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August 28,
2008 Volume
4, Number 35 | ||
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In This
Issue
E-Mail
cynthia.davis@house.mo.gov
Chair Vice Chair
Vice Chair
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The Real
Estate Tax Squeeze Twenty years ago, my husband and I wanted to do
something that would provide a service to our community. We asked
ourselves what O’Fallon needed that it didn't have already that would help
people and make a positive impact on our area. In February of 1989,
we opened the Back to Basics Christian Bookstore. We knew we would
have to pay more than most residents in real estate taxes, but we never
imagined it would become one of the highest costs of doing business, along
with payroll and rent. Our real estate taxes started to escalate at a
rate that went far beyond inflation. We soon found that we were
paying an extra 20 percent, 30 percent, and even 40 percent increase every
two years, sometimes even more frequently. Many people do not
realize that taxing jurisdictions can change their rates every year. After only 13 years, we found ourselves
paying ten times the amount of real estate taxes than when we
started. We started feeling like we were only renting our property
from the government. After visiting with my constituents, I have
confirmed that many others also feel this way and have had similar
experiences. We can all understand the rate of inflation, but these
property tax increases are far beyond that. While some may be
satisfied with the taxation level, we are at the point where other people
are suffering. When the economy was flourishing, it was easier for
the residents to feel generous, but what about those who get laid off or
who experience a decline in real estate
values? One of the most common questions I am asked is,
“Will my taxes be reduced if my real estate assessment goes down?”
Unfortunately, the answer is not good for property owners. Your
assessment is not a A proposal I offered last session would limit the
property tax increases per parcel to no more than the rate of
inflation. The constitution already prohibits districts from
increasing taxes beyond the rate of inflation. However, the
districts are allowed to combine all parcels to arrive at a total value of
all assessments for the district, so any new development allows for a far
higher revenue ceiling every year. Thus, if the revenue ceiling and the
budget goes up, everyone still pays more despite the fact that their
assessment has declined. For this reason, in the last legislative session,
I offered an amendment to the constitution that would require a county
collector to calculate tax increases on either the assessments for the
past year or the future year “whichever is less.” Property taxation
should not be a game of how to extract the maximum allowable from the
taxpayer. We need office holders who are committed to helping
homeowners get the fairest tax burden possible.
In addition, because the law allows taxing
jurisdictions to combine all parcels into one pool, a tax abatement for
one entity such as a new development means that all the other land owners
end up paying extra to make up the difference. Furthermore, the
value of new development contributes to a higher revenue ceiling, thereby
diminishing the need for a rollback that might be otherwise
required.
Ultimately, the best public policy keeps our taxes
at a level where all of us can afford to pay our fair share. In our
next session I will be working to get a
proposal on the ballot that, if approved by voters, will stop
the out-of-control increases in our property taxes. If you would like
to see the text of the House Joint Resolution that I introduced in
the last session, please click here: HJR
79 If the legislature cannot agree to put this
resolution onto the ballot next session, our best hope will be to initiate
a petition to create a statewide vote. If it makes it to the ballot,
I am confident it will pass. Your
thoughts are important to me, so please let me know if you think your tax
rate is fair. You can send me your opinion by clicking
here: Cynthia Davis. Last week, I spoke to the O’Fallon Senior Advisory
Happy Labor
Day
Labor
Day pays
tribute to the contributions workers have made to the strength,
prosperity, and well-being of our country. In honor
of the
social and economic achievements of American workers, all
non-essential
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reflection of your actual tax
bill. It only 
