Constituents continue to contact me about the issue of property tax reform.
The other day a constituent explained to me that he had built a new house. He could have built this house anywhere but he chose to build it in Logan County. Upon moving into his new house he was told that his property tax payment would be thousands of dollars each year to the point that the property tax payment will represent a significant percentage of his overall payments.
This story makes the point that property tax provides a huge disincentive for citizens to invest in real estate. Why should someone buy a nice new house when the property tax payment on their new house might be as large as the mortgage payment on their old house? Building new houses is a great economic activity generator. How many jobs have been lost because punitive property taxes have discouraged this type of investment?
A senior citizen constituent visited my office one day. He produced a detailed spreadsheet calculating the implications of a continued 5% increase on his home assessment price over the upcoming years. He could demonstrate how with compounded interest the amount of his property tax would double over a certain time period. In fact, his home property taxes were nearly equal to 25% of his social security income.
And even though property values are currently in a state of decline, because assessors have had to increase the price of properties in excess of the 5% cap in the past, many homeowners will likely continue to see their assessments rise by 5% even in a down economy when their personal budgets may be shrinking.
A very simple, common sense property tax reform proposal has been circulating through the Legislature for the past few years. The reform would allow people to vote on lowering the cap of the ability of the county assessor to increase yearly assessments from 5% down to 3%. The bill is usually approved in the House or the Senate or both, but somehow always manages to get jammed up in the legislative process.
This is not a dramatic reform. This is not even a tax cut. It is a simple reduction of the amount by which this punitive tax increases each year. It is absolutely unconscionable that the Legislature refuses to give people an opportunity to vote on this bill. If the Legislature refuses once again to take action on this proposal during the upcoming session, I believe it will be vital for the people to place this issue on the ballot by circulating a initiative petition.
It is always possible that an initiative petition effort will seek a more aggressive reform such as a 1% cap each year. I would suggest that the special interests who have opposed the very reasonable 3% percent cap should consider that their short-term unreasonableness may have long term consequences, because citizens cannot continue to just stand by and be punished in this unfair manner.