Jackson County officials say they plan to fight a recent ruling from the Missouri State Commission that ordered the county to roll back its 2023 property tax assessment.

The commission told Jackson County to reevaluate 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 that they are exploring an appeal.

Deputy assessment director Maureen Monaghan said the commission’s ruling, should it go into effect, would hurt the taxing jurisdictions that rely heavily on revenue collected from property taxes.

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

The order issued last week threatens to upend an assessment process that has already caused frustration for many homeowners and served as another flashpoint between Jackson County Executive Frank White and members of the county legislature.

Legislators say the county should not open up another legal challenge, and should instead focus on mitigating taxpayers’ burden while reducing harm to taxing districts like public schools, whose budgets could be in jeopardy.

“Everybody in the county knows that we did not do all this properly,” said Legislator Sean Smith. “It’s just such an obvious, glaring fact that, I’m asking for collaboration and believe the fix can be had so that we fix this for taxpayers, and we don’t harm the taxing entities any more than necessary.”

Many taxing jurisdictions and local governments already set their budgets and established their tax rates for this year — many of them lower than previous years to offset the increased assessed value. Taxpayers already paid their 2023 tax bill, which reflected the new values.

Calculations from 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 tax revenue and allocated to taxing jurisdictions like school districts.

“It’s been spent on teachers,” said County Administrator Troy Schulte. “It’s been spent on firefighters. It’s been spent on prosecutors, in the case of the county and corrections officer. That money is spent.”

The commission ordered Jackson County to cap increases of assessed values at no higher than 15%. That means most homeowners’ assessments will be lowered to 2021 or 2022 levels, plus a 15% increase.

The State Tax Commission alleges that Jackson County failed to follow state law and properly notify property owners in writing whose assessed values increased by 15%. The commission said the county also failed to comply with state law by not performing a physical inspection of properties where the assessed value went up by 15%.

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

Jackson County’s 2023 assessment process raised property assessments by an average of 30%, and some homeowners saw increases above 100%.

Next steps

It’s unclear what, exactly, will happen next, with county officials at odds over how to respond to the state tax commission’s ruling.

The commission does not give instructions beyond the order to roll back 2023 assessments.

The county could simply cap assessment values at 15% where applicable, and not issue a refund to taxpayers. Officials say that could open the county up to liability from taxpayers who may have overpaid in their 2023 tax bill.

The county could issue refunds to homeowners whose assessed property values increased by more than 15%. But county officials in the executive’s office say refunds are unlikely because much of the money has already been allocated to county services and taxing jurisdictions – 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 over a certain period of time. That option, too, could be detrimental to city governments, public libraries and public schools.

Impact on school districts, libraries, cities

If the State Tax Commission’s order goes into effect, it’s likely to cause headaches for jurisdictions like school districts, public libraries and local governments that receive a significant portion of revenue from property taxes.

County Counselor Bryan Covinsky said 65% of property tax collections go to school districts and 17% of that money goes to localities like Kansas City.

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

Covinsky said the county will work with school districts, cities and impacted taxing jurisdictions to figure out the best way to legally challenge the commission’s order.

“It’s unconstitutional, it’s unprecedented, and it has no evidence to even prove it,” Covinsky said. “We’re going to be working with the subdivisions that have actually been harmed by this decision that’s done retroactively that will affect the future of their budgets as well.”

What does it mean for taxpayers?

County Administrator Schulte said the commission’s ruling will likely not result in homeowners receiving a refund or tax credit, even if their home’s assessed value goes down. Instead, taxing jurisdictions like school districts will have to reevaluate the rate they ask taxpayers to pay based on their home’s assessed value.

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

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

Schulte said taxing districts will likely increase their levy, in line with Missouri law. He said when assessed values decline, the state constitution lets taxing districts raise their levy to allow districts to collect the amount of revenue they had already budgeted for.

“What you’re looking at is potentially the largest tax increases, because of the state tax commission order, in the history of Jackson County,” Shculte said. “I want to disabuse people that they’re going to get some lovely refund check because of this egregious error by the county. It’s not going to happen, and in most cases, you’re going to pay a lot more.”

Should taxing districts increase their levy this year, Schulte warned, homeowners whose assessed values did not exceed 15% could be hardest hit. Their tax bill would end up increasing to make up for the decrease in assessed values for other homeowners.

“That’s the reality we’re going to deal with over the next couple of months, unless we can find a solution to this,” Schulte said. “There is no free lunch in local government, so the bills have to be paid some way, somehow.”