Revaluation affects property-tax rates of local governments

Published 8:00 pm Tuesday, February 20, 2018



Washington City Council member Doug Mercer wants the city to adopt a revenue-neutral approach as it deals with revaluation of property values during the council’s budget preparations in the coming months.

Mercer discussed the issue at the City Council’s Feb. 12 meeting.

Simply put, a revenue-neutral policy is a taxing method that allows a government — local, state or federal — to receive the same amount of tax revenue despite changes in tax rates. The government may lower taxes for a specific group of taxpayers and/or increase taxes for another specific group of taxpayers. This allows the overall revenue the government takes in to remain unchanged, or neutral.

The revaluation of property in Beaufort County takes effect this year. A county must conduct a revaluation at least every eight years.

Mercer believes overall property values in the city will increase because of revaluation, hence the need to be revenue neutral. “One of the things that concerns me if property values increase in the city, which I think they will do, and you keep the same tax rate, the provided a windfall to the city. I don’t think we should have that significant a windfall based on the fact that the property is re-evaluated,” Mercer said. “If my house goes from $100,000 to $125,000, I would hope that next year I would pay the same rate of money that I paid this year.”

Mercer acknowledges property values in the city have seen nominal growth in recent years. “I gave all of you information … that shows that the real property values in the city over the past seven years had grown at less than 1 percent. The total property valuation, which includes personal property and other things, had grown about 2 percent. If we go revenue neutral, we can allow an inflation factor for the real property, but we should remain revenue neutral with the real property tax values for next year,” he said.

The following is an example of a revenue-neutral property-tax scenario. If a homeowner owns a house valued at $100,000 and the property tax rate is 50 cents per $100 valuation, that homeowner pays an annual tax of $500. If the value of that house increases to $125,000, the homeowner would pay $625 a year in taxes if there were no revenue-neutral policy in place. By lowering the tax rate to 40 cents per $100 valuation, a government would receive $500 a year in taxes, the same amount the homeowner paid in previous years.

In 2010, the council set the property-tax rate for the 2010-2011 fiscal year at 50 cents per $100 valuation. The tax rate for fiscal year 2009-2010 was 60 cents per $100 valuation. The tax rate dropped 10 cents per $100 valuation because of the revaluation of properties in Beaufort County and its municipalities, resulting in an overall revenue-neutral affect for them.






About Mike Voss

Mike Voss is the contributing editor at the Washington Daily News. He has a daughter and four grandchildren. Except for nearly six years he worked at the Free Lance-Star in Fredericksburg, Va., in the early to mid-1990s, he has been at the Daily News since April 1986.
Journalism awards:
• Pulitzer Prize for Meritorious Public Service, 1990.
• Society of Professional Journalists: Sigma Delta Chi Award, Bronze Medallion.
• Associated Press Managing Editors’ Public Service Award.
• Investigative Reporters & Editors’ Award.
• North Carolina Press Association, First Place, Public Service Award, 1989.
• North Carolina Press Association, Second Place, Investigative Reporting, 1990.
All those were for the articles he and Betty Gray wrote about the city’s contaminated water system in 1989-1990.
• North Carolina Press Association, First Place, Investigative Reporting, 1991.
• North Carolina Press Association, Third Place, General News Reporting, 2005.
• North Carolina Press Association, Second Place, Lighter Columns, 2006.
Recently learned he will receive another award.
• North Carolina Press Association, First Place, Lighter Columns, 2010.
4. Lectured at or served on seminar panels at journalism schools at UNC-Chapel Hill, University of Maryland, Columbia University, Mary Washington University and Francis Marion University.

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