More than a month before Hurricane Dorian threatened to enter the Gulf of Mexico, property owners in New Orleans faced a different kind of storm surge — significantly higher property assessments. Higher assessments almost always lead to higher property taxes, which in turn trigger pushback from property owners.
Assessor Erroll Williams and his staff have already gotten an earful during the annual period of open assessment rolls. That’s when taxpayers can seek relief directly from the assessor — or file formal appeals.
The Louisiana Constitution mandates reassessments every four years, which is a long time in a hot real estate market like New Orleans. Some homeowners reported increases of 100% or more.
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On Sept. 4, about the time Dorian is expected to enter the Gulf, Williams will submit the final formal appeals of his latest assessment rolls to the City Council. The council sits as the Board of Review, or the court of first resort for property owners seeking a break in their assessments. It’s a painstaking process for all involved.
On one hand, council members want to help their constituents. On the other hand, they need to make sure the city gets its share of tax revenues to provide services.
Then there’s the Byzantine “roll back, roll forward” exercise. The state constitution requires entities that receive property tax revenues to “roll back” their tax millages to levels that make reassessments revenue neutral. That happens automatically, as a matter of law. However, those same tax-recipient entities may, by a two-thirds vote, “roll forward” their millages up to the levels they were before reassessment — thereby generating more revenue … and hiking property taxes.
That’s another reason why city council members are nervous. They will face pressure from constituents not only to reduce assessments but also not to roll millages forward. At the same time, Mayor LaToya Cantrell is expected to push for a roll forward to keep the city’s budget in balance.
All this comes just as the mayor is asking citizens to approve a 3-mill property tax for infrastructure on Nov. 16.
Talk about a storm approaching.
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No doubt sensing where voters’ sentiments lie, the council recently adopted a resolution urging state lawmakers to consider a constitutional amendment mitigating the impacts of residential property reassessments. The council suggests forgoing quadrennial reassessments on homes subject to homestead exemptions in favor of fixed — or capped — annual or biennial assessment increases, which at least would be predictable (and subject to appeal). The council also recommends basing such assessments on the fair market value at the time of sale, donation, or transfer rather than current market value.
“The system is backward — taxing individuals on what they might receive if they sell their homes,” said District B Councilman Jay Banks, who authored the resolution. “We should only astronomically increase values if the value is actually captured by the owner.”
For his part, Williams wrote the council on Aug. 28 stating that he had already tried — unsuccessfully — to convince lawmakers to cap assessment hikes. He noted that 10 other states, including Arkansas and Texas, already cap reassessments.
Trading a cap for annual assessments makes sense, and it could gain traction in this election year. A lot can change in the wake of a storm.
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