Organization Day - Tuesday November 17

As we enter Organization Day, property tax issues continue to dominate the legislature's agenda.  Three suggestions that sound great; tax caps, assessment caps and expanding the homestead to include luxury items, are great for a few taxpayers, but for the majority of property owners or local income tax payers they create an increased burden.   

An unintended consequence of tax caps is that those NOT benefiting from the tax caps pay more for some local government services than those benefiting from the tax caps.  Tax cap property owners receive many of the same services but at a lower price.  As life under the tax caps progresses, this problem will become more evident.  If I live in a low tax area, I am now subsidizing the services of property owners who live in a higher tax area and hit the caps. 

Assessment caps will have a similar effect.   Capping AV growth creates an inequity for taxpayers by moving away from the "fair market value" for assessments.  I know the state limits tax liability on the deduction/credit side of the equation but we should stay the course on the AV.  Keep the "market value in use" concept as pure as possible.  Why should one homeowner's assessment be fair market value and another homeowner not be assessed at fair market value?  If my property value does not increase but my neighbor's property value does increase, why should I pick up a portion of his tax liability?  What if the property was under assessed (due to error) in the previous year?  Does the growth cap still apply? What if the property changes use?  Assessed value should be based on market value in use and nothing more or less. 

Expanding the homestead to include luxury items such as pools and gazebos benefits those who have such luxury items but means every property that does not have such luxury items pay more in property taxes or pushes them closer to the cap.  The State did not subsidize such luxury items when they were paying Homestead Credits, so why the change now?  It's because the state does not have "skin in the game" and the burden will fall to local units of government only and other property owners. 

All of these "property tax reforms" will not cost the state a penny, but they will create inequities in the property tax system and cost the majority of property owners, and local option income tax payers, more.    

David Bottorff, AIC Executive Director