County officials are considering opting out of a state law that requires different tax rates for personal property and real estate.
Under the law, which Missouri counties must adopt in 2005, public entities are required to levy different rates for personal property and the three sub-classes of real estate — residential, agricultural and commercial. The law was written to prevent unequal shifts in the tax burden when the value of one class of property increases more than another.
This happened in 1997 and 2001 when the value of residential property rose and agricultural property values remained constant, County Assessor Tom Schauwecker said.
“A reassessment shifts the tax burden,” Schauwecker said.
However, another law passed earlier this year gives counties the choice of opting out. Presiding Commissioner Keith Schnarre and Southern District Commissioner Karen Miller both said they were leaning toward that option.
“Everybody I’ve heard from thinks we should opt out at this point,” Miller said.
The commission must make its decision before the end of the year.
Representatives from several public entities met with county officials Sept. 13 and Sept. 15 to learn about the potential impact of the law. They expressed concerns about implementation costs and how the tax burden would shift between classes of property owners, Miller said.
Schauwecker and other county officials said the new law presented a mix of potential costs and benefits.
“I believe in theory it’s sound public policy,” Schauwecker said. “It would soften the blow for any taxpayer subject to reevaluation.”
But Schauwecker said the law could create an “accounting nightmare.” The county would have to hire a salaried employee and invest 2000 hours to reprogram the county’s computer system to handle more data.
County Clerk Wendy Noren was concerned that some school districts that fell within two counties could lose money. If one county opted in and one opted out of the new law, there would be too many tax rates at play within the district’s jurisdiction. A prohibition in the state constitution could force the district to levy the lowest rate.
“They would not get income sufficient to support the school district,” Noren said. “It would defeat the purpose of the legislation.”
County Collector Pat Lensmeyer favors collecting data for a year to better estimate the impact of the new policy on taxpayers. She worries that the law will make tax bills harder to understand.
“We have very bright taxpayers in the county,” Lensmeyer said. “But I would predict that they’re going to have a hard time deciphering just the look of the tax bill.”