Jackson County Assessment Facts, Part 3
This is the third in a series of posts on assessment practices in Jackson County, Missouri. It comes a mere 8 years after the first two posts. (My time in a different role for the Institute, and then at a different organization, explains this time lapse.) Unfortunately for me, and even more so for many Kansas City taxpayers, 2019 was the most critical and controversial reassessment for Jackson County in years. With home prices rising substantially right now, will those issues in Jackson County repeat?
But first, some history. One might have reasonably guessed that the historic underassessment of property (finally corrected, for better or worse, under orders from the state tax commission [STC] in 2019) was a response to the famous judicial-desegregation case tax increases from Judge Russell Clark. After all, the best way around a big property tax hike is to keep assessments low. The tax rate doesn’t matter much if the assessed value is low enough. But Jackson County assessments were low compared to St. Louis prior to Judge Clark’s order in 1987 that doubled the Kansas City school district tax rates.
In 1985, Jackson County had 44 percent of the population of St. Louis City and St. Louis County, but only 32 percent of the residential assessed valuation. That is a significant difference, especially when you consider that the Case-Schiller real estate value index ranked Kansas City’s housing values higher than St. Louis’s, both then and now. That difference in assessed values grew over time. In 2018 (before the STC ordered redo), Jackson County had 54 percent of the population but only 36 percent of the assessed value of St Louis City and County. What to make of this and how it relates to Judge Clark’s order? I make of it that Jackson County was under-assessed from the start of the current system in 1985, and that the judge’s tax increases gave Jackson County politicians, voters, and taxpayers an incentive to keep those assessments low instead of trying to make them more accurate until more than thirty years later.
That matters for a number of reasons. As Kansas City is within multiple counties, if homes in Jackson County are under-assessed, but similarly valued homes in Platte, Clay, or Cass county are properly assessed, then those taxpayers are paying more property taxes to Kansas City than their Jackson County neighbors based on the same municipal tax rate. That’s just one example. There are many taxing districts that affect your property tax bill; some cross county lines and some don’t.
I don’t think it is far-fetched to believe that something along these lines happened. Judge Clark’s tax increases were outrageous (and some were quickly overturned), and Jackson County officials stated they were going to oppose them at the time. Once the income tax aspect of the order was overturned, keeping assessed valuations low would help deal with the property tax increases.
Fast forward to 2019. Jackson County was compelled (properly) to make its assessments more accurate and property assessments jumped. However, one last holdover from the desegregation case is the Kansas City school district’s exemption from the property tax rollback rules. So, when the assessments increased substantially, the school district had no obligation to lower its tax rate. Final result? Very large tax increases for many people. That is not supposed to happen through reassessment, but it did. This is all a very complicated issue, but there is one change that should be made going forward. It is time to remove the Kansas City school district’s rollback exemption, which is turning assessment increases into a tax windfall for Kansas City schools.