Missouri’s property tax system works best when the assessments are accurate, the tax base is wide, and the rates are low. That combination will help grow Missouri’s economy for everyone while properly funding the necessary functions of local government. However, a radical change in the system is being put before voters in Webster, Christian, Lawrence, and Dade counties in April. These four counties will vote on whether to prohibit any property tax increases due to reassessments. Current law requires local governments to roll back tax rates as assessments increase, but we all know that taxes still go up, sometimes substantially.

At the Show-Me Institute, we support low taxes, and I am well-aware of how tempting this will be to voters. But using market valuations in reassessment to set tax levels is a good system. While our property tax system needs reforms, eliminating any and all tax increases from reassessments will make Missouri more dependent on other taxes that hurt our economy far more than property taxes do. Hate them as much as you wish, but property taxes indisputably harm economic growth less than other taxes do.

These property tax limitations would reduce the ability of school districts to fund themselves and would make them more dependent on state aid. Consider the following: school districts in St. Louis County regularly receive at least 80% of their funding from local sources, primarily property taxes, and some are over 90%. It is nowhere near that level in Southwest Missouri. Nixa school district in Christian County is only 54% locally funded, while Marshfield school district in Webster is only 46% locally funded. Even Springfield school district, the largest school district in Greene County, where no property taxes changes are proposed, is only 58% locally funded. These changes would make school districts in these counties more dependent on state aid, not less. Again, I’m aware that many voters may view that as a benefit, but it is anything but.

Numerous other harmful effects would come from diluting the market forces (in the form of assessments based on market values) that form the basis of property taxation. California provides us with an example of the harms of these types of property tax caps with its famous Proposition 13, passed in 1978, which dramatically limited increases in property assessments and taxes. Proposition 13 certainly had its intended effect of lowering property taxes for California homeowners. However, it also reduced mobility, significantly increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties receiving similar services. These negative consequences are exactly what these four counties would experience over the long run.

There are also significant constitutional concerns with this legislation. Missouri Constitution Chapter X, Section 3 states that “taxes . . . shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” So, consider the issue of the Logan-Rogersville R-VIII school district. This school district serves families in three counties. If voters approve these tax changes, the property tax system in one of those three counties would remain unchanged (Greene), while in the other two (Webster and Christian) it would be illegal to have a tax increase from reassessment. It would certainly seem unconstitutional for property owners within the same taxing district who own the same type of property (single-family homes) to face different tax and assessment systems for the same services.

We need property tax reform in Missouri, but this total limitation is too severe. If enacted, the property tax proposals before the voters in these four fast-growing counties would make the region’s overall tax system worse, not better. I hope voters will look past the easy appeal of a tax limit to think about the long-term harms.

The post The Wrong Way to Fix Property Taxes appeared first on Show-Me Institute.

A version of this commentary appeared in the St. Louis Business Journal.

Missouri’s property tax system works best when the assessments are accurate, the tax base is wide, and the rates are low. That combination will help grow Missouri’s economy for everyone while properly funding the necessary functions of local government. However, a radical change in the system is being put before voters in St. Charles, Jefferson, and Franklin counties in April. These three counties will vote on whether to prohibit any property tax increases due to reassessments. Current law requires local governments to roll back tax rates as assessments increase, but we all know that taxes still go up, sometimes substantially.

This change would also reduce the ability of school districts to fund themselves and would make them more dependent on state aid. Consider the following: Parkway school district in St. Louis County is 89% funded by local taxes. However, Fox school district in Jefferson County is only 51% locally funded, while Wentzville school district in St. Charles is only 64% locally funded, and St. Clair school district in Franklin is just 45% locally funded. These changes would make school districts in these three counties more dependent on state aid, not less. Again, I’m aware that many voters may view that as a benefit, but it is anything but.

At the Show-Me Institute, we support low taxes, and I am well-aware of how tempting this will be to voters. But using market valuations in reassessment to set tax levels is a good system. While our property tax system needs reforms, eliminating any and all tax increases from reassessments will make Missouri more dependent on other taxes that hurt our economy far more than property taxes do. Hate them as much as you wish, but property taxes indisputably harm economic growth less than other taxes do.

Numerous other harmful effects would come from diluting the market forces (in the form of assessments based on market values) that form the basis of property taxation. California provides us with an example of the harms of these types of property tax caps with its famous Proposition 13, passed in 1978, which dramatically limited increases in property assessments and taxes. Proposition 13 certainly had its intended effect of lowering property taxes for California homeowners. However, it also reduced mobility, significantly increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties receiving similar services. These negative consequences are exactly what St. Charles, Jefferson, and Franklin counties would experience over the long run.

There are also significant constitutional concerns with this legislation. Missouri Constitution Chapter X, Section 3 states that “taxes . . . shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” So, consider the issue of the Meramec Valley R-III school district. This school district serves families in three counties. If voters approve these tax changes, the property tax system in one of those three counties would remain unchanged (St. Louis), while in the other two (Jefferson and Franklin) it would be illegal to have a tax increase from reassessment. It would certainly seem unconstitutional for property owners within the same taxing district who own the same type of property (single-family homes) to face different tax and assessment systems for the same services.

We need property tax reform in Missouri, but this total limitation is too severe. If enacted, the property tax proposals before the voters in these three fast-growing counties would make the region’s overall tax system worse, not better. I hope voters will look past the easy appeal of a tax limit to think about the long-term harms.

The post The Wrong Way to Fix Property Taxes appeared first on Show-Me Institute.

The state tax commission (STC) stepped into the below-market mess and required Platte County to increase its assessed valuations to a more accurate level. The county and the STC agreed to an across the board 6.8% increase on residential property in Platte County. This agreement is exciting to me, and yes, I realize it is weird to be excited by something like that. But I have been calling for years for counties to stop individually assessing every property and to do it using an average-based system. As I explained in my recent testimony before a House committee on property taxes:

Missouri should eliminate the practice of sending thousands of assessors out into our neighborhoods every other year to assess residential property. In the current system, each county assessor uses sale prices of comparable homes or other, less accurate, methods to assess every home in the county. The county’s average rate of increase—which is used for tax rate–setting purposes—is determined only after all of the homes are reassessed. I believe the process should be reversed.

. . . This article could serve as a starting point for the Missouri State Tax Commission as it worked with county assessors, local realtors, and online real estate resources to determine average county increases (or decreases) in valuation for each reassessment cycle.

Each residential, commercial, or agricultural property in a county could then be adjusted based on the county’s average for that particular class or subclass of property. The various tax rates could then be adjusted based on that average, and the vast majority of homeowners would be subject to the same resulting increase (or decrease) in their overall property taxes. This would eliminate wide discrepancies from house to house that undermine faith in the current system and sometimes lead to high tax increases for some homeowners even when the overall assessment increases are modest.

The final part is really the key. If everyone sees the same residential increase, then everyone’s tax rates can be rolled back the same amount as dictated by the Hancock Amendment, and everyone will more or less see the same, small property tax increase.

There is one potential flaw in the plan, which Platte County may be experiencing this year. If taxing districts find ways around rolling back their tax rates, then the idea doesn’t work. And from what I have been told by knowledgeable sources, school districts have started to aggressively move funding from their general service funds to their debt service funds. The latter is exempt from rate rollback requirements. I have been told that two school districts in Platte County are going to do this. (I hope that’s wrong.) I know of one school district in Lebanon that was planning to do it but instead “compromised” and moved most of the general fund rollback to the debt service fund but did allow a very small overall decrease in the total fund.

These are just a few specific examples, but I hear about it happening all over Missouri. However much ignoring the tax rate rollback by raising the debt service rate may be happening, it is wrong. School districts (or any government bodies) should not do this, and state government needs to amend the laws to make sure it can’t happen going forward.

The post Platte County Agreement Could Be a Model for Missouri appeared first on Show-Me Institute.

The new state law creates three types of counties with different rules for property taxes and assessments: five percent counties (75 total counties), zero percent counties (22), and unaffected counties (17). For more details on the differences among these counties, go here.

There are many reasons why these substantial changes to the system are bad. The first one, which I wrote about previously, is that property taxes are generally the least harmful tax for economic growth. So, if you want to create a tax system that encourages greater economic opportunity for all Missourians, the property tax is the last tax you should focus on.

This post is about the absurdity of putting Jackson County in the unaffected category. Jackson County is home to most of Kansas City and is the second-largest county in Missouri. It has had by far the worst administration of assessment and tax collection in recent years of any Missouri county. This is like a patient going to the doctor with a bad left knee and the hospital deciding to amputate their right arm. You made everything worse but didn’t address the main problem that started it all.

The solution to Jackson County’s issues is not to simply make it a zero percent or five percent county. That would cause serious problems over time, which we will eventually see in the other zero and five percent counties in Missouri if the law is upheld in court. What you need in Jackson County is first and foremost better administration. If 113 counties can generally make the assessment and tax process work without being sued by the state tax commission and one cannot, then the problem is with the one county, not with the overall process. Electing the Jackson County Assessor (instead of the assessor being appointed), which will be voted on soon, would be a good start. From a tax bill perspective, ending the rate rollback exemption for the Kansas City 33 School District is a vital change. The main reason bills increase so much in that part of Kansas City is because that district does not have to roll rates back at all, unlike every other taxing body in Missouri. Major reforms were needed in Jackson County, but instead in the special session we got bad legislation that did nothing for the taxpayers there. That’s not a win for anyone.

Future posts will discuss the potential constitutional problems with this bill, the harmful effects of favoring current homeowners over future homeowners, and a discussion of Charles Tiebout and his theories. For more information, please see my testimony from the special session, these policy studies on this issue of property taxes and assessments, and related commentaries.

The post Why the New Property Tax Rules in Missouri Are Bad, Part 2 appeared first on Show-Me Institute.

On June 10, 2025, David Stokes, director of municipal policy at the Show-Me Institute, testified before the Missouri House Economic Development Committee to express concerns about the property tax provisions included in a special session bill.

Stokes warned that the proposed property tax caps, added on the Senate floor without a public hearing, are constitutionally questionable, economically harmful, and likely to trigger long-term unintended consequences. He argued that freezing or severely limiting property taxes in certain counties will increase pressure on other revenue sources, such as sales taxes and state income taxes, and lead to greater use of tax districts like TDDs and CIDs. He also raised concerns about fairness and uniformity, noting that identical homes could be taxed at dramatically different rates simply based on how long someone has lived there.

Read his submitted testimony here: https://bit.ly/4kXtdII
See the recording of the full hearing here: https://house.mo.gov/MediaCenter.aspx

The post Testimony of David Stokes Before the Missouri House Economic Development Committee June 10, 2025 appeared first on Show-Me Institute.

Many homeowners in Jackson County had seen their reassessments increase by more than fifteen percent, so this order by the STC was no small thing. Because of the major impacts on tax revenues for various local governments, the county sued the STC to stop the order. The judge ruled the other day, and the county lost.

The county will likely appeal this ruling, but the facts are pretty clear here. The Jackson County Assessor’s Office did not adhere to the requirements of the process, and property owners were harmed by it. I don’t see any way the appeals court changes this ruling (I am not a lawyer), unless the judges decide that the harm to the taxing districts overrides the rights of the property owners.

I have been writing about the history and issues of property reassessments in Jackson County for a long time. One hundred and thirteen counties can get their reassessments done correctly, and one can’t, so the problem is more with the management in Jackson County itself than with the reassessment process overall. Better management of the Jackson County Assessor’s Office is the first needed change. Beyond that, some policy changes are needed for Jackson County, including:

• Electing the assessor (Jackson is the only county in the state with an appointed assessor); and
• Removing the tax rate rollback exemption for the Kansas City 33 School District.

Jackson County may have been underassessed overall, but that doesn’t excuse the county from complying with the reassessment process laws. If the county appeals, I hope it loses again, and quickly.

The post Jackson County Property Tax Assessment Update appeared first on Show-Me Institute.

It’s an obscure state law that every article about government and politics in Kansas City has to include a quote from Harry Truman. As I follow the controversy over the reassessment process in Jackson County, I flash back to my own time working for St. Louis County government during the 2001 “drive-by assessment” scandal. That, in turn, reminds me of this quote from our 33rd President: “The only thing new in the world is the history you do not know.”

In the Spring of 2001, the St. Louis County Assessor had a problem. An enormous number of homes were coming back with a reassessment appraisal increase greater than 17 percent, meaning that a physical (in-person) inspection would be required. The problem was that the assessor had neither the time, the staff, nor (apparently) the desire to schedule in-person inspections of tens of thousands of properties. The solution? Quietly redefine what “physical inspection” meant. The assessor’s office plotted tens of thousands of properties with large valuation increases on maps (probably using Mapquest; Google maps hadn’t been designed yet) and sent assessors off driving around the county. Driving past a house and looking at it was considered a physical inspection. Problem solved, right?

Wrong. Assessments ballooned throughout the county. Taxpayers were livid. They called their council members screaming. A few of them, including my soon-to-be boss, started to investigate. They asked for the filed inspection reports. Once it became clear that individual assessors had somehow been doing several hundred “physical inspections” per day, the scheme was exposed and the scandal exploded.

Huge valuation increases. A poorly managed assessor’s office. Angry taxpayers. Politicians trading blame. Does this sound familiar to residents of Jackson County?

If you look at the property valuations in Jackson County from a decade ago and compare them to valuations in St. Louis, it is hard to dispute that Jackson County property, overall, was underassessed. That is the only partial defense I’ll give to the Jackson County executive and assessor. But for multiple cycles now, especially in 2019 and 2023, the assessor’s office has done a shockingly poor job of managing the reassessment and adhering to the rules of the process. Nobody likes seeing their valuations go up at tax time, but 113 other counties in Missouri seem to be able to reassess property without the process failures that have plagued Jackson County. Taxpayers in Jackson County have every right to be angry.

Taxpayers in St. Louis were angry in 2001, too. Almost immediately, the assessor and revenue director were fired. While it took a few more years, that demand for reforms to the reassessment process led to real change locally and statewide. The law was clarified to define a physical inspection as just that, and the trigger point for an inspection (with homeowner consent, of course) was reduced to the present 15 percent increase in value. Requirements for tax-rate rollbacks by governments were enhanced. Eventually, the St. Louis County charter was changed to make the assessor an elected position. While the present process is far from perfect in the rest of Missouri, the changes that emerged from that 2001 scandal have benefited the entire state.

Which brings us back to Jackson County. Voters and taxpayers need to demand reform. There is already an effort to change the law to elect the assessor, which seems like an obvious improvement. Another change that is needed is to end the tax-rate rollback exemption for the Kansas City School District. Despite its substantial increase in assessed values in 2023 (which is still being contested in court), the district voted once again to keep its tax rate the same. Every other taxing body in Missouri has to roll its tax rate back to at least partially offset assessment increases, but the Kansas City School District gets to enjoy its windfall on the backs of taxpayers. Finally, Jackson County could consider using variable property tax rates, as St. Louis County does, to allow for greater ability to adjust rates by property type in response to future changes.

Other changes would be easier and don’t require amending the law. Why the Jackson County assessor still has her job after all this mismanagement is a mystery to me.

The 2001 reassessment disaster in St. Louis led to improvements to the overall process that are still in place today, at least everywhere but in Jackson County. Hopefully, the ongoing controversy over the 2023 reassessments in Jackson County can lead to similar, lasting reforms. Jackson County taxpayers deserve nothing less.

The post Jackson County Assessment Disputes Will (Hopefully) Lead to Real Change This Time appeared first on Show-Me Institute.

Like these other ongoing sagas, Jackson County’s assessment practices have been getting worse, though they were never great to being with. As bad as the situation was in 2019 and earlier, in 2023 it hit bottom.

The Missouri State Tax Commission (STC) has taken the unprecedented step of ordering Jackson County to essentially ditch the 2023 reassessment and move every change in assessed valuation (AV) that was over a 15 percent increase down to 15 percent. The total AV increase for Jackson County was almost 25 percent, which is enormous. Obviously, if the total increase was 25 percent, a substantial number of individual properties had to go up more than that 15 percent number. (The 15 percent level is key because that is where additional taxpayer notification laws come into play.)

This change lowers the assessed valuation for tens of thousands of properties and involves hundreds of millions in AV. According to Jackson County, the total amount of tax revenue disputed here for various local governments is $117 million. (The AV would be significantly higher than the tax revenues.)

Jackson County has been underassessed for decades. Jackson County has been attempting to correct that in recent years (under direction from the STC), and that is a good thing. More accurate assessments don’t have to lead to higher taxes, except in the Kansas City 33 school district, but’s that another issue. However, Jackson County officials seem to think that their attempts to correct prior errors somehow exempt them from following the current laws. As a county official admits in the just-filed lawsuit against the STC order :

This filing is not just about the legalities—it’s about safeguarding the resources that support our schools, public safety and community programs. [emphasis mine]

Fortunately for taxpayers, good intent does not exempt you from following the laws in reassessment. As the STC order states, the Jackson County assessors made all sorts of mistakes in 2023:

9. The Commission finds and determines that in conducting its biennial reassessment for 2023, Jackson County assessing officials failed to give proper notice to property owners and failed to perform physical inspections as required by Section 137.115 RSMo. where the assessed valuation of residential real property increased by more than fifteen percent since the last assessment, resulting in mistaken or erroneous assessments and taxes that were mistakenly or erroneously levied or paid in 2023 . . .

The STC order goes into more detail on a number of failures by the assessor’s office.

The order may well impose a major burden on taxing agencies in Jackson County that must now redo their valuations and property tax rates. But just because it’s a major burden doesn’t mean taxpayers should have to accept having their rights violated.

I hope the Jackson County lawsuit fails and the STC order is upheld. The county assessor should not be allowed to ignore the very clear rules—rules that every other county assessor had managed to follow in recent years—that protect the rights of property owners. This may be a mess in Jackson County, but it is a mess of the county’s own creation.

The post Jackson County Assessment Facts, Part Four appeared first on Show-Me Institute.

Well, it does. Stick with me on this.

Last year, Missouri’s budget included an appropriation increasing the minimum Missouri starting teacher salary to $38,000, funded primarily by state tax dollars and not local school taxes. This year, officials are proposing legislation to raise it even higher, with the same primary funding from the state. Where do you think those state tax dollars are going to come from, and where is this new fund to increase starting teacher salaries going to be spent?

It is more difficult for rural school districts to fund themselves with property taxes because of the high percentage of agricultural property in those areas. (I’m not saying it’s impossible, just more difficult.) Whether you like it or not, farmland is underassessed in Missouri(most farmers presumably like it). It is hard to raise the revenue necessary for a small school district with a tax base starting out so low. Since tax rates are the same for various classes of property (except in St. Louis County), setting a rate high enough to raise enough funds from farmland would mean incredibly high taxes on the more accurately assessed homes and businesses in those communities.

Urban and suburban school districts, for the most part, aren’t starting their teachers out at $25,000. At Indeed.com, every job opening I saw for City of St. Louis public schools started at $46,000. In this blog post, James Shuls goes into more detail on this discrepancy. (James goes into even further detail on the problems of funding rural school districts here.)

Where do the taxes that fund much of Missouri government and, by obvious extension, this new state teacher fund, come from? As this map shows, our larger urban counties produce an outsized percentage of Missouri’s economic activities. St. Louis County alone produces over 25% of the state’s GDP. State income and sales tax collections are going to largely align with those totals.

If you were a voter in rural Missouri, and you were told that you could vote for a local tax increase or have the state pay for salary increases for your school district, what would you pick? We would all pick the latter.

This issue will play out similarly to the sheriff salary issue of about 15 years ago. There, the state decided to increase sheriff’s deputy salaries by adding a fee to process service around the state. The problem was that St. Louis County, which has a county police department and a sheriff’s department that is not a law enforcement agency (trust me on this, I used to be a county sheriff), was ineligible for the funds even though it generated more fees from process service than any other county in the state. Yes, lawsuits were filed over it, but they failed (unfortunately).

I like low taxes. If rural Missourians want low taxes, I’m all for it. But we should not establish a system where rural teacher salaries are paid for (mostly) by taxpayers in urban and suburban areas. The combination of low assessed farm values and a desire for low tax rates in rural areas should not be addressed by taking money from urban areas. I recall signs along I-70 years ago on farm fences objecting to using state funds for sports stadiums in St. Louis. Those signs were correct then, and they still are now, but it works both ways.

The post The Connection Between Farmland Assessment and Teacher Pay Increases appeared first on Show-Me Institute.

The post Jefferson County Property Tax Freeze appeared first on Show-Me Institute.

There has been much discussion in this newspaper and elsewhere about how the Mehlville School District reacted to the substantial increase in assessed valuations that came about after voters had approved a property tax increase for the district.

Here are the facts: In April, voters approved the tax increase of up to 31 cents per $100 of assessed valuation. The district’s assessed valuation then went up 18 percent, much more than in other reassessments. Then, in September, the board voted to raise the tax rate by 29 cents, which was less than what voters had authorized—but only barely. According to reports, applying the 29-cent tax rate hike to the higher assessed valuations will lead to at least $5 million more in tax revenues than originally expected.

These machinations may not violate the law or the letter of the Hancock Amendment, but they certainly break the spirit of the amendment and, more importantly, the trust of the residents. The Mehlville school board should have approved a tax rate that would have raised the revenues expected by the voter approved increase. Instead, they have double-dipped on both assessment and rate increases, and taxpayers are feeling the pain of it.

The post Mehlville School District Reaps Windfall at Public Expense appeared first on Show-Me Institute.

I am going to take these one at a time because, frankly, this stuff is so hot I doubt you all can take any more than that. Let’s start with one of the most pressing issues where the voters are actually in charge.

As a relic of Kansas City’s famous school desegregation case, Kansas City 33 School District’s (KCSD) tax rate is managed by the constitution, not statute. Under the Missouri Constitution, article 10, section 11(g), KCSD is exempt from property tax rollbacks when assessments increase, leading to dramatic tax hikes on Kansas City residents in recent years. Trust me when I say that the KCSD has reveled in this fact and ostentatiously kept rates high despite enormous assessment increases during the past three (at least) reassessment cycles.

Here is the exact language:

Operating levy for Kansas City school district may be set by school board. — The school board of any school district whose operating levy for school purposes for the 1995 tax year was established pursuant to a federal court order may establish the operating levy for school purposes for the district at a rate that is lower than the court-ordered rate for the 1995 tax year.  The rate so established may be changed from year to year by the school board of the district.  Approval by a majority of the voters of the district voting thereon shall be required for any operating levy for school purposes equal to or greater than the rate established by court order for the 1995 tax year.  The authority granted in this section shall apply to any successor school district or successor school districts of such school district.

Voters need to repeal this section entirely. That means we need a ballot measure approved either by initiative petition or by the legislature allowing us to vote on a repeal. By repealing this constitutional provision, KCSD’s tax rate would be governed by the same rules as all other taxing jurisdictions in Missouri. That’s all. As assessments increase, rates would roll back at least in part to offset the tax hikes. Voters in the district could, of course, raise the rate if they chose to.

We should care about property tax rates for everyone, not just wealthy suburbanites. The residents of KCSD don’t deserve these constant tax increases. This provision may have been useful a while ago when the desegregation case was ending, but it is no longer needed.

The post One Way to Actually Do Something about Kansas City Property Taxes appeared first on Show-Me Institute.

• Why we need to empower the auditor’s office
• Medicaid eligibility problems
• Missouri’s property tax assessment woes
• An update to MOSchoolRankings.org
• Committing to innovation in education

Click here to find the newsletter.

The post Show-Me Institute’s October 2023 Newsletter appeared first on Show-Me Institute.

Is it Johnny-come-lately political theater? Is it a principled beef against higher taxes on behalf of citizens? The court will decide!

Blue Springs will join one of its neighbors [Independence] and become the third city suing Jackson County over property tax assessments. . . .

“The mayor and City Council are authorizing legal action to ensure the residents of Blue Springs receive a fair and consistent process for the assessment of real property in compliance with state law,” the City Council said in a statement Thursday. . . .

Last month, Auditor Scott Fitzpatrick said his office’s whistleblower hotline has received complaints about significantly higher property assessments, not being able to get through the phone line, and software company Tyler Technology making decisions it might not be qualified to make.

The lawsuits by the cities are in addition to the class action lawsuit filed privately by residents on similar issues, asserting (in short) failures of notice and process by the county. For example, the Lee’s Summit suit asserts that the state’s requirement that a reassessment be the result of a physical inspection was not met for this year’s reassessment, and the Independence suit asserts that the county failed to meet a variety of deadlines, among other statutory violations.

Whether anything comes of this stack of lawsuits remains to be seen, but the fact remains that property tax reform should be a priority for legislators and county leaders in 2024, so that future reassessments will be predictable and reasonable for Missourians statewide. As for Kansas City, my colleague David Stokes would remind policymakers that the constitutional exemption that allows the Kansas City public school district to not roll its tax rate back as property assessments increase is a major issue that should be grappled with sooner, not later.

The post And Then There Were Three: Blue Springs Joins Jackson County Property Tax Lawsuit Party appeared first on Show-Me Institute.

Earlier this year, Missouri homeowners received their reassessment notices on the value of their property. For many homeowners, the new values were quite a shock. In Jackson County, for example, the average assessment increase was 30 percent.

Missouri’s Hancock Amendment is supposed to require tax rate rollbacks as assessed values increase. Reassessment is not supposed to be a tax increase. However, the high inflation of last year allows local governments to roll back rates far less than usual, if at all. Columbia announced it was keeping its city tax rate exactly the same, despite an eight-percent average valuation increase in Boone County. Don’t let your county or other local government do the same.

In September, counties throughout Missouri are setting their tax rates for 2023. Many of them are seeing large increases in the assessed valuations within their boundaries. Missouri taxpayers need to demand that their counties—and other taxing districts within certain charter counties—roll back rates to offset the otherwise large property tax hikes people will see later this year. Yes, this means local governments should roll back rates even more than is required by Hancock.

Large increases in assessed valuations don’t have to translate to large tax increases, but they will if local officials keep their tax rates the same or lower them by the bare minimum required. High inflation shouldn’t be an excuse to hammer taxpayers with large tax hikes. Taxpayers deserve—and should demand—better treatment from their county officials and other local governments.

The post Taxpayers should demand larger rollbacks than Hancock Amendment requires appeared first on Show-Me Institute.

The post St. Charles County Bill 5221 / Property Tax Rate Freeze for Senior Citizens appeared first on Show-Me Institute.

When you freeze assessments (or implement a similar plan), you create distortions in the system that have their own economic consequences. For example, people not taking a job because it would require moving, and moving would result in higher property taxes on a new home. The best way to deal with the problem of trying to reduce tax increases on property owners without creating harmful market distortions is through tax rates. That is what the Hancock Amendment has done with some success over the years.

To start the discussion, If there is one number I would suggest changing, it is the maximum five percent inflation adjustment. That number could be lowered to, perhaps, three percent, to allow for local governments to still address inflation at least in part. Yes, during this period of recent high inflation, lowering the number from five to three percent could affect the bottom lines of taxing agencies (by limiting that portion of their tax rate calculation to below inflation levels), but my interest has never been ensuring that taxing agencies get as much money as they can. My interest is in ensuring that we have a property tax system that funds local government while encouraging economic growth.

Don’t believe this constant canard that we aren’t funding our school districts, cities, etc. Local governments have more money than they know what to do with right now thanks to the various federal stimulus programs and assessment increases. They can all live with a lower inflationary adjustment in their annual rate-setting process just fine this year. If they have to make some budget adjustments, then so be it.

Another thing we should do in the next few years is phase out the personal property tax. Property taxes work best when the thing being taxed is immobile. That means taxing land and buildings, but not taxing cars, boats, and livestock. (Yes, livestock really is taxed.) Missouri taxes personal property more than most other states. Moving property taxes in a revenue-neutral way more toward land and buildings and away from mobile items like cars will create a more stable tax base. Yes, it would shrink the tax base some, which I am generally against, but in this case I think there is strong evidence that it would be a beneficial change.

Next up, what are some of the bigger, more complicated changes we can make to our property tax and assessment system?

The post So, What Exactly Should Missouri Do About Property Taxes and Assessments? Part Two appeared first on Show-Me Institute.

Wanting to do something to address higher property assessments and taxes should not mean doing the wrong thing, though, and doing the wrong thing is where we are headed. Giving one population group a tax or assessment freeze, as state law allows counties to do this year and which many are considering, is wrong for reasons you can read here. A more comprehensive limit on the rise in assessed valuations or taxes, similar to what California famously did with Prop 13 in 1978, is also the wrong thing to do. Proposition 13 has certainly had its intended effect of making it easier for California residents to stay in their own homes. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities among similar properties receiving similar services. This is not what we need for Missouri.

The easiest way to address that—for local governments to voluntarily roll their tax rates back more than legally required (as St. Charles County did in 2022)—is unlikely to happen in most places and especially unlikely for school districts, which make up the bulk of your tax bill. So, what else can we do about property taxes and assessments?

There are things people and government can do in the short term to make the overall process better. Right now, people should be pressuring their local officials to roll tax rates back, especially the Kansas City school district which is the only taxing body in the state exempt from rate rollbacks. Removing that constitutional exemption for KCSD should also be a high priority. That would involve amending the state constitution, but it should be a high priority to get that on the ballot in the next legislative session.

While we are addressing short-term impacts and constitutional changes, adding personal property to the tax rate rollback requirements should absolutely be done. In 2021 and 2022, many local governments enjoyed a windfall from increased used car values. That is not how the system is supposed to work.

Finally, did you know that a few counties require certificates of value to be filed with the assessor when property is sold but most do not? We should require them statewide to help make assessments more accurate, especially in rural areas.

In my next post, I’ll discuss what we can do in the long run to make our property tax and assessment system better.

The post So, What Exactly Should Missouri Do about Property Taxes and Assessments? appeared first on Show-Me Institute.

The policy conversation around this question typically assumes a state solution. Read the newspapers or listen to testimony before the state legislature and you will hear a clear narrative—it is the state’s responsibility to raise salaries. This ignores the fact that local school districts set the starting salary. Assuming the state is responsible also ignores the important role of local school districts in raising funds for schools.

The Missouri funding formula is a complex partnership of state and local effort. When the Department of Elementary and Secondary Education (DESE) determines how much aid each school will receive, the state calculates how much money the district can raise locally. In doing so, the state assumes a tax rate, or performance levy, of $3.43 per $100 of assessed valuation.

Yet more than 30% of all school districts in Missouri do not even tax themselves at the rate DESE assumes in funding formula calculations. In 2022, 162 school districts taxed themselves at rates lower than $3.43.

School property tax rates are set locally. Changes to tax rates are proposed by local boards of education and local taxpayers vote on those changes. Though Missouri allows for tax rates to vary among school districts, the state has instituted a required minimum rate of $2.75 per $100 of assessed valuation.

In 2022, 55 school districts taxed themselves at the state minimum rate. On average, these districts raised just 38.4% of their funding from local sources.

Missouri could go a long way in raising teacher salaries if these low-tax school districts would simply tax themselves at the state’s assumed performance levy. That, of course, has rarely been mentioned in serious policy conversations.

The post Want Higher Teacher Salaries? Raise Property Taxes appeared first on Show-Me Institute.

That’s why the latest version of Missouri Department of Revenue’s sales and use tax mapping tool is so welcome. A story by the eMissourian is a testament to precisely how I would hope the site would be used by the media and the public:

A purchase in downtown Washington comes with an 8.85 percent sales tax, which includes a 2 percent city sales tax and a 0.375 percent tax for the Washington Area Ambulance District.

Someone making the same purchase in downtown Union would have to pay 9.475 percent in sales tax. While Union has the same 2 percent city sales tax as Washington, consumers also pay a 0.5 ambulance district tax and a 0.5 percent tax for the Union Fire Protection District. St. Clair has the same 9.475 percent sales tax rate, with its fire and ambulance districts both having half cent sales taxes.

While Pacific charges a higher 2.5 percent city sales tax, it has the same overall 9.475 percent sales tax rate because no fire sales tax is shown.

You can find the sales and use taxes in your jurisdiction, and any Missouri jurisdiction, here.

It’s worth noting that while a number of articles this month have referenced the map as “new,” as my colleague Elias Tsapelas might note, it’d be more accurate to characterize it as “improved.” House Bill 1858 in 2018 and Senate Bill 153 in 2021 both helped lead to the new initiative, and perhaps serendipitously those local rate transparency initiatives also coincided with both the Show-Me Checkbook spending transparency projects and parallel spending transparency initiatives by the state treasurer and the state office of administration.

In other words, the transparency initiatives of the late 2010s are starting to bear fruit here in the early 2020s, so while some features on the interactive map may be “new,” the ideas aren’t. Of course, the state can always do more to promote transparency, such as requiring spending transparency from local governments and curricular transparency from schools and districts. But for what this tax map narrowly seeks to do, it does a good job of it.

The post State-Created Tax Map a Solid Tool for Oversight of Local Sales and Use Taxes appeared first on Show-Me Institute.