HCS SS SCS SB 711 -- PROPERTY TAXATION

SPONSOR:  Gibbons (Sutherland)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 8 to 0.

This substitute changes the laws regarding property taxation by
requiring tax rate rollbacks by all political subdivisions in
assessment years, changing the way voter-approved tax increases
are applied to assessed values, changing the time line for the
assessment and appeal of property taxes, and creating a voluntary
property tax deferment program.  In its main provisions, the
substitute:

(1)  Prohibits penalties and interest on the erroneous payment of
property taxes when there is clear and convincing evidence that
the county made an error in determining the tax amount due.  Any
penalty or interest paid by the taxpayer will be refunded upon
the discovery of the error or omission;

(2)  Allows individuals who are disabled or who are 60 years of
age or older by October 15 of the year in which a claim is filed
to elect to have the property tax on their homestead deferred if
they have lived in their home for at least the previous five
years, did not file a homestead exemption credit, had equity
interest in the homestead of at least 25%, and have the homestead
insured for at least the amount of the assessed valuation by
filing a claim with the county assessor after January 1 and on or
before October 15 of the first year in which a deferral is
claimed.  A lien for the amount of the deferred taxes, fees, and
accrued interest will be placed against the property until the
taxes are paid voluntarily, after the death of the taxpayer, upon
the sale or transfer of the homestead, or after any outstanding
indebtedness against the tax-deferred property is refinanced;

(3)  Creates the Senior Property Tax Deferral Revolving Account
to pay county tax collectors the property taxes deferred and for
administrative expenses and to receive repayments of deferred
property taxes.  Interest will accrue annually on the actual
amount of taxes advanced to the county for the tax-deferred
property at the rate of the average annual interest rate paid on
bonds plus 2% rounded up to the nearest whole percentage.  If
there is insufficient money in the account to make payments to
the counties, as determined by the State Auditor, the necessary
amount will be transferred from general revenue and repaid as
funds become available or the account may be funded by bonds;

(4)  Requires voter-approved property tax rate increases to be
applied to a political subdivision's most recent total assessed
valuation, as certified by the city or county on or before the
date of the election.  Every political subdivision in a
reassessment year must roll back its prior year's tax rate
regardless of whether the political subdivision was levying the
tax at its tax rate ceiling.  A political subdivision can modify
its tax rate, not to exceed its maximum authorized voter-approved
levy, through the adoption of an ordinance, resolution, or policy
statement in a non-reassessment year;

(5)  Requires all counties and the City of St. Louis to allow
public testimony at the public hearing prior to setting the tax
rates;

(6)  Allows charter counties and the City of St. Louis to set
their tax rates by October 1 instead of September 20;

(7)  Requires assessors for the City of St. Louis and all charter
counties to notify taxpayers by June 15 of real property
assessment increases and the county to provide an estimated tax
liability for the property beginning January 1, 2009;

(8)  Requires assessors for non-charter counties to notify
taxpayers by June 15 of real property assessment increases and
the county to provide an estimated tax liability for the property
beginning January 1, 2011;

(9)  Requires assessors to provide the city or county clerks with
assessment books by March 1 of each year to assist with
determining the estimated tax liability on properties with
increased assessed valuations.  The clerks must make abstracts of
the assessment books showing the aggregate amount of different
types of property and the valuation of each type for each
political subdivision levying taxes on property;

(10)  Requires governing bodies of political subdivisions to
informally project non-binding tax rate levies from the
information provided in the abstracts and provide the projected
levies to the clerk by April 8 of each year;

(11)  Requires the county collector to calculate the projected
tax liability for each property for which the assessor intends to
provide a notice of increased assessed valuation by April 30 by
utilizing the projected tax levies;

(12)  Reduces a political subdivision's tax levy by 20% for the
tax year if it fails to provide projected tax levies by April 8
unless the failure is a direct result of a delinquency in
providing, or failure to provide, the required information by
either the clerk or the assessor;

(13)  Extends the requirement that certain counties and the City
of St. Louis must deduct a percentage of all ad valorem property
tax collections and deposit the amount into the county's
assessment fund from December 31, 2009, to December 31, 2015.
The substitute increases the percentage deducted from either 1/8
of 1% or 1/4 of 1% to either 1/8 of 1% or 1/2 of 1% and increases
the income limits from $100,000 to $125,000 in any year for first
classification and charter counties and from $50,000 to $75,000
for second, third, and fourth classification counties.  If the
commission withholds state assessment reimbursement funds from a
county for three consecutive quarters, the extra 1/8 of 1% or 1/2
of 1% collection revenues in the county assessment fund will be
forfeited and returned by the county to the political
subdivisions within the county;

(14)  Changes which counties of the first classification are
required to withhold 1% of all ad valorem taxes to be deposited
into the county's assessment fund;

(15)  Specifies that the true value in money for assessment
purposes of any possessor interest in real property on or
adjacent to a certain commercial airport and owned by a political
subdivision will be the true value in money of the possessor
interest in the real property less the total costs paid toward
any new construction or improvements on the property if included
in the possessor interest, unless paid by the political
subdivision, regardless of the year the costs were incurred;

(16)  Authorizes, beginning January 1, 2009, a property tax
credit for expenses incurred to manufacture, maintain, or improve
a freight line company's qualified rolling stock up to the amount
of its tax liability.  The state will annually reimburse a
political subdivision for any loss in revenue;

(17)  Changes the date that the St. Louis County Board of
Equalization convenes from the first Monday in June to the second
Monday in July;

(18)  Requires the State Tax Commission to develop or enter into
contracts for the development of computer software programs which
will produce the notice of projected tax liability.  Any
collector that files a request with the commission before
December 31, 2009, will be provided with the computer software
programs;

(19)  Requires the circuit court clerk to send the county
collector a notice when a taxpayer timely files an appeal seeking
exemption of a final decision of the local board of equalization.
The notice must contain the taxpayer's name, the case number
assigned by the court, and the parcel or locator number of the
property being appealed.  The notice to the collector must state
that the taxes in dispute are to be impounded;

(20)  Requires the commission to send the county collector a
notice of appeal when a taxpayer timely files an appeal.  The
notice must contain the taxpayer's name, the appeal number
assigned by the commission, the assessed value provided to the
local board of equalization, and the assessed value proposed by
the taxpayer if the values are available to the commission when
the appeal is filed.  The notice must also specifically state
that the taxes in dispute are to be impounded; and if the notice
is filed in an odd-numbered year, it will serve as notice to the
collector to impound taxes for the following even-numbered year
if no decision has been rendered in the appeal;

(21)  Relieves a taxpayer from the requirement of filing a
statement of protest if the taxpayer filed an appeal from a local
board of equalization to the commission or circuit court;

(22)  Changes several provisions of law regarding the
notification of appeal of assessment and the impounding,
investing, and refunding of protested tax payments;

(23)  Specifies that school districts which levy a tax rate below
the performance levy due to mandatory roll-backs in the
provisions of the substitute will continue to be eligible to
receive grants currently provided to small school districts.
Political subdivisions with voter-approved rate increases
subsequent to setting their most recent tax rate are exempt from
the provisions regarding the mandatory rollback in reassessment
years;

(24)  Repeals the requirement that the commission notify each
school district of the equivalent sales ratio for the previous
year which was adopted to determine the equalized assessed
valuation of the property and the equalized operating levy of the
school district for distributions under the previous school
foundation formula; and

(25)  Creates the position of taxpayer advocate within the
commission to represent and protect the interests of taxpayers
regarding property taxation.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of More than
$331,159 in FY 2009, More than $356,973 in FY 2010, and More than
$4,365,631 in FY 2011.  Estimated Effect on Other State Funds of
an income of More than $100,000 in FY 2009, a cost of Unknown in
FY 2010, and a cost of Unknown in FY 2011.

PROPONENTS:  Supporters say that the bill ends backdoor tax
increases through reassessment.  The problem is with districts
that are not at their tax rate ceiling.  Currently, political
subdivisions that are below their voter-approved levies are not
required to roll back their rates.  This is the biggest problem
noted by taxpayers, and the failure to reduce rates has resulted
in some large percentage increases in property taxes over the
last couple of assessment cycles.  The elderly have the most
trouble paying their property tax bills and need time to get
money.  Currently, taxpayers feel powerless regarding property
tax assessment.  The bill will bring reasonableness, fairness,
and predictability to the process.  Early notification is
important, and the bill will improve the assessment process and
public opinion of the process.  While the changes in the time
line for mailing notices to taxpayers will be helpful to
taxpayers, it presents a concern to county offices.  The bill is
a good, reasonable approach to the issue of property tax
increases and balances the concerns of taxpayers and school
districts and other public entities that rely on property tax
revenues.

Testifying for the bill were Senator Gibbons and Representative
Stream; Sarah Haenni, St. Louis County For Tax Relief Now;
Taxpayers Research Institute of Missouri; Associated Industries
of Missouri; Missouri Assessor's Association; National Federation
of Independent Business; State Tax Commission; Missouri County
Collectors Association; Cooperating School Districts of Greater
St. Louis; and Penney Rector, School Administrators Coalition.

OPPONENTS:  There was no opposition voiced to the committee.

OTHERS:  Others testifying on the bill say that it is well
crafted and balanced.  However, notifying the taxpayer of the
amount of the tax early with the tax rate and assessment
presented at the same time can cause confusion since a taxpayer
can't appeal their taxes, but just their assessment.

Testifying on the bill was Steve Gardner, University of Missouri,
St. Louis.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:12 pm