Property Taxes Cost More This Year? Find Out Why

By David Howell
Editor


    Tax talk has been a recurring theme around the county as Yalobushians received their tax bills at the end of 2007.

    Many have seen an increase and want to know why.

    Each year, supervisors work to prepare a fiscal year budget, beginning October 1, and this year was no exception.

    One variation in this year’s budget was that 2007 was a mandatory year for property value reassessment. State law requires each county’s tax assessor/collector to periodically reassess the value of real property in the county.

    After the assessment, the county’s assessed value increased 11 percent, increasing from 62,249,788 to 69,684,836. Of the increased assessed amount, almost $200,000 was attributed to automobiles, and approximately 76,000 of the  increase was credited to the mobile home rolls. The personal roll climbed 715,000  and the rest of the increase, almost $6.5 million, came from the land roll which was triggered by the reassessment. The only decrease came from the utility roll, which recorded a 100,000 decrease.

    On the surface it sounds good, 7,435,048 more stuff to tax in the county.

    Or, better yet, lower the millage rate because there is more to tax – which would mean no net gain.

    However when many Yalobushians received their tax bill this year, it had increased from the previous year.

    “How come the supervisors did not lower the mills to compensate for the increased valuation,” has been a common question.

    In other words if the value of your home went up, the thought process for most tax payers is that supervisors should lower the tax rate enough so the taxpayer would pay the same amount.

    It is not that simple.

    A number of factors supervisors faced made it almost impossible to lower the tax millage so that property owners would not see an increase.

The Factors

    Although the county’s taxation process is fairly complicated, there are two simple factors that worked against lowering the tax millage, Chancery Clerk Amy McMinn explained last Friday.

    Of the 7,435,048 increased value on the county’s tax rolls, a tax exemption to the county’s largest employer, BorgWarner, negated almost half.

    BorgWarner was granted a 3,068,042 exemption on their appraised value. This part of business is routine for counties across the state, new investments made by industries are typically granted a 10-year exemption.

    The second factor is that of the 7,435,048 assessed value increase, 16 percent of this growth is not fully taxable because the taxpayer is either over 65, disabled or receives a regular homestead exemption.

    These taxpayers receive a $75,000 exemption on their appraised value, which means if their property’s appraised value increased from $61,000 to $71,000, the $10,000 growth is not fully taxable.

    With the BorgWarner exemption and the loss of taxable value due to the number of tax payers who are over 65 or disabled, the increase in the assessed value is cut from $7,435,048 to $3,167,309.

    A meager five percent.

    Now the scenario has changed, the county did have an 11 percent increase in the amount of assessed valuation, but that amount is trimmed to a modest five percent increase.

    With that in mind, supervisors were able to lower the general fund levy from 57.54 mills to 53.37 mills – a decrease of almost seven percent.

Shifting the Burden

    These two factors mean that the tax burden is actually shifted to others on the county’s tax roll. In fact, McMinn explained that 52 percent of the county’s tax payers pay the bulk of the taxes. That leaves 48 percent who fall into two categories – either over 65 or disabled. These taxpayers who fall in the 48 percent range receive a $75,000 exemption on their property tax.

    That means that if the appraised value of their home is $80,000, they will only be fully taxed on $5,000.

    McMinn also reported that of the 12,204 parcels in the county, only 1,028 are assessed with a valuation greater than $75,000.

A Look At The Total Tax Levy

    Now that is just the general fund – the portion of the county’s budget which funds many of the offices in the county – sheriff’s department, tax assessor/collection, justice court, chancery court and office and circuit court and offices.

    The other levies in the county’s budget did remain the same for the current fiscal year as the previous year. These levies include some county-wide assessments and other assessments for specific areas.

    Other mills levied county-wide include 1.09 mills for community college support, another mill for community college capital, 3.07 mills for rural fire protection in the county, 4.65 mills for county roads,9.20 mills for county roads, and 7.66 mills to service the principal and interest for bonds floated for the hospital and courthouse.

    With the exception of the levies for bond payments, the rest of these mill rates were not decreased even though a mill does generate additional revenue because of the increased assessed value.

    Typically these assessments remain the same each year explains Joe McRaney, who works as a government specialist with North Central Planning and Development District.

    His expertise, especially at budget time, is shared by seven counties including Yalobusha.

    An example, pointed out by McRaney, is that with the rising cost of fuel, lowering the mill rate for rural fire protection is not a viable option. The same scenario is also applicable to the road and bridge funds assessments.

School Levy

    Supervisors are also required to levy taxes to operate school districts in the county. This year, the Water Valley School District requested a 2.73 mill raise – an amount that negated more than half of the original 4.17 mill decrease in the general fund.

    It must be pointed out that this was the first increase the Water Valley School District had requested in three years.

    In Coffeeville, the school district millage rate remained flat with only a .09 mill increase requested.

    “Supervisors have no input in setting school’s millage rate,” McRaney explains.  

    “They are required by law to fund these requests,” McRaney said.

The Reassessment

    “When someone’s property value increased by 16 or 20 percent, there is no way you can reduce the tax levy by that same amount,” McRaney continues.

    Typically reassessments, which are based on market values in a specific area, vary from property to property, according to McRaney. This means that some property owners even received a reduction in their property value asssessment and enjoyed a decrease in their taxes, according to McRaney.

    “The millage on the tax structure combines everything,” McRaney explains. Which means that the tax rate is applied across the board – for the land roll, the personal roll, automobile tags, and mobile homes.

Homestead Exemption

    Further complicating the tax scenario is that of the 12,204 parcels of land that are taxed in the county, 3,693 of the parcel owners receive homestead exemption.

    This equals another tax credit, based on the property’s value. The maximum exemption is $300 for each taxpayer who receives a homestead exemption.This exemption is based on a sliding scale stemming from the value of the property.

    The county is reimbursed $50 for each homestead application from the state – and the difference between the two numbers is substantial. The total amount the county lost is $1,029,287.73 before the reimbursement.

    

An Example

    To equate that to tax dollars for the general levy, we need to examine a $100,000 house as an example.

    According to state law, the house is assessed at 10 percent of the appraised value, which means the  assessed value for $100,000 is $10,000.

    Now, using the 2007-2008 general fund levy, which is 53.37 mills, we find out that this homeowner is assessed $533.70 just for the general fund levy.

    This does not count additional levies (mentioned earlier in the article) or homestead exemption.

The Last Punch

    While a blessing for many, almost one-fourth of the county’s 495 square miles is owned by the federal government. This land is not fully taxable, in fact only around $160,000 in tax money from the federal land goes to the county’s coffers.    

    A portion of this money comes from the P.I.L.T. (payment in lieu of taxes) and the rest from forestry money for counties in which federal land lies.

    Now this money could be in jeopardy as federal lawmakers in Washington D.C. have already cut these appropriations from several bills.

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