Property owners concerned about rising taxes have reason for optimism after local tax rate levy hearings last week. As property values in the area continue to increase, local tax rates are staying the same or even decreasing. One significant factor behind this welcome trend is Missouri’s Hancock Amendment.
Excelsior Springs has seen consistent growth in property values, influenced by infrastructural improvements, heightened real estate demand, and community development initiatives in recent years. While rising property values often lead to concerns about potential tax hikes, the Hancock Amendment provides a safeguard for Missouri residents. Passed in 1980, the Missouri Tax Limitation Amendment, commonly called the Hancock Amendment, restricts the revenue generated from taxes. It ensures that local governments cannot enjoy disproportionate profits due to rising property values without corresponding growth in services.
Established in 1980, the Hancock Amendment limits the revenue generated from property taxes in Missouri. When property values rise, as they have in Excelsior Springs, the amendment requires tax rates to be rolled back so that the same revenue is collected as the previous year, barring a few exceptions. This rollback ensures that municipalities don’t reap windfall profits from surging property values.
Over the past few years, the community has seen a consistent uptick in property values attributed to infrastructural improvements, increased real estate demand, and efforts to foster a vibrant community atmosphere. The Hancock Amendment acts as a safeguard, ensuring these rising values don’t automatically translate to heightened taxes. For tax rates to go beyond set limits, it mandates voter approval, thereby keeping rates in check.
City Rates to Decrease by 5.5%
Amid the complex landscape of property values, inflation rates, and state regulations, Excelsior Springs City is set to decrease its city tax levy, offering relief to some residents. The reason behind the decrease is multifaceted, but City Manager Molly McGovern tried to clarify the matter.
Speaking on the revised lowered tax rate, McGovern said, “Adoption of this levy results in a $0.0603 (5.5%) decrease in the total City tax levy.” This reduction comes on the back of significant shifts in assessed property values, which play a crucial role in determining tax rates.
Explaining further, McGovern outlined the driving factors behind the tax adjustment. “This year’s decrease was significantly influenced by assessed value increases that were greater than the Consumer Price Index certified by the State Tax Commission (6.5%). In fact, the Assessed Values witnessed a rise of 12.88%.”
The State Tax Commission’s criteria are pivotal in determining whether tax rates increase or decrease. McGovern elaborated, “Anytime assessed values increase by a rate that surpasses the inflation rate used by the State Tax Commission, property tax rates decrease. Conversely, if assessed values dip or grow at a rate beneath this inflation marker, rates increase.”
She further broke down this year’s assessed values, “Real estate values in Excelsior Springs experienced a significant boost, rising by 17.31%. On the other hand, values on personal property saw a negligible dip of 0.02%, leading to an overall assessed value uptick of 12.88%.”
School District Tax Levy Remains Constant, as Promised
The tax levy for the Excelsior Springs School District remains unchanged from the previous year, but the reasons behind this decision are not as straightforward as some might think.
In a recent interview, school superintendent Jaret Tomlinson shed light on the district’s tax rate decision, stating, “Anytime you have an election in that year, the Hancock Amendment doesn’t apply.” Excelsior Springs School District had a tax levy issue on the ballot this year, so it is in a unique position compared to other tax-collecting entities.
Tomlinson elaborated on the district’s approach, “What we’re doing is moving 70 cents from fund three to fund one as part of the election. Fund three rules allow us to set the rate at whatever is necessary to make our payments.” Tomlinson indicated that they did lower the rate to about 60 cents, emphasizing the district’s commitment to its voters, “We wanted to ensure we had the exact rate of 5.2262 – the same rate as before. So we made the necessary adjustments to keep our promise to the taxpayers.”
Rates Down, Revenues Up
Despite the forthcoming tax rate decreases, the Excelsior Springs School District and City are projecting a surge in their revenue streams. This anticipated growth is attributed to the substantial rise in property valuations, compensating for the lower tax rates. When assessed values climb sharply, as they have in Excelsior Springs, they often increase total revenue even when individual tax rates are reduced. This phenomenon reflects the city and school district’s dedication to fostering taxpayer relief while ensuring sustainable financial growth for the community’s development and services.
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