JEFFERSON CITY — Legislation intended to protect homeowners from large, unexpected property tax increases sailed through the Senate on Wednesday without any dissent.
Senate President Pro Tem Michael Gibbons said his bill targets cases in which property taxes rise as a result of reassessments in property values. His case study is St. Louis County, where property taxes shot up $46 million last year, but the legislation would affect homeowners across the state.
Senators sent the bill to the House by a 33-0 vote.
Missouri has more than 2,700 entities that levy property taxes, including public schools, cities, counties and special services such as public ambulance, fire, road and library districts.
Those local taxes are calculated by applying a voter-approved tax rate to the assessed value of the property. So tax bills can rise either because property values rise or because the local governments increase their tax rates.
According to the Missouri Constitution, if assessed property values rise by more than inflation — excluding new construction and improvements — then local governments are supposed to reduce their maximum allowed tax rate so that the total amount of taxes they collect remains about the same.
But some local governments have avoided rolling back tax rates after assessed property values spike because they have set their tax rates below the maximum amount approved by voters.
Sarah Haenni, a spokeswoman for the advocacy group St. Louis County Residents for Property Tax Relief Now, complained earlier this year to a Senate committee that local governments were using “a legal loophole” to reap more money from taxpayers.
Legislation “is necessary to limit the ability of unscrupulous taxing bodies from grabbing tax dollars through increased reassessments,” Haenni said.
Gibbons, R-Kirkwood, said about 80 taxing districts in the St. Louis area had set their tax levies below their voter-approved maximums. Of those, only about 15 voluntarily rolled back their tax rates when assessed property values rose last year, he said.
“If this bill had been in place at the time, those tax increases — which is really what people are primarily concerned about — wouldn’t be happening,” he said.
His bill requires those tax rollbacks to occur even if local governments have set their tax rates below the voter-approved ceiling.
The legislation would require counties to mail notices in the spring to property owners detailing their projected tax bills that will arrive later in the year. The intent is to provide greater warning to taxpayers so they can save money or appeal. But that provision won’t start until 2009 for some of the larger counties and 2011 for the others.
Legislative researchers estimate the new notice requirements could cost local governments more than $1.8 million annually.
The legislation also would expand a state income tax break for low-income senior and disabled taxpayers.
Current law sets the income cutoff for people to qualify for the tax credit at $27,500 annually for individuals and $29,500 for married couples. The Senate bill would raise that to $30,000 annually for individual homeowners and $40,000 for married homeowners, while leaving the qualification standards unchanged for renters.
The legislation also increases the maximum tax credit from $750 to $1,100 for both homeowners and renters.
Officials from MU’s Economic Policy Analysis and Research Center projected that the expanded tax break could cost the state about $28 million a year. Gibbons contends that the estimate is too high.