Property tax idea would push bills up

Wake County is considering reassessing homes without a compensating tax-rate decrease

Wake County commissioners are considering a proposal that could cause some homeowners to pay thousands of dollars more in property taxes when their homes are reassessed.

Under the proposal, Wake would reassess homes more often but wouldn't lower the tax rate to offset the higher property values.

That would reverse a decades-old county practice that shields homeowners from a double hit on tax bills. It would also go against a national trend of not using reassessments to boost tax revenue.

On Monday, commissioners endorsed the idea, saying it would help pay for an estimated $18.4 billion needed for new schools, jails and open space in Wake by 2030.

"This is a way of making growth pay for itself," said Tony Gurley, chairman of the board of commissioners.

Homeowners could see a change on their tax bill as early as 2008, when the county assessor resets property values.

If they adopt the proposal, commissioners could decide to keep the tax rate the same in that year's budget, which would also mean bigger bills for many taxpayers.

They could also speed up the next reassessment, which otherwise would not be until 2016.

The commissioners directed county staff to research the options and report back next year but didn't say when or which changes they would make.

Under North Carolina law, counties are required to reassess properties at least every eight years. Forty-seven of the 100 counties do it more frequently to more accurately reflect changes in the real estate market.

Wake has considered more frequent reassessments before, but the idea of holding the tax rate steady is new. It came from a task force of business leaders and community activists appointed by commissioners to find ways to manage the county's growth.

Critics say it would amount to a back-door tax increase because some homeowners' bills would go up by thousands of dollars.

Wayne Trout, president of the International Association of Assessing Officers, said that local politicians often try to duck responsibility for higher taxes by blaming the assessor, even though they chose not to lower the rate.

"It allows them to score some political brownie points," he said.

Supporters of the proposal say that more frequent reassessments are not the same thing as raising the tax rate. John Hood, who is president of the conservative John Locke Foundation and served on the county task force, said it just redistributes the tax burden to homes that have increased in value the most.

"If the tax rate is level, and the value of your home is rising, you will pay more than you otherwise would have paid in taxes," he said. "But you are not the victim of a tax increase the way you would be if the rate went up."

Doing the math

Since the 1970s, the county has lowered the tax rate after reassessments. Individual taxpayers, however, have often seen their bills go up dramatically, especially in neighborhoods at the higher end of the market.

In 2000, for example, the county tax rate dropped from 73 cents per $100 of assessed value to 56.4 cents. (The rate now stands at 63.4 cents.)

But the assessed value of a home on Holt Drive in Raleigh's posh Hayes Barton neighborhood nearly doubled from $863,178 to $1,676,928. Even with the reduced rate, its county tax bill went from $6,301 in 1999 to $9,458 the next year.

If county commissioners had not dropped the tax rate after the 2000 reassessment, however, the bill on that home on Holt Drive would have nearly doubled as well -- to $12,242.

In a recent study, the county's revenue director, Emmett Curl, projected that single-family homes in Raleigh worth more than $185,000 will see an average 32 percent increase in value after the 2008 reassessments. Those under $185,000 will see a 16 percent increase.

If the tax rate were held steady, homeowners could expect similar increases in their tax bills.

Homeowners say that more frequent reassessments would help ease sticker shock, but they are not as enthusiastic about keeping the tax rate steady.

"I would rather see small changes over time than big ones. They're easier to budget for and easier to swallow," said Chris Engel, a Raleigh pharmaceutical analyst. "It would be great if the [county] assessed every home every year -- and then lowered the tax rate."