Martin explains assessment changes

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 (Editor’s note: Recently, Mobridge residents received assessments from the Walworth County Director of Equalization.  For some the major increases in assessed value came as a quite a shock. The following is an explanation from Walworth County Commissioner Duane Martin as to what those assessments mean and how it will impact taxes paid in 2015.

Martin is experienced in home assessment and currently is a licensed appraiser and has been actively engaged in developing residential appraisals during the past 13 years. His appraisal practice included clients from the surrounding eight-county area and the cities of Aberdeen and Pierre. Because his practice is located in Mobridge, much of the work was in Walworth County and as a result he is familiar with Walworth County property values. Prior to his work as an appraiser Martin worked as a licensed home inspector and also was a self-employed insurance adjuster. Most all of his work experience during the past 25 years required a good understanding of residential, commercial and rural properties.)

As we know the collection of property taxes involves several steps. The phases associated with the collection of the taxes that are used to pay for local services are sometimes confusing.

Property tax is a tax on the assessed value of a property.

Assessed value is the estimated market value of a property.

Market value is the selling price of a property.

Mil levy is the rate of tax applied to the assessed value of a property.

A budget is the planned expenses or cost for a specific purpose or project for a specific period of time.

Equality when used by the assessor refers to the application of uniform standards used in determining the assessed value of properties.

The process involved in collection of property taxes begins with the assessor’s office.

It is the assessor’s duty to maintain complete and current records of all properties in the county. This is done by visual inspection, building permits and property owner reporting. Each year the assessor must use the information on the property records to determine the assessed value of each property. The assessed value of a property should be equal to a property’s market value.

The amount of property tax to be collected is determined by each jurisdiction’s budget request.

Every entity in the county, including the county, cities and school districts, will submit their prepared budget to the county auditor, who then will (with the guidance of the state auditor) apply a levy to the total assessed value of all the property in that entity’s jurisdiction. (For example, taxes collected to meet the Mobridge budget will be assessed to only those properties located in the city of Mobridge and likewise for the city of Selby and every other entity in the county.) The levy to be applied to the total assessed value will be sufficient to collect the tax requested by each entity’s budget and then applied proportionally to each property’s assessed value.

Equality in the tax burden is dependent on the assumption that each property is assessed fairly. This is done by applying uniform standards to each property and can only be done if information recorded by the assessor is complete and up-to -date.

In the past several years the citizens in Walworth County have questioned the equality of property assessments.

In the fall of 2012, an audit by the state indicated that the county assessors office was understaffed and as a result the office could not maintain current property records. At about the same time a random sampling of recent property sales indicated that the average assessed value of a property was between 50 percent and 60 percent of the property’s market value. Further review of property records reveled significant discrepancies in assessed values of properties in all areas of the county. In the late spring of 2013 the county commissioners did agree to take action to update all property records.

The assessor’s office staff was increased from one full-time and one part-time to three full-time employees. Office equipment was updated and a letter was sent to all property owners requesting updated information. The new staff came on board in June of 2013 then one of the two left in January 2014.

The response to the letter sent to all of the county’s taxpayers requesting updated information was a failure, due to lack of response (about 40 percent returned the questionnaire). As a result our efforts to move closer to equality in assessment of the tax liability fell short of the intended goal.

If we are to attain equality in property taxes, it is imperative that we complete the effort to update every property record in the county and this must be accomplished in this calendar year.

It is estimated that when all county property records are current the total assessed value of some entities in the county will double. This will result in a favorable impact on everyone’s tax liability. We know that a few properties are assessed at fair market value while many are assessed at somewhat below market value and others are grossly under assessed. To give every property owner an idea where they are simply ask yourself if your assessed value is close to the estimated market value. If so, your assessed value is fair.

After assessed values are fair to all we can expect the total value in most jurisdictions to double

and the anticipated impact to the individual property owner will be as follows:

In the City of Mobridge:

•  Total assessed value 2014, $87,120,780; estimated assessed value 2015, $150 million

•  Budget request 2014, $604,966; 2015, budget request $604,966.

•  Required levy, 2014, 6.944, required levy 2015, 4.03.

Tax on property with assessed value of 2014          Tax on same property 2015

$50,000, tax $347                                                                 $50,000, tax $243

$100,000, tax $ 694                                                            $100,000, tax $403

$150,000, tax, $1,042                                                        $150,000, tax $604

As illustrated above Mobridge City taxes should decrease 58 percent when assessed values are at

full and true.

This example includes tax for the city only. It does not include the tax for the school district or

county.

The increase in assessed values of the school district and county are more difficult to estimate,

however, we do expect they will increase at least 25 percent. We do expect the levies to decrease

up to 10 percent or more.

Total tax levy for Mobridge          Current         Projected levy full and true assessed value

City                                                           6.944                            4.03

County                                                    4.196                             3.78

School                                                     14.494                       13.045

Total levy                                               25.634                      20.855

 

Tax on $100,000 assessed value   $2,563                     $2,086

The opt out for the city swimming pool asks for an additional $200,000 for the city budget. If

approved and the assessed values are adjusted to full and true value as expected in 2015 it would

increase the city tax levy for 2015 to 5.34 and the tax on a property assessed at $100,000 to $534,

an increase of $131 (from $403 to $534.)

- Katie Zerr, Duane Martin -

 
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