We see several factors contributing to big jumps in property taxes.
Home and property values are going up sharply all over the country, so assessments will reflect this inflation. Counties are responsible for property assessment in Missouri. Assessments are done every other year.
Jackson County has had long-standing problems with assessment, relying on formulas and outdated computer programs rather than considering homes individually.
Several years ago Missouri drastically cut its financial support for counties to do their required assessment.
Because of these factors Jackson County is years behind assessing the actual value. Their reason that assessments are growing so fast is that assessments are catching up to increases in value that were there all along. We don’t entirely agree, but it’s important to know the County’s explanation. A KCUR article explains more and quotes County officials.
So what about tax abatement? Where does that fit in? There are a couple of ways that property tax abatements like TIF contribute to the problem of escalating property taxes for homeowners.
Public services rely on property taxes. When corporations get big property tax breaks, it reduces revenue for schools, libraries, and other public services. As time goes on, losses get heavier because revenue stays the same due to TIF, but the cost to provide services increases due to inflation.
The tax rate is a percentage of the property tax that is based on county assessment, discussed above. Public services’ tax rates can grow slightly, based on inflation, are usually limited in the state constitution, and voters have to approve increases beyond those factors. Public libraries in our county were hurt by tax abatement and voters approved rate increases.
Schools are the largest percentage of the property tax bill. Sometimes schools have more leeway in setting their rate, but it is still based on the assessed value. Public schools south of the Missouri River have taken a huge hit from tax abatement. The problem has persisted for years causing inequities between districts south of the river and their Northland counterparts who have little impact from property tax incentives (TIFs). Districts that serve the poorest children don’t have the ability voluntarily discount their tax rate (cut their revenue) when the base jumps because they are already so far behind.
Incentives in Kansas City and around the country mainly create luxury housing and expensive office buildings. Tax assessment relies on “comparables.” When the property in your neighborhood is sold, increases in value are used as a comparison to assess the value of your own property. This is likely to augment assessed value. Here is the classic feature of “gentrification” which has been a major problem for long-time residents of neighborhoods like Kansas City’s Westside. For example, when a million-dollar house is built next to you, it will cause your property taxes to rise significantly.