Jackson County officials say they plan to appeal a recent decision by the Missouri State Commission that required the county to rescind its 2023 property tax assessment.

The commission asked Jackson County to reassess its 2023 assessments within 30 days, by Sept. 5. Jackson County Executive Frank White, along with County Assessor Gail McCann Beatty, County Administrator Troy Schulte and the county’s legal team, said Monday they are considering an appeal.

Tax Commission Deputy Chief Maureen Monaghan said if the commission’s decision goes into effect, it would harm tax authorities, which are heavily dependent on property tax revenues.

“The State Tax Commission has never issued a retroactive tax assessment because they know the adverse impact it has on schools, cities, fire districts, libraries and the blind,” she said.

The order issued last week threatens to upend an assessment process that has already caused frustration among many homeowners and sparked further conflict between Jackson County Executive Frank White and members of the county legislature.

Lawmakers say the county should not file another lawsuit but should instead focus on easing the burden on taxpayers while limiting the damage to taxing districts like public schools whose budgets could be at risk.

“Everyone in the county knows we have not done this right,” said Assemblyman Sean Smith. “This is such an obvious, glaring fact that I ask for cooperation and believe a solution can be found so that we can make this right for the taxpayers and not hurt the taxing authorities any more than necessary.”

Many taxing authorities and local governments have already set their budgets and set their tax rates for this year – many of them lower than in previous years to compensate for the increased assessed value. Taxpayers have already paid their 2023 tax bill, which reflects the new values.

Calculations by County Executive White’s office estimate that schools and libraries could lose more than $86 million; cities and fire districts could lose nearly $20 million.

County officials say about $118 million has already been collected from property taxes and distributed to taxing entities such as school districts.

“It was spent on teachers,” said district administrator Troy Schulte. “It was spent on firefighters. It was spent on prosecutors, in the district’s case, and on corrections officers. That money is spent.”

The commission ordered Jackson County to limit assessed value increases to no more than 15%. That means most homeowners’ assessed values ​​will be reduced to 2021 or 2022 levels, plus a 15% increase.

The state tax commission alleges that Jackson County violated state law and failed to properly notify property owners whose assessed value increased by 15% in writing. The commission said the county also violated state law by failing to conduct a physical inspection of properties whose assessed value increased by 15%.

The commission also stated that the county did not provide homeowners with clear written notice of their right to a physical inspection.

As part of Jackson County’s 2023 assessment process, property assessments were increased by an average of 30%, and some homeowners experienced increases of over 100%.

Next Steps

It’s unclear exactly what will happen next, as county officials disagree on how to respond to the state tax commission’s decision.

The Commission is not issuing any further instructions beyond the order to withdraw the levies for 2023.

The county could simply cap the assessed values ​​at 15% and not provide taxpayers with a refund, officials say, which could leave the county liable to taxpayers who may have overpaid on their 2023 tax bill.

The county could provide a refund to homeowners whose assessed property value increased by more than 15 percent. But county clerk officials say a refund is unlikely because much of the money has already been used for county services and taxation – and the county can’t afford it.

The county could issue refunds to eligible homeowners and then claw back that revenue by not allocating money to taxing districts for a period of time. This option could also have a detrimental effect on municipalities, public libraries and public schools.

Impact on school districts, libraries, cities

If the state tax commission’s order goes into effect, it is likely to cause headaches for jurisdictions such as school districts, public libraries and local governments that derive a significant portion of their revenue from property taxes.

County Councilman Bryan Covinsky said 65 percent of property tax revenue goes to school districts and 17 percent of that money goes to places like Kansas City.

Kansas City expects about $9 million in property tax revenue for its fiscal year 2024 budget, which the City Council passed in the spring. Property taxes are the city’s third-largest source of revenue.

Covinsky said the county will work with school districts, cities and affected taxing authorities to find the best way to legally challenge the commission’s order.

“This is unconstitutional, unprecedented and there isn’t even any evidence to support it,” Covinsky said. “We will work with the subdivisions that have actually been harmed by this retroactive decision, which will also affect the future of their budgets.”

What does this mean for the taxpayer?

According to Schulte, the county administrator, the commission’s decision likely won’t result in homeowners receiving a refund or tax credit even if their home’s assessed value drops. Instead, taxing entities like school districts will have to re-determine the tax rate they charge taxpayers based on their home’s assessed value.

School districts must set their levies by October 1 each year. Missouri’s Hancock Amendment requires districts to lower their levies when property values ​​increase more than inflation, so lower levies offset the impact of higher levies on taxpayers.

Last year, higher levies caused school districts in Lee’s Summit and Blue Springs to lower their levies. Kansas City Public Schools is exempt from the Hancock Amendment, so its levies did not change.

Schulte said taxing districts will likely increase their levies, consistent with Missouri law. He said the state constitution allows taxing districts to increase their levies when assessed values ​​decline, so the districts can collect the amount of revenue they have already budgeted for.

“Because of the State Tax Commission’s order, we may be facing the largest tax increases in Jackson County history,” Shculte said. “I want to convince people that they are going to get a nice check back for their income because of this blatant error by the county. That’s not going to happen, and in most cases, you’re going to pay a lot more.”

If tax districts increase their assessments this year, Schulte warned, homeowners whose assessed value does not exceed 15 percent could be hit hardest. Their tax burden would ultimately rise to offset the decline in assessed value for other homeowners.

“This is the reality we’re going to have to deal with over the next few months unless we find a solution to it,” Schulte said. “Nothing is free in local government, so the bills have to be paid somehow.”