Property Tax Plan in Missouri Legislature Has Some Worried

Proposed plans before the Missouri Legislature that would change the way real estate property gets assessed is not sitting well with some St. Charles County government leaders.

The proposal contained In House Joint Resolutions 5, 6, 7 and 8 was unveiled during the special session of the legislature-not as an action item but to preview an issue sponsors hope to advance in the regular session in January.

Sponsors include State Representative Ben Keathley (R-Chesterfield), who supported the Senior Property Tax Freeze bill in 2023. He explained how the new plan would work during a Sept. 9 hearing in Jefferson City.

"What we have is a property tax system that isn't working for Missourians anymore," Keathley says. "HJR 5 through 8 would eliminate the personal property tax structure and then roll that revenue into the existing real property tax levy."

A 10-tier system for assessing real estate based on square footage and age would replace the current system of assessments based on market value and comparable sales. The goal would be to hold increases to no more than 5%.

"Rather than having assessors go out every other year and having to appraise and evaluate every single piece of property, we would put this into a tiered structure," Keathley says.

Watching these developments, St. Charles County Assessor Travis Welge warns the plan could raise the average St. Charles County homeowner's property tax bill about $800 a year, if it becomes law.

"What this House resolution does is shift all your personal property tax to your real estate property tax," Welge says. "There's going to be winners and losers. If you have nice vehicles, you're going to save money. If you don't have nice vehicles, you're probably going to lose money because your house taxes would go up more than you're paying in personal property tax."

Welge is also concerned about the proposed new method of assessing property based on ten tiers of value that depends on square footage and age.

"There's no definition of what Tier One is going to be or how that affects taxes," Welge says. "It doesn't define any of that."

Welge believes the legislation would just move the tax burden around.

"Taking away personal property tax and adding it to real estate tax is not the way to go. They need to find somewhere else to get the money from and not from shifting it to real estate.

Statewide, 25% of tax revenue comes from personal property, compared to 14% in St. Charles County, Welge says.

"So, here in St. Charles County, we'd have to make up $130 million that now comes from personal property taxes by shifting that to real estate property taxes," Welge says. "Statewide it would be $2 billion dollars shifted to real estate property taxes."

Meanwhile, St. Charles County Collector of Revenue Michelle McBride worries the plan could hurt the Senior Tax Freeze.

"I'm concerned that the base frozen year amount will change and get reset at a newer, higher level," McBride says. "It's very likely the base, the frozen amount, will have to adjust if the real estate takes on all of this personal property tax liability. This is bad legislation."

In a phone interview, Keathley was asked about McBride's concerns. He says there's nothing in his resolution that would directly change the base year for the Senior Tax Freeze. But he admits it could set the stage.

"I would imagine one of the topics of discussion would be how the Senior Property Tax Freeze would be adjusted or changed to accommodate a brand-new property tax model," Keathley says. "But that's not a part of the overhaul of the property tax system in HJR 5."

"The way it would work right now if you just left it alone, the Senior Property Tax Freeze would still govern. I think seniors would still be protected at whatever they're frozen into right now or would be frozen into. Their base year is not going to change. That statute itself would have to be adjusted if we wanted to adjust that to accommodate the personal property tax effects."

Keathley was asked how confident he is that the ideas contained in HJRs 5 through 8 will develop into formal legislation during the regular session that begins in January.

"I don't know that the ten-tier assessment structure is going to be the silver bullet that gets adopted to fix property taxes once and for all," Keathley says. "I think we're still a ways away from that. There are certain parts of it that will probably carry forward based on the conversation we've had. …I don't know about the overall tier structure, and I don't think the personal property tax abolishment is going to happen quite like that."

Whatever the outcome, Keathley says it's been worthwhile to get a discussion started about how to reform the state's system of property tax.