|
|
By Joel Burgess
JBURGESS@CITIZEN-TIMES.COM
September 5, 2006 12:15 am
Getting that heavy sort of feeling? If you’re a
This year, when the county reassessed the value of all real estate in its borders, a good chunk of the tax burden (read: tens of millions of dollars) shifted to the backs of home and landowners. At the same time, utility companies and those owning businesses and automobiles got millions in tax breaks, largely because of a taxation system rooted in state law.
It may not be apparent from this month’s tax bills, but the shift means that on average, county and city real estate tax bills went up at least 30 percent, while power companies, businesses and auto owners actually will pay up to 19 percent less.
For some homeowners, that translates into huge jumps in tax bills.
Harry and Mary Ann Wainwright said they saw their bill double this year. The
73-year-old former pastor and his wife built their home in a senior community
off
“I’m not blaming anybody. Property here in
Yet, while the obvious explanation seems to be rising property values, only
a portion of this year’s real estate tax bill increase is directly related to
the booming housing market. Tax increases by the county and
But most of the shift is due to a largely misunderstood process that
Real estate up, businesses, utilities down
Property taxes are the biggest source of revenue for local governments. Those taxes come from four different kinds of property:
• Real property, which means land and buildings, including houses and businesses.
• Personal property, which is made up mostly of property inside businesses such as office equipment. Individually owned personal property, such as mobile homes and boats, is also included.
• Public service property, which is made up of utility companies’ hardware such as power poles and repair equipment.
• Motor vehicles.
Real, or real estate, property values rose considerably throughout the county and its municipalities after revaluation. This year, the average home value went up 45 percent.
On the other hand, the total value of personal property, public service property and motor vehicles went up slightly, or even dropped. That means the new property added to these three areas only added a little value to the total or actually did not keep up with depreciation. Motor vehicles will depreciate as they age. Businesses are allowed to depreciate the value of practically everything they use, from light bulbs to copying machines.
The value of utilities, meanwhile, is assigned by the N.C. Department of Revenue. This year utility values were largely static.
This all means if local governments wanted to take in the same amount of total property tax money after the revaluation as they did before the revaluation — a situation called “revenue neutral” — they have to lean harder on homeowners and landowners to make up for losses from utilities, businesses and automobiles. That can happen even if the governments lower the tax rates, as the county and city did.
For homeowners, that was compounded by an actual tax increase. The two biggest governments in the county lowered their tax rates but went above the revenue neutral rate. The city dropped its rate from 53 cents per $100 of assessed value to 42.38 cents. That raised $1.3 million in additional property taxes. The county dropped its tax rate from 59 cents per $100 of assessed value to 53 cents, raising an additional $6.4 million, increasing the burden on homeowners even more.
(Revenue neutral does not include “natural growth” in the tax base such as new homes built or improvements on old homes, so governments can claim that new tax money without an official tax increase.)
Change the system?
Since a homeowner is usually also an auto owner and can also be a business owner, the tax shift can have different effects on different people.
Some, such as Realtor Milo Garren, say the shift unfairly puts the burden on homeowners, particularly in an area of the country where salaries can be low and mortgages high.
“The way the law is structured is discriminatory and it is unfair frankly to people who own property as opposed to those who do not.”
Garren said he doesn’t think the law intentionally places the extra burden on real estate owners but thinks it needs “to be looked at.”
One possibility, he said, would be splitting the different property taxes in order to raise and lower them separately.
Such a split would require a change in state law, Asheville Chief Financial Officer Ben Durant said.
“North Carolina General Statutes require that property taxes be uniformly applied,” he said. “Thus, we cannot give different tax rates to different types of property.”
Because the rule is actually part of the state constitution, such a change would not be simple and would require a voter referendum, said Shea Denning with the UNC Institute of Government.
Tom Atkinson, a small business owner with two properties, suggested other ways to tweak the system, such as looking at the process of real estate revaluations.
Atkinson does wiring work on computers and telephones. He owns his home in Oteen and another where his son lives in
“And there have been no major improvements made, except a new heat pump.”
One possible change, he said, might be giving people who have lived in a home for five years or more an exemption from revaluations.
Atkinson said he wouldn’t mind paying more in the other types of property tax, such as personal business taxes, if it meant reducing the burden on some homeowners who can ill afford increases.
“If it is a revenue source, something that generates income, I am not opposed to paying taxes.”