Editorials

Knowing one’s property has increased in value might be considered a “feel good” development, but the thrill is diminished by realization it usually translates into higher tax bills.

This subject is timely because newly released certified appraisal roll figures for Smith County show taxable values rose 6.7 percent for 2008. Word that the increase isn’t as great as in recent years might be seen by taxpayers as something of a consolation.

As explained in a news report in the Tyler Paper, the increases in appraised values mean the taxing entities will have more money with which to work, even if their tax rates stay the same. In other words, with the same tax rates, a person whose property valuation goes up will pay more taxes.

So the inclination is to blame the appraisals for higher taxes. But a convincing point is made by Steve Stanek, managing editor of Budget and Tax News,

that it is not property reassessment that drives higher taxes, but spending.

A recent decision of Georgia Gov. Sonny Perdue to end automatic property assessments in that state will verify his point, Stanek said. The action may not change property tax bills in the state right away, he noted, but it may change attitudes toward local government officials, and in time, “that may result in real tax cuts.”

Perdue ordered the Georgia Department of Revenue to inform counties they no longer have to reassess property for tax purposes every three years.

That is important, Stanek explained, because property tax reassessments “Have been a handy way for local authorities to keep raising property tax bills without (giving the people) a chance to vote on it.”

With that excuse gone, and the truth about rising taxes becoming more apparent, voters will have better information for holding elected officials accountable for their spending decisions, it is suggested.

“Accountability, including the threat of local officials being voted out of office, would be a very good thing,” Stanek believes.

“The truth is, spending — and only spending — causes tax bills to rise,” he emphasized. “But for years, even decades in many places, local officials have escaped accountability by blaming rapidly rising tax bills on property values. Yet nothing — absolutely nothing — requires local governments to spend more money just because property values rise.”

He describes a property tax assessment as nothing more than a way to determine a parcel’s share of a total property tax bill in a given area.

The procedure is explained: In most areas there are many local taxing bodies — school districts, library districts, fire districts, park districts, county governments, municipalities, etc. Each submits its tax bill — called a levy — to the county, and those levies get totaled up. The taxable value of all the properties within each taxing body’s jurisdiction also gets totaled, and a tax rate to generate the necessary amount of money to cover each levy is set. That rate is usually expressed as an amount per $1,000 of taxable property value.

“Tax hikers often try to cover their tax-hiking ways by saying they haven’t raised taxes,” Stanek said. “But if property values go up a certain amount, say 10 percent, and local governments ask for enough money to keep the tax rate unchanged, the result is 10 percent more property tax collected.”

People are advised to remember, “Your tax assessment is nothing more than a way to determine your property’s share of the total amount of tax that will be collected in your area.”

Perdue’s action will clarify where the responsibility for high property taxes belongs, Stanek said.

Taxpayers in other states could be watching, and learning, from developments there.

()