If you have received your Notice of Value from the Mohave County Assessor for 2008, you may be like me and understand better why our forefathers threw the tea in the Boston Harbor in revolt! I don't recall all the details of that time, but I do remember it had to do with unfair taxation, and it was the first thing that came to mind when I read my tax notice. In talking with people around town, it appears that many feel the same.
I do understand the need for taxation; however, putting such a large increase in a one-year timeframe is insane. It makes me wonder the reason behind the huge increase - could it be to increase the levels so that "everyday" people will no longer be able to afford keeping their properties and lose them in the near future to the tax sales and foreclosure processes? Is it due to the fact that the city and county governments made budgets according to the tremendous growth Kingman experienced a while back, and now that the "boom" is over, are trying to come up with ways to finance those budgets? I'm not typically such a skeptic, but it does make one wonder. Again, I am only speculating, but there has to be some reason for this. I am not assuming nor implying, only asking.
By the book
Here's what really scares me though. I went to the assessor's office to obtain appeal information and asked for information as to how the taxes are calculated. I was given a booklet that was prepared by Ron Nicholson, our county assessor, "Understanding Arizona Property Taxes." I was also told by one of the clerks that values were based on property values from approximately 18 months ago, ironically, during the "boom." (I suggest that you ask for a copy of the booklet as well when you go over to ask for your appeal form - more on that shortly).
As far as I can tell, our tax increase is not going to stop here. There is much more detail to this to get the taxes "exact," but I think I can at least give you an idea of the "bigger" picture.
Per the booklet, page 6, it states that full cash value is "based on what is happening in the market." My first question here is, what happened to the is part of that statement since our current is is not the same as 18 months ago? It further states the limited value "may be equal to, but never exceeds full cash (a statutory calculation)." Are you worried yet? You should be. Let me explain why.
The largest share of the tax bill is normally based on the limited value, so that is what I want to address as that will have the largest effect on us. If you want more detailed information, please consult the booklet in regards to primary/secondary rates and so forth, but I think you'll get enough of an idea based on just the limited value.
Again, per the booklet, the rules to determine limited value are the greater of:
(1) Last year's limited value plus 10 percent; or,
(2) Add 25 percent of the difference between this year's full cash and last year's limited value to last year's limited value.
(3) If there is a new improvement, use the statistical average of the limited values of improvements in your area.
The majority of the notices, if not all, that I have seen thus far have all been subject to No. 2 of the above.
For example ...
Now, let me show you an actual example so you will be able to calculate your own, and hopefully, have a better understanding of the overall affect of this:
2007; Class 3; FCV (Full): $232,877; Assmt Ratio: 10; Assd Value: 23,287; Lim Val: 183,681; Assd Value: 18,368
2008; Class 3; FCV (Full): $323,409; Assmt Ratio: 10; Assd Value: 32,341; Lim Val: 218,613; Assd Value: 21,861
Using No. 2 above, 323,409 (this year's full) minus 183,681 (last year's limited) equals 139,728 x 25 percent equals 34,392 x 10 percent (assessment ratio) equals 3,493. Add this number to last year's limited value for the current: 18,368 plus 3,493 equals 21,861. For simplicity sake, as far as I can tell, the taxes are close to 10 percent of the final assessed value, so in this example, the taxes are increasing from roughly $1,837 to $2,186 a year. So, in this example, taxes are going up approximately $350 in one year.
Here's what's scary. What about the upcoming years? Let's suppose the full cash value stays the same for 2009 and re-work the numbers: 323,409 (FCV) minus 218,613 (2008 limited) equals 104,796 x 25 percent equals 26,199 x 10 percent (assessed ratio) equals 2,619.9. Adding this to last year's limited value of 21,861 equals 24,480.9. So, in 2009, the taxes are going to increase again, another $262 approximately! Scared yet? Okay, just wait. What if you say, well, properties are decreasing in value, so taxes may go down next year. Not necessarily.
Let's say, given the above scenario, the property decreases in full cash value to $275,000. 275,000 (FCV) minus 248,100 (2009 limited) equals 26,900 x 10 percent equals 2,690. Add 2,690 to the 24,481 equals 27,171. So, now the annual taxes on this particular property will be approximately $2,717 a year, even though the value went down! Where does it end? Are you getting the picture now? This large increase is going to affect us all for many years to come.
This is but one example. I'll give you an example of another for someone I know. He is a disabled vet who purchased two 40-acre parcels (approximate) that are side by side. Not getting into exact details, his full cash value on one parcel went from $27,728 in 2007 to $222,647 in 2008! (Strangely, the other parcel right beside it and in fact a bit larger went from $28,142 to $56,513.) Personally, I haven't explored the reasoning behind determining the full cash value as of yet, but I'm totally confused by many of the examples I've seen. What's even scarier is that I've seen worse examples than this.
Future looks bleak
I'm not a tax expert by any means. I am merely a Kingman citizen who is scared and worried about the effect of such a large increase. Not only for myself, but what about those of us who work for set wages? You know that raise you just got, guess where it's going to go? Think about those people who are on fixed incomes. Do you think the increase in Social Security will keep up with the increased taxes? I'm not even addressing the increased cost of inflation.
Yes, granted, there are measures that people can take to "freeze" the tax increases, but only if certain restrictions are met such as (1) must be at least 65 years of age; (2) must be your primary residence; (3) must have lived on the property for at least two years prior; (4) combined household income cannot exceed certain amounts ($28,944 single owner and $36,180 for two or more); and (5) if alterations/additions are made after the "lock" has been approved, the locked value will be removed, and you will have to reapply. The booklet goes into further detail, but the last paragraph is what really gets me:
"It is important to know that the valuation for the primary residence will be frozen as long as the owner remains eligible. Taxes will not be frozen and will continue to be levied at the same rate as all the other properties in the taxing district."
Where's the help here? What this means is that this person, even though they fit all of the above guidelines, will be stuck with the higher valuation and thus higher taxes for years to come - or at least until the limited catches up with the full cash value, at least as far as I can tell from what I'm reading.
Bond that binds
I have also heard that the school bond initiative that passed this past election is going to cost taxpayers $200 a year per $100,000 value of their primary residences. If this is true, this new assessment is going to cost many of us even more! What are they going to base the value of everyone's home on? One could only assume that the government would use the tax assessor's rolls. With the first example given earlier, because the new full cash value is over the next $100,000 mark, here goes another $200 of increased cost per year, bringing the new total to an increase of $950 in one year!
Please keep in mind the effect of this on years to come! How much is this increase really going to cost you? You might want to take a good, long look and figure it out.
I hope your question at this point is, "What do I do about it?" The tax assessor's office has forms you can complete to "appeal" the taxes. The deadline for doing so is March 30. The forms can be picked up from their office at 700 W. Beale St. I am also collecting names/numbers of those who may be interested in pursuing this further should the appeals be denied. Please send an e-mail to: email@example.com with your contact information and I will get back to you as quickly as possible.
I'm sure the assessor's office is full of wonderful people. I'm sure our tax dollars will be put to good use, or so I hope. I just don't understand the justification for increasing it all in one year!
Obviously, I cannot make any guarantees but one: If you do nothing, that is exactly what will happen and you will be stuck with the consequences.
I don't know about you, but I'm grabbing my box of tea and heading to the harbor.
Best of luck to us all!