Property taxes have long been a source of financial strain for Missouri homeowners, with sudden and significant increases leaving many vulnerable, especially those on fixed incomes. In 2023, Jackson County saw property assessments spike by an average of 30%, with some homeowners facing increases of over 100%, sparking outrage and fears of losing homes (KMBC News). This crisis, compounded by reports that the Missouri State Tax Commission alerted as many as 80 counties of under-assessed properties, highlights the urgent need for reform in how property taxes burden Missourians.
Senate Bill 87 (SB 87) steps in as a critical response, capping annual property tax increases at 5% during reassessment years and offering credits to shield homeowners from financial shock. Until our state does the right thing and completely eliminates property tax—the most unfair of all taxes—SB 87 offers needed protection for our citizens. While this bill provides essential relief, it’s a temporary measure in the face of a deeper issue that demands a bolder solution.
Background and Purpose of SB 87
SB 87, formally the Senate Substitute for Senate Committee Substitute for Senate Bill No. 87, seeks to amend Chapter 137 of the Revised Statutes of Missouri (RSMo) by adding a new section, 137.1100. This legislation aims to stabilize property tax liabilities for Missouri residents by introducing a property tax credit system with a particular focus on primary residences, also known as homesteads. The bill’s timing is significant, given reports that the Missouri State Tax Commission recently notified as many as 80 counties that their property tax assessments are too low, potentially leading to substantial tax increases for residents.
The primary purpose is to limit the financial burden on homeowners, especially those on fixed incomes, by capping annual tax increases and providing credits. This is crucial in a context where assessment errors or market-driven value spikes, as seen in Jackson County, can lead to unexpected and unaffordable tax bills.
Detailed Provisions of SB 87
The key provisions of SB 87 are located within Section 137.1100, with specific subsections outlining the framework:
- Section 137.1100.1 – Definitions:
This subsection defines critical terms, including:- Eligible Taxpayer: A Missouri resident owning and occupying their primary residence, liable for its property taxes.
- Homestead: The primary residence, with only one claimable per taxpayer.
- Eligible Credit Amount: The difference between the current year’s tax liability and the “initial credit year” liability, capped at a 5% increase during reassessment years.
- Initial Credit Year: The year the taxpayer first qualifies for the credit, or a subsequent year if tax liability drops below the initial year’s level.
- Section 137.1100.2 – Authorization of Tax Credit:
Counties may grant the tax credit to eligible taxpayers, equal to the eligible credit amount. This can be authorized by:- County ordinance, or
- Voter referendum, initiated by a petition signed by at least 5% of registered voters from the last gubernatorial election, asking if the county should exempt taxpayers from increases on primary residences.
- Section 137.1100.3 – Application of the Credit:
Counties must apply the credit when calculating tax liability, noting it on tax statements. They can establish procedures for implementation but cannot alter definitions of eligible credit amount or taxpayer. Adjustments are made for new constructions, improvements, or annexation into new taxing jurisdictions. - Section 137.1100.4 – Financial Considerations:
The total credits granted are considered tax revenue for levy calculations, ensuring no negative impact on county or subdivision budgets. - Section 137.1100.5 – Notification Requirement:
Counties must notify political subdivisions of the total credit amount by November 30th each year, ensuring transparency.
These provisions collectively aim to protect homeowners by limiting tax volatility, with the 5% cap during reassessment years being a pivotal measure to prevent sudden spikes.
Protection Against Unexpected Property Tax Increases
SB 87’s protection mechanism is particularly relevant given the current state landscape. Reports that the Missouri State Tax Commission has alerted up to 80 counties to under-assessed properties suggest the potential for significant tax increases, mirroring the situation in Jackson County. The bill’s credit system ensures that any increase beyond the 5% cap is offset, providing financial predictability. This is especially vital for fixed-income households, who may lack the means to absorb significant tax hikes.
The flexibility for counties to adopt the credit via ordinance or referendum ensures local governance, allowing communities to tailor the measure to their needs. This local control is an unexpected detail, as it balances state-level policy with community input, potentially increasing acceptance and effectiveness.
Case Study: Jackson County, Missouri
Jackson County’s 2023 property tax assessment process serves as a stark example of the risks SB 87 aims to mitigate. Homeowners faced assessment increases averaging 30%, with some properties seeing hikes over 100%, as reported by KMBC News. This led to higher tax bills, causing financial strain, particularly for seniors and those on fixed incomes, with fears of home loss (KCUR).
The Missouri State Tax Commission intervened, ordering a rollback to no more than a 15% increase from the previous assessment, citing procedural failures like inadequate notification (KCTV5). This rollback highlighted systemic issues, with the commission noting widespread and systemic failures affecting at least 75% of parcels. The controversy, including lawsuits and county pushback, underscores the complexity and sensitivity of property tax assessments, making SB 87’s protections timely.
Impact on Citizens, Especially Fixed-Income Households
Significant property tax increases, as seen in Jackson County, can have severe consequences. For households on fixed incomes, such as retirees, these hikes can consume a large portion of their budget, leaving little for essentials like healthcare or food. The risk of losing homes is real, with news reports, such as those from FOX4KC, highlighting fears among residents that they may lose their homes due to unaffordable taxes, underscoring the human impact.
SB 87’s 5% cap and credit system directly address this, offering a buffer that could prevent such outcomes. By ensuring tax increases are gradual and predictable, the bill helps maintain housing security, particularly for vulnerable populations.
Comparative Analysis and Implementation
Compared to Jackson County’s rollback to 15%, SB 87’s 5% cap is more protective, offering a tighter control on increases. The bill’s allowance for local implementation via ordinance or referendum is an unexpected detail, as it contrasts with top-down mandates, potentially fostering community buy-in. For example, five counties, including Jackson, have already considered freezing assessments for seniors, showing early adoption of similar protective measures (Spectrum Local News).
Conclusion
SB 87 represents a critical legislative response to the property tax challenges facing Missouri, particularly in light of the Jackson County experience and the broader state assessment issues. By capping increases at 5%, providing credits, and allowing local implementation, it offers a robust framework to protect homeowners, especially those on fixed incomes, from the risk of losing their homes. This measure, detailed in Section 137.1100, is timely and essential for maintaining housing stability across the state.
Action
Contact Senate Pro Tem Cindy O’Laughlin and ask her to bring SB 87 back to the Senate floor and support its passage. Contact your State Senator and ask them to support SB 87!
Senate Pro Tem Cindy O’Laughlin
573-751-7985
cindy.olaughlin@senate.mo.gov