Missouri House members have passed legislation aimed at lowering property taxes.
Representatives voted 133-13 to pass the legislation. It now goes to the Senate, where Republican Floor Leader Tony Luetkemeyer, R-Parkville, has already said reducing property taxes is a priority.
Speaking before the vote, Rep. Tim Taylor, R-Bunceton, praised the bill he sponsored and the work of the special committee he chaired on property taxes.
"If this passes this final journey, we can assure our constituents that we have made their lives better, and, quite frankly, made our lives better as taxpayers as well, in stabilizing the current system so that we can continue to work forward in the years to come to make it even better," Taylor said.
The bill received bipartisan support, including from Democrats who served on the committee like Rep. Kathy Steinhoff, D-Columbia.
"I wish we could do more legislation this way, where we take a concept and we go out and we find out what's all out there, all the different ideas, all the different concerns, and try to come back and solve it," Steinhoff said.
According to Taylor, the largest remaining change in the bill would individualize, or silo, the different property tax subclasses in the state.
Currently, those subclasses, which include residential and commercial properties, are grouped together. Due to the Hancock Amendment, which Missouri voters passed in 1980, property tax rates must be lowered if property values rise higher than inflation.
However, when those subclasses are grouped together, if one rises in value faster than the others, that subclass ultimately pays more in taxes.
"When the increase happens, that's when Hancock takes effect, if it hits that level, but one will dilute the other," Taylor said. "And so combined, they don't necessarily enact Hancock provisions."
By siloing the subclasses so that increases in the assessed value of one property type do not affect others, Taylor said taxpayers are more likely to benefit from lower tax rates allowed under the Hancock Amendment.
"By having each one of those work separately instead of in conjunction, it's going to bring some relief," Taylor said. "I think it's going to quell those unusual spikes."
St. Louis County currently silos its subclasses. Taylor said he started hearing about the idea during special property tax committee hearings held last year across the state.
Taylor said the siloing was an idea that has support from both Republicans and Democrats.
"We traveled across the state and listened to constituents, be they the taxpayer or the taxing entities about what our property tax system looks like in this state," Taylor said. "We started looking into it more, and we thought, 'Gosh, this could have the ability to help so many people.'"
Steinhoff also voiced support for the approach on the House floor.
"It may not have caught it in the past few years when we saw spikes in particular, like the residential properties," Steinhoff said. "I wish we had done it then, because then we could have probably stopped that bleed a little sooner, but it will hopefully going forward, prevent that from happening again."
Other changes
In addition to the siloing portion of the bill, the legislation includes other measures related to property taxes.
One provision requires a physical inspection of commercial property if its assessment increases by more than 15%. That inspection requirement already exists for residential properties.
Another change would require that if voters approve a new tax levy, the existing levy must expire before the new one takes effect.
There's also a new policy regarding school levies.
School levies are local property taxes approved by voters within a school district to generate revenue. The amount a district receives depends on property assessments within the district.
The legislation lowers the school district tax rate requirement from $2.75 to $2.20 per $100 of assessed value.
According to the bill's summary, school districts cannot currently receive more state aid "for its education program than it received per weighted average daily attendance for the school year 2005-06 from the foundation formula unless it has an operating levy for school purposes of not less than $2.75."
The bill lowers that threshold to $2.20, which could allow schools with excess funding to roll back levies and provide property tax relief.
"It's a compromise or attempt to give those taxpayers in those districts the opportunity to have that levy rollback so that their taxes aren't astronomical, still leaving the schools the ability to get what they had plus CPI or 5%, whichever is less," Taylor said.
Taylor said on the House floor that schools will not see a decrease in funding as a result of the policy.
Steinhoff expressed some concern since work is being done to change the state's foundation formula.
"I would hate for them to be doing work based on that being the foundational amount and then we come over here and we change that number," Steinhoff said.
A companion bill
The House bill was given first-round approval in February. At the time, it was a much larger bill, with a series of changes to property tax policy.
Lawmakers ultimately sent the bill back to committee, which is a rare occurrence.
"It was a very large bill, and people were concerned about that, being able to digest all the information, so we split the two bills," Taylor said.
Previously, the legislation contained many policy changes regarding property tax elections. That included moving any proposed property tax change to the November ballot.
When the bill was reconsidered in committee, the portions related to elections were stripped out of the bill.
They are now within a different property tax bill, HB 2668, sponsored by Rep. Ben Keathley, R-Chesterfield. That bill is on the calendar for initial approval on the House floor.
The legislation passed Thursday in the House is HB 2780.
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