Jackson County says tax assessment rollback order is unconstitutional. What happens now?

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Jackson County Executive Frank White Jr.’s administration has no intention of complying with a state order for a blanket rollback of county real estate assessment values, the county’s top lawyer told reporters at a news conference on Monday.

While some county legislators oppose a legal challenge, County Counselor Bryan Covinsky said the county and local taxing districts, whose finances would take a big hit, plan to challenge the rollback order in court.

But they haven’t decided yet on a litigation strategy or who should take the lead in filing suit to challenge the state commission’s order, which he said was unconstitutional and unenforceable. The county or another taxing district like an area school district could file the suit.

Either way, it would be a coordinated effort.

“We want to talk to the school districts, everyone affected by this, to make sure we do it together, because that’s who’s being affected by this,” Covinsky said.

The morning news conference was held in response to the Missouri State Tax Commission issuing what the county described as an unprecedented order last week. It would cap property assessments set last year for 2023 and 2024 at no more than a 15% increase — unless the county could prove it complied in each instance with a state law that requires a personal inspection of every piece of real estate whose value rose by more than that.

The order estimated that three quarters of the valuations were set in violation of that law and would need to be rolled back to 15%.

But county officials say the order contains no evidence to back up that assertion and that the State Tax Commission took none of the steps it would normally take to evaluate a county’s assessment procedures.

“The order contradicts the procedures and policies of the State Tax Commission,” said deputy county assessor Maureen Monaghan, who before taking her current job was for 13 years chief counsel of the commission.

“The State Tax Commission has never issued a retroactive assessment because they know the detrimental impact it has on the schools, the cities, the fire districts, the libraries, the blind. Furthermore, the order they issued was in secret, without a public hearing, without evidence, without conducting ratio studies,” she said.

Monaghan’s boss, Jackson County Assessment Director Gail McCann Beatty, said the tax commission approved her department’s procedures before last year’s reassessment effort began. She said the county complied with state law in conducting it, and that taxing districts received property tax revenue — for many of them, it is their main source of income — based on those assessed values.

Convinsky said the county could choose to challenge the tax commission ruling directly, or to take no action on it. The taxing districts could then sue the county for its inaction, which would force the tax commission to defend its order in court.

Whatever strategy they agree on, local governments need to move swiftly. Otherwise many taxpayers will suffer financial harm, County Administrator Troy Schulte said at the same news conference.

Deadline approaching

Sept. 30 is the deadline for school systems, cities and other taxing districts to set their tax levies, as tax bills come due by the end of the year.

If there is no clarity by then on whether the assessment rollback order can be enforced, local governments would have to assume the worst. They would likely increase their levies substantially to make up for the money lost by forcibly lowering property values, as state law protects local governments from taking a sudden budget hit from a change in property assessments, Schulte said.

“If this isn’t resolved quickly, my sense is you’ll start to see significantly higher levies,” Schulte said. “That’s going to affect pretty much everybody.”

The main beneficiaries of capping assessment increases to 15% across the board, Schulte said, would be property owners whose assessments went up by double or more because their homes had been undervalued for years.

Taxpayers whose property values were closer to market value during the 2023 reassessment — which is the goal of reassessment, as required by state law — would end up paying much higher taxes, Schulte said, because the schools, and other taxing districts would raise their tax rates to recoup lost revenue from the rollback.

Even if they did so with the intention of lowering them later after winning a court challenge, Schulte said, mortgage companies would likely assume tax bills would be going up for good and jack up house payments to reflect that cost in borrower’s escrow accounts.

“So this has long-term ramifications if we’re allowed to implement this stuff,” Schulte said.

Every two years, Missouri counties set new values on real estate for tax purposes. Jackson County’s property assessment system has come in for criticism during every cycle since 2019, when the county began trying in earnest to assess all properties at actual market value, which is the state standard. Many if not most properties had been undervalued for years, and values spiked along with the rising value of real estate everywhere.

Many taxpayers objected to the higher values, citing flaws in the county’s process. After a large number of taxpayers complained about big increases in their property assessments last year, the State Tax Commission joined in a lawsuit challenging the assessment process that Attorney General Andrew Bailey filed last December.

Bailey dismissed the lawsuit last week, a day after winning his Republican primary race before he was expected to be deposed to answer questions under oath, and two days before the county was set to present its case in court.

White maintained again on Monday that the court case and the order that followed its dismissal were politically motivated. Bailey and the two members of the tax commission who signed the order are Republicans.

White and a majority of the Jackson County Legislature are Democrats. The only Democrat on the tax commission did not sign the commission’s order.

Some members of the county legislature agree with the tax commission that values need to be rolled back out of fairness to taxpayers.

Sean Smith, one of two Republicans on the legislature, tried to introduce a resolution at the body’s regular meeting Monday afternoon which would have asked the county counselor not to challenge the commission’s order. Democrat Manny Abarca and a few others support Smith’s effort.

But legislative chair Jeanie Lauer, the other Republican, would not allow it to move forward because of concerns about its legality.

Convinsky said the county legislature has no say on whether he could initiate a lawsuit, per the county charter. But he said doing nothing could leave the county open to lawsuits.

Individual taxpayers could sue to get tax refunds from 2023, which is money that the county doesn’t have. Or it could make refunds and repay itself by withholding future payments to school districts, cities and other tax recipients until the county had compensated itself for those refunds.

That would invite lawsuits from the 57 local governmental units that would suffer those reductions, Covinsky said.