News Property Taxes On The Rise

Property Taxes On The Rise

Property Taxes On The Rise
May 1, 2002 |

Alabama property owners paid 17 percent more property taxes in 2000 than in 1998, and the assessed value of their land has more than tripled since 1978, according to the Alabama Department of Revenue.These figures offer a sharp contrast to allegations by certain politicians and special-interest groups who blame Alabama’s tax structure for recent shortfalls in education funding. The Department’s records also contradict claims that the state’s system of taxing property at its “current use” has suppressed property values. Approved by Alabama voters in 1978, current use has been maligned in the news media by special-interest groups who claim it favors large farmers and timber companies. Mike Kilgore, executive director of the Farmers Federation, said this is simply not true.”The concept of current use means that property is taxed based on its present use rather than some speculative value,” Kilgore said. “Under Alabama’s tax system, farmland is taxed as farmland, just like a car is taxed as a car. Without current use, bureaucrats would be free to tax property at what they perceive is its highest or best value. That would mean a farm could be taxed at the same rate as a shopping mall, which could result in farmers being forced to sell their property. Current use not only ensures that property is taxed fairly, but it also helps preserve green space.”Still, many detractors claim current use has resulted in lower property tax values and decreased state funding. According to the Revenue Department, however, property tax valuation actually has increased three-fold since current use became law.Comparing the Department’s records from Oct. 1, 1978, with those from Oct. 1, 1999 (the most recent data available), total property valuation spiraled from $8.7 billion to almost $29.2 billion. During that time, 13 counties experienced more than 300 percent growth in property valuation, and two counties, Baldwin and Shelby, increased more than 500 percent. Only in two counties, Washington and Colbert, did property valuations fail to at least double.Even when adjusted for inflation, total property valuation increased by $7.4 billion since the inception of current use.Meanwhile, actual property tax collections also have increased substantially. According to Revenue Department records, Alabama property owners contributed $1.4 billion to the state’s coffers in fiscal year 2000–more than one-third of which went directly to schools.Because the Department began tracking tax collections by county and type of tax in fiscal year 1998, only a two-year period could be studied. Using records for net assessed valuation and net collections (after all exemptions), the change in the total millage rate from fiscal year 1998 to fiscal year 2000 was estimated for each county.During the two-year period, when inflation was 4.4 percent, total property tax collections increased by 17 percent. Included in that figure are municipal taxes, up 20 percent; state taxes, up 17.1 percent; school taxes, up 16.2 percent and county taxes, up 16.1 percent. Eight counties experienced total tax increases of 30 percent or more, and an additional 18 had growth rates of 20-30 percent.When it comes to supporting schools, property owners certainly have done their part, Kilgore said. According to the Revenue Department, tax collections for schools grew by more than 30 percent in eight Alabama counties, and another 16 had growth rates of between 20 and 30 percent. Morgan County led the state with collections increasing 45.1 percent in just two years, and Jackson County was close behind at 39.1 percent.Kilgore said these statistics prove that what Alabama needs is more accountability, not higher taxes.”For years, certain special-interest groups have blamed Alabama’s tax structure and specifically current use for the state’s education problems,” Kilgore said. “The Revenue Department’s own records show property tax valuations and collections both are growing at astounding rates. Yet, our government leaders continue to spend more each year–even forcing our state into proration.”Increasing taxes–through a constitutional convention or otherwise–is not the answer,” Kilgore added. “Instead of raising our taxes, lawmakers should write budgets based on the previous year’s revenues, not overly optimistic projections. They also should set aside money in a rainy-day fund for education. As voters, we should elect people who will work to improve our economy and expand our tax base, instead of supporting those who would ask us to open up our wallets yet again.”

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