Missouri Lawmakers Begin Dive Into Property Tax Problems
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By Rudi Keller, Courtesy of the Missouri Independent – missouriindependent.com
Missouri’s snarled property tax system needs to be fixed or the courts will — again — step in, the vice chairman of the Missouri House Special Interim Committee on Property Tax Reform warned Wednesday.
State Rep. Rodger Reedy, a Republican from Windsor, said he was just 20 years old and a newly appointed deputy assessor in Benton County when the entire state underwent reassessment to current property values in the early 1980s.
The Missouri Supreme Court, in 1979, ruled that assessments had to be based on current real estate values. In that case, property owners in St. Louis County sued because their new homes were being taxed far more heavily than older properties because there hadn’t been a general reassessment since 1960.
“We’re headed back to the same situation,” Reedy said during the first of six hearings the committee will hold across the state. “Two houses are very similar, assessed a lot different amounts, and we will have another lawsuit in the state of Missouri that’s going to cost us millions of dollars if we don’t get our boots on the ground and actually be looking at those properties and knowing what’s there.”
Reedy is one of the limited number of people with a strong grasp of how Missouri imposes property taxes. After working as a deputy assessor, he was elected Benton County Assessor in 1992 and held the position for 26 years.
Missouri lawmakers are under pressure to address property taxes to try to solve a variety of issues. The rapid increase in home values — and resulting higher property tax bills — is one of the biggest.
Tied to that issue is the question of whether every county is valuing property in the 90% to 110% of its price in the open market. Many are not, and are under pressure from the State Tax Commission to increase values by as much as 15% every two years, or more if physical inspections are conducted.
In Missouri, property taxes are almost exclusively imposed to finance local government operations. When property values rise, those local agencies — school and library districts, municipalities and counties, and other specialized districts — can reap increased revenue, within limits.
The issue the committee must address, along with all the others, is how those limits are applied and whether they should be tightened or loosened. And it must examine how each classification of property is taxed, because a different percentage of actual value is assigned to personal, agricultural, residential and commercial property before the final bill is calculated from the local rate.
“It really is too complicated,” State Rep. Tim Taylor, a Boonville Republican and committee chairman, said in an interview after the five-hour hearing. “Honestly, in my opinion, I wish there were a simple, more clean and efficient way to do this, and that would be one of my goals.”
In response to complaints that appraisals, and property tax bills, are creating hardships for people on limited incomes, lawmakers in 2023 passed a bill allowing county-by-county votes on whether to freeze property taxes for people 62 and older. So far, about 60 counties have adopted ordinances enacting the freeze.
There have also been legislative attempts to limit the increase in value of vehicles taxed as personal property and, during the recent special session, legislation was passed to cap increase in tax bills for property owners in 97 of the state’s 114 counties.
There would be 75 counties where basic tax bills would not increase more than 5% per year or the rate of inflation, whichever is greater, and 22 where no increase would be allowed.
The committee spent the first hour sharing views on the tax questions and talking about where they would find solutions.
“If you’re going to complain, and we all complain about our property taxes because none of us like the way the system’s working, all right,” Taylor said. “But I want your suggestions about how we might possibly make this better.”
Some want to abolish the property tax altogether.
“It is my vision that we look very hard at transitioning away from an income tax and a property tax and go to a consumption tax basis,” said state Rep. Darin Chappell, a Republican from Rogersville.
That generated objections from members in rural districts with few businesses.
“If you take my whole district, we have one McDonalds and two Subways,” said state Rep. Tony Harbison, a Republican from Arcadia. “We don’t have no Walmarts. We don’t have no big box stores, so a consumption, or a sales tax, would be impossible.”
There are 4,856 property tax rates imposed by 2,807 taxing authorities across the state, according to the 2024 report on property tax rates issued by the state auditor. Many of the taxing entities have two levies, one for operations and the other to pay bond debt.
The ranking Democrat on the committee, state Rep. Kathy Steinhoff of Columbia, is a former teacher and she said she will be watching out for proposals that hurt local agencies.
“I know that no one likes to pay taxes. I don’t like to pay taxes,” she said. “I want to be equally protective of our taxing entities, because these entities are what make our communities, what our communities are.”
The highest taxes in any location are generally for the local school district, which has no power to impose another type of local tax. Some taxing authorities, like cities and counties, may also impose sales taxes, while others, like ambulance or fire districts, may not, depending on their location.
Under the 1982 Hancock Amendment, when property assessments increase faster than prices generally, excluding new construction, agencies are supposed to reduce their levies so the new revenue produced is not a windfall.
Jeremy Wilmoth, finance director for the Mid-Continent Public LIbrary district in Kansas City, told the committee that the average residential appraisal in his district increased almost 56% from 2021 to 2023, but the revenue produced by that average residence increased by 18%.
“We see that the Hancock Amendment is protecting the property tax owner in our levy,” Wilmoth said.
An opponent of property taxes, Dennis Ganahl of Missouri Tax Relief Now, said the senior property tax freeze has been adopted in 60 counties. The next step, he said, is to freeze all assessments at the end of the next cycle.
“And then work from that as your benchmark, and get rid of the entire assessment process,” Ganahl said.
The final witnesses of the day were from the State Tax Commission, the agency responsible for making sure assessments are uniform and equitable. It’s the agency pressuring counties to increase appraisals, with 70 counties agreeing and many that did not when presented with a reassessment plan.
Gary Romine, a former lawmaker who chairs the commission, echoed Reedy in his concern that the courts might again take up the question of fair assessment and require the state to bear the cost.
“One of the biggest concerns is we don’t want one county doing it one way and another county doing another way,” Romine said. “What that will end up being is the tremendous cost that the state would face if there would be statewide reassessment.”
The Special Interim Committee on Property Tax Reform will hold four public hearings outside Jefferson City over the next six weeks. Each will start at 5:30 p.m.
The dates, and locations, are:
July 30 at the Wallace Center, 325 Harwood Ave. in Lebanon
Aug. 13 in the Board Room at Union Station, 30 W. Pershing Road in Kansas City
Aug. 20 at the Center of Clayton, 50 Gay Ave. in Clayton
Aug. 27 at the Comfort Inn, 1821 N. Missouri in Macon
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