June 8, 2009
PROPERTY TAX ASSESSMENT ADMINISTRATIVE MODELS
By: John Rappa, Principal Analyst
You wanted to know if there are alternatives to having each municipality appraise property for property taxes.
An online survey of state and county revenue departments found several alternatives to having municipalities appraise property for taxes. The alternatives vary depending on the respective roles of state and county governments.
A state agency appraises property for all political subdivisions in Maryland while the state and the counties jointly do so in South Carolina. Counties appraise property for local taxes in Florida, but do so under the state's supervision. Minnesota and Texas counties appraise property for municipalities, school districts, and other taxing jurisdictions. New York, on the other hand, encourages these entities to consolidate or coordinate their appraisal practices and standards.
STATE ADMINISTERED PROPERTY TAX ASSESSMENT
Maryland is the only state that assesses property on behalf of its political subdivisions. Its Department of Assessment and Taxation's Real Property Valuation Division revalues all real property every three years by monitoring and analyzing real estate sales and inspecting exteriors. It also annually appraises business personal property and administers the state's enterprise zone and circuit breaker property tax credits.
JOINT STATE AND COUNTY PROPERTY TAX ASSESSMENT
The state Revenue Department and county assessor offices appraise property for South Carolina's municipalities, school districts, and other taxing districts. The department appraises mostly business property, including factories and mines, while the counties concentrate on homes and apartments. It also oversees how the counties value property to insure equal and uniform assessments.
STATE-SUPERVISED COUNTY ASSESSMENT
Florida's counties appraise property for their respective municipalities, school districts, and other taxing jurisdictions. But they do so under the auspices of the Florida Revenue Department's Property Tax Administration Program, which annually reviews and approves the counties tax rolls based on real estate data and property appraisals. It also maintains the digital geographic information system assessors use to identify, classify, and assess property, trains and certifies assessors, and helps them solve technical problems.
In many states, counties assess and collect property taxes for municipalities, school districts, and other taxing jurisdictions. Texas consolidated property tax assessments in the counties because overlapping municipalities, school districts, and other taxing jurisdictions were appraising the same property according to different methods and standards.
Minnesota counties assess and collect property taxes on behalf of municipalities and other political subdivisions. This includes classifying property and administering property tax credits. (Minnesota law assigns property to different classes and assesses each class at a different percentage of fair market value.)
Over 1,000 municipalities, school districts, and other jurisdictions assess property taxes in New York, each according to its own cycle and assessment ratio. Consequently, these factors spawned a system that is “notoriously complex and confusing for taxpayers,” the New York State Office for Real Property Services (ORPS) concluded (Collaborative Assessing: Potential Options for Study under the CPTAP Grant Program,
May 2008). (By comparison Connecticut requires its 169 municipalities to revalue all property at least once every five years and assess it at 70% of its fair market value. The state's myriad special taxing districts use the municipal assessments.)
Rather than consolidate taxing jurisdictions or impose uniform statewide revaluation requirements, ORPS encourages municipalities and other taxing jurisdictions to collaboratively develop and implement solutions for improving how they assess property taxes. It does so by offering $50,000 grants to counties for studying how municipalities can coordinate their assessment systems. In conducting the study, a county must consider at least one alternative assessment model, including:
1. having the county assess property for them;
2. assigning some assessment duties to the county, such as tracking and analyzing real estate sales and processing property tax exemptions and credits; or
3. coordinating assessment practices, such as assessing property at the same rate or revaluing it according to the same cycle.
ORPS also provides one-time grants for municipalities that implement one of these models. The grant equals $7 per parcel, up to $140,000 per municipality. It also provides grants to individual municipalities or groups of municipalities that assess property at 100% of fair market value for six years. The grants equal $5 per parcel, up to $500,000 per municipality.