Disconnect seen between lower values for homes, higher taxes
August 5, 2012
Carson City’s assessor and treasurer’s offices have been fielding a steady stream of calls from residents both confused and angry that even though their property values are still going down, their taxes this year are going up.
The answer is actually pretty simple – the Board of Supervisors raised the property tax rate in March to recoup revenues the city was going to lose because of declining assessed values.
Supervisors said at the time that they had to raise the rate to prevent a revenue decrease that would force reductions in services.
“A lot of the comments we’re getting is that this was very sneaky of them (the supervisors),” said Assessor Dave Dawley. “But they had three public meetings.”
He said one common complaint is from residents who point out that Washoe County’s property taxes are going down with values, not up.
Dawley said that’s because Washoe was already at the $3.66 per $100 of assessed value – the statutory cap. Carson City was more than 50 cents below that cap.
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As a result, Washoe was unable to legally raise its rate; Carson City was.
He and Treasurer Al Kramer said that’s because Carson officials have tried their best over the years to keep the property tax rate as low as possible.
For nearly all of Carson City, the board increased the rate from $3.09 to $3.56. In one small part of the west side that has a 10-cent rate for a water district, the rate went to the $3.66 cap.
Kramer said that without the rate increase, about 6,500 of the capital’s 13,000 single-family residences would have seen taxes go down.
“Most now won’t see a decrease, and many will get an increase,” he said.
Before the Legislature capped annual increases, the tax was calculated by simply multiplying the rate by the assessed value. But with the cap in place, raising the tax rate could result in an increase larger than 3 percent. In those cases, the assessed value has to be lowered to prevent the homeowner’s tax bill from increasing more than that.
The rate increase had an even more confusing effect on a large number of mobile homes that were worth so little they weren’t paying property taxes. Under state law, if the property tax is $15 or less, no bill is sent because it would cost more than that to collect.
With the increase in the rate, Dawley said, mobile homes that haven’t received a bill in 10 years received a bill this year.
“Eight hundred more mobile homes got a bill, and they don’t understand why,” he said.
Both men pointed out that, throughout most of the period when home values were skyrocketing, property owners were paying far less in taxes than the value of those homes would otherwise dictate because tax increases are capped at 3 percent a year.
“Values went up dramatically but taxes only went up 3 percent,” said Dawley.
The gap between market value and the taxable value is called “abatement.”
As an example, Dawley cited a Lakeview home that’s now valued at $335,000 but whose owner pays on a taxable value of just $250,000.
He said a huge number of homes in the Lakeview-Timberline areas were valued well below what they would sell for because the city froze their taxable values after the Waterfall Fire.
“We froze values up there for two years. Then the state put in the cap,” he said – which locked in the artificially low taxable values there.
Now that market values are dropping sharply, he and Kramer said, that gap is going away and market values are again approaching taxable values.
But they said with the higher rate, some homeowners will see several more years of tax increases.e