Jackson County Assessment Facts, Part 1

Posted on by David Stokes

Is Jackson County property poorly assessed? If so, is it systematically under-assessed, or just inaccurate all the way around? If many properties are under-assessed, resulting in them paying lower taxes than they should have and others paying more, how did that happen? Is it a new problem or an old one? One reasonable hypothesis is that the county did not accurately assess property at market rates during the real estate boom of the previous decade. Anyway, does the data back up that hypothesis?

Here are some interesting numbers comparing Jackson County assessments to Saint Louis County. When I began this research, I thought the reason for the current assessment controversy would point to not increasing the values as much as they could have during the real estate boom that ended in 2007. That, of course, is not automatically a bad thing, but the point here is to discuss assessment accuracy, not tax levels. The problem, remember, in Saint Louis during the 2000 – 2007 period was more about tax entities not rolling back their tax rates than assessment increases. (Aside from the awful and illegal “drive-by” assessments of 2001, which was indeed an assessment issue.)

From 2000 to 2011, Jackson County residential assessments went up 59.6 percent. Saint Louis County, which we all know was pretty aggressive in reassessment, went up 59.7 percent. But from 2000 to the peak year of 2008, Saint Louis County went up 79.1 percent; Jackson County went up less at 68.8 percent. The difference is that Jackson County assessments decreased less from 2008 to 2011 as the real estate market declined. (Remember, the decline in real estate values began in 2007 but was not reflected in Missouri assessments until 2009.) Those assessment totals are very close to standard real estate indexes for the two areas, by the way, which is strong evidence in both counties’ favor. The key takeaway is that Jackson County was almost as aggressive as Saint Louis County in increasing assessments during the boom, so why is Jackson County so under-assessed now? (If it indeed is, though I do believe the many reports of crazy under-assessment in Jackson County.)

Going back further, from 1985 to 2011, Jackson County residential assessment increased 255 percent while Saint Louis County increased 234 percent. So, if Jackson County is so under-assessed, it has not come from a lack of reassessment increases, either during the go-go years or the total period. So what is the issue, if indeed there is one? I’ll look at it another way in Part 2.

Don’t Bash Tax Cuts, Then Cite Freightquote And Applebee’s As Missouri ‘Wins’

Posted on by Patrick Ishmael

Last week, Kansas City Week in Review had a fascinating segment about the economics and politics of Missouri Gov. Jay Nixon’s tax cut veto. Among other things, the panelists talked a little bit about the “victories” each side of the Kansas-Missouri economic border war had experienced in recent years. Kansas City Star reporter Kevin Collison specifically cited two Missouri “wins” — Freightquote and Applebee’s.

Well, you know, Missouri has gotten a few major wins, too. Freightquote, a major firm, is going to be moving into their new space on the Missouri side of the border. There has certainly been a lot — Applebee’s came over here. Kansas has had an edge…

As we’ve noted here before, both Freightquote ($60-plus million) and Applebee’s ($10-plus million) were promised massive tax incentive packages to get them to move into Missouri. That’s remarkable for one big reason: For all the hand-wringing about how disastrous tax cuts would be, it is ironic and hilarious that the very “wins” Collison and others cite in support of the status quo are themselves . . . extremely targeted tax cuts. What else would you call reducing the tax burden for a few businesses?

A better policy, based in the literature, would be to reduce taxes for everyone. Why Collison and others would support special tax breaks for the favored few, and then deny tax relief for millions of others, is strange, unfortunate, and wrong.

Closed Open Meetings

Posted on by Patrick Tuohey

The Kansas City International Airport (KCI/MCI) terminal advisory group is off to a rocky start.

First, its charge of being an ‘adult discussion’ about building a new $1.5 billion terminal at MCI seems hollow, as the Kansas City mayor and City Council already have urged the Aviation Department to go ahead with its plans anyway.

Second, the first meeting, held two weeks ago at Union Station, was marred when Kansas City police escorted opponents of the plan off the premises. Meanwhile, just a few feet away, group leader Bob Berkebile was telling participants that the meeting was to be open to the public regardless of their view on the matter. Oops.

Now, according to the Kansas City Star, the task force is to meet again on Tuesday, and again in the Stillwell Room at Union Station. Union Station officials issued a statement saying it is a private space — despite receiving millions of dollars in taxpayer subsidies — and so, they say, Union Station officials can set special rules about whether the public can enter the building and under what circumstances . . . even when there’s literally a “public meeting” taking place within its walls.

If the city is serious about listening to the task force, it ought to halt the Aviation Department from spending money on a new terminal pending a committee conclusion. If the task force is serious about its job of involving various views, it ought to seek and receive public assurances from Union Station that it will respect the rights of the public to attend public meetings.

Milkshakes and Handshakes: Brownback Signs Another Kansas Tax Cut

Posted on by Patrick Ishmael

In Missouri, governors veto tax cuts. In Kansas, apparently governors sign tax cuts… annually. (Emphasis mine)

TOPEKA, Kan. (AP) — Proclaiming Kansas “open for business,” Gov. Sam Brownback on Thursday signed into law a measure that makes additional income tax cuts over the next five years while generating new revenue through higher sales taxes and other adjustments. …

Conservative Republicans pushed the initial cuts through last year while acknowledging that the plan was too aggressive and would need refinement in 2013. Those changes in the bill signed by Brownback on Thursday include decreasing income tax deductions over time as overall rates drop, as well as giving a less generous standard deduction for married couples and single parents.

The top in personal income tax rate [sic] will drop to 3.9 percent for 2018, down from 4.9 percent, and promises future rate reductions in years when revenues grow more than 2 percent.

Notably, Kansas’s lowest income tax bracket will also drop, from 3 percent to 2.3 percent. And taken together with last year’s cuts, Kansas’s new cuts put the state on track to return nearly $4 billion to Kansans over the next five years. Huge.

There was a great deal of talk last week about how “progress” had been made to end the Kansas-Missouri economic border war, but the “progress” appears to boil down to Kansas deciding that it will drink Missouri’s milkshake, and Missouri hoping for a handshake in return. That’s a bad, bad deal, and that deal will only get worse the longer Missouri does nothing to lighten the state’s tax load on its families and businesses.

Real Estate 101

Posted on by Kacie Barnes (Galbraith)

If you were a real estate agent with nearly 8,000 properties for sale, what would you do?

You might be thinking, “Well, duh. I would sell them. Cha-ching!” Seems really simple, but the St. Louis Land Reutilization Authority (LRA) does not appear to have that same mindset.

When I met with Michael Allen, founder of the Preservation Research Office (a private historic preservation and architectural research organization) he remarked at how little advertising the LRA does for its properties. Compared to real estate agencies, LRA advertisement is practically non-existent.

Shouldn’t the LRA function in the same way as real estate agents if its goal is to sell property?

According to Janet McAfee Real Estate’s Marketing Director Chuck Roper, the Multiple Listing Service (MLS) is the primary source of real estate listing information for approved brokers in Saint Louis. LRA-owned properties, however, are very rarely listed in the MLS.

Besides the MLS, there are a variety of other ways to make information available about properties. Newspaper and magazine ads, online ads, listings on real estate websites, social media, direct mail…you get the picture. The LRA does none of these things. You could drive by an LRA property that is for sale and have absolutely no idea. Two LRA staff members gave me different replies about whether they post “For Sale” signs. One said they are put up on “selected properties.” But the other simply said, “Nope, we don’t do that.”

With the LRA, the onus is all on you, the potential buyer, to figure out the entire process to purchase a home. You have to know that the LRA exists, what it does, find its list of properties, set up your own inspection of the house, and then begin the application process.

Every year that goes by, the city pays more and more to maintain these properties. They sit vacant, collecting no property tax. With 8,000 vacant properties, the LRA cannot afford to have the attitude that these properties can sell themselves. Any real estate agent will tell you that couldn’t be further from the truth.

Why A Single High School Equivalency Exam?

Posted on by James V. Shuls

The Missouri Department of Elementary and Secondary Education (DESE) announced on Wednesday that it selected a new test to replace the GED, the HiSET.

The cost of the new test will be $95, which includes a $60 registration fee for the cost of the test and $7 for each of the five test sections to cover the costs of administering the test. Because examinees do not have to complete the entire test at one time, they can take the test in sections.

The $60 registration fee will allow individuals to test three times during a 12-month period. Examinees who do not pass the test the first time can retake the entire test or any of the test sections two more times within the 12-month period by paying an additional $7-per-section fee.

The change was prompted because

. . . the American Council on Education GED Testing Services (GEDTS) and Pearson announced plans to create a for-profit organization to develop a new computer-based high school equivalency test to replace the current GED test in January 2014. Shortly after the announcement, GEDTS revealed that the price of its new test would be $120, not including any state administrative fees.

Changes to the GED have finally prompted others to enter the market for high school equivalency tests.

I commend DESE’s attempt to keep the cost low for test takers. What puzzles me is why they chose only one exam. It would be a much better system if multiple providers of high school equivalency tests were recognized and individuals were given the ability to choose among them. Some students may wish to pay to take the GED because it is so widely recognized.

Having multiple tests would give individuals who have not graduated from high school more opportunities to better their lives. Instead of providing options, we have simply moved from one monopoly to another.

Missouri House Bill 253…Vetoed! (Part III)

Posted on by Michael Rathbone

Now all of a sudden Missouri Gov. Jay Nixon is concerned about certain businesses getting preferential treatment in the tax code. Specifically, in his veto of Missouri House Bill 253, Nixon said that it “…provides preferential treatment to select Missouri businesses, while discriminating against the majority of others based solely on the paperwork the businesses filed to organize.”

First, a quibble. Nixon says this “preferential treatment” will be discriminating against the majority of businesses in the state. That left me confused. How did the governor reach that conclusion? According to figures from the Missouri Department of Revenue, the state has 128,126 pass-through entities (including S-Corps). The total number of C-Corps is 68,185. By most rules of math that I know, 128,126 is a larger number than 68,185, so I can’t possibly see the governor’s point here.

Does HB 253 create preferential treatment for one type of business, as the governor fears? Eh, not really. Both the pass-through entity and corporate income tax cut are nearly the same amount. It is true that the corporate income tax cut only goes into effect if certain revenue targets are met, and it will take 10 years to be fully enacted instead of the five years for the business tax deduction. In the long run, however, the amount of the tax cut will be nearly identical. If the governor has evidence that this short-term difference will negatively impact Missouri businesses, he should present it.

It also is humorous that the governor is criticizing companies getting preferential treatment through the tax code. This is the same governor who extolled the benefits of the Mamtek deal, which was awarded $7.6 million in Missouri Quality Jobs tax credits and $6.8 million in Missouri BUILD tax credits. Economic development tax credits, by their very nature, give preferential treatment in the tax code. I wonder what brought on the change in outlook. The governor has voiced support for tax credit reform, but he hasn’t been hesitant to take credit for the supposed “benefits” that they create.

HB 253 is by no means a perfect bill, but it is a step in the right direction. Nixon has listed his reasons for vetoing the bill and hopefully I have conveyed how those fears are either imagined or overstated. Hopefully some kind of tax reform is enacted. Missouri cannot afford to wait too long.

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