Assessments: An Explanation
Need an explanation of your personal property assessment?
By state law all real estate must be reassessed each odd-numbered year to reflect its true market value. The 2011 assessment notices were mailed on May 20th. Most homeowners saw a drop in the assessed value of their property, although some residents in the central corridor saw small increases. The average residential assessment dropped 4.7%. Neighborhoods experiencing many foreclosures saw double-digit declines, while many stable areas saw declines in the 2% to 3% range. The valuations reflect the sale prices of similar properties in the same or similar neighborhoods.
So that property owners can better prepare for the tax bills that will come in November, the assessment notices also contain an estimated 2011 tax bill and the actual tax amount from 2010. The estimated tax rates are set by the individual taxing districts, not the Assessor's Office. Contact information for each of the taxing districts is included with the assessment notices for property owners who have questions about the tax rates.
Many property owners whose home dropped in assessed value by a small amount have noticed that the estimated 2011 tax bill is higher than last year's amount. That is because the tax rate for 2011 is estimated to be higher than the 2010 rate. Tax rates move in the opposite direction of assessments. Think of it as a seesaw, when one goes up the other comes down. When assessments jumped in 2003, 2005 and 2007, the tax rate was rolled back. In 2009 and this year assessments dropped and the districts are legally entitled to roll their rates up so that there is no net loss of revenue. The boards of the taxing districts, not the Assessor or Collector, determine their tax rates.
Why do the tax rates fluctuate every year? In the 1970's voters statewide approved the Hancock amendment to the state constitution. That amendment was designed to prevent taxing authorities from getting a revenue windfall as property increased in value, as it tends to do over the long term. The amendment and related state laws limit the revenue any taxing district can receive to the amount it received the prior year, plus an inflation adjustment and revenue derived from new construction. If revenue in a given year would exceed that formula, the district must lower its tax rate. But the converse is also true: if the prior year's tax rate would result in a decrease in revenue under the formula, the district may increase its tax rate (with some limits). What the formula does is stabilize this revenue source for the taxing districts. So you don't have a school district, for example, hiring 200 additional teachers when property values jump, and then having to lay them off when property values decline.
While the Assessor's Office cannot adjust the tax rates, there is a mechanism for property owners to contest the assessed value of their property. If the owner feels that the property is worth less than the appraised value shown on the assessment notice, the owner can appeal that valuation to the Board of Equalization. Instructions for doing so were included with the assessment notice. The deadline for appealing your 2011 assessment is July 11, 2011.
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