Any legislation to allow only Mecklenburg County to reset property tax values or refund taxpayers retroactively to 2011 likely would be unconstitutional, according a UNC School of Government taxation expert.
“You can’t have special rules for special counties,” said Chris McLaughlin, a lawyer and assistant professor specializing in local taxation at the school. “A conservative reading of the (state constitution) says that resetting tax values back to 2011 would be unconstitutional.”
That could explain why some advocates in recent days have backed off calls for redoing the controversial revaluation. Many commissioners have stressed the issue is complex, and don’t want to build expectation.
Commissioner Karen Bentley, a Republican from Huntersville, once staunchly supported a redo. But after talking to “experts” she said last week that one was likely unrealistic.
Yet many, including state legislators in the Mecklenburg delegation, are still pushing for a retroactive refund of taxpayers who were overbilled in 2011.
McLaughlin said it can’t happen under the current law. The issue, he said, falls under a “classification” clause stating that only the General Assembly has the power to “classify property for taxation, which power shall be exercised only on a statewide basis.”
All classifications, the law says, are to be uniformly applied in “every county, city and town” across the state.
McLaughlin said no county is ever going to accurately value all its properties, and that’s why the appeals process was set up.
“They do the best they can given their resources, but the appeals process allows the counties to say, ‘If you think you can come and show us information we missed, we’ll make the change,” he said. “The appeals don’t stop with the county. It’s important to remember Mecklenburg County can revalue properties at any point they wish – but it’s a problem they can solve only going forward.”
Last week, Mecklenburg commissioners adopted a multistep process to clean up after the botched 2011 revaluation.
The actions included giving County Attorney Marvin Bethune 60 days to consult with experts on the legality and consequences of resetting property values back to Jan. 1, 2011. Those changes would include refunds to overtaxed property owners or higher tax bills for undervalued homes.
Taking any changes back two years would require legislative authority. Without it, they’d go into effect when new tax bills are mailed in 2013.
McLaughlin said he conferred with Bethune last week and “I told him the same thing.”
It may take a court to decide the issue, he said. “What you’re doing is creating special rules for certain properties in a certain part of the state. No court has spent any time wrestling with that issue.”
Meanwhile, key state lawmakers are watching the county’s efforts to fix the revaluation that has fueled anger and distrust for county government from thousands of taxpayers.
For more than a year, property owners complained of over-inflated property values and their inability to find a receptive ear in county government during appeals.
What started as a small taxpayer revolt in the Cornelius/Lake Norman area spread quickly throughout the county.
After an outside review of the appraisal by Pearson’s Appraisal Service found dozens of inequities among 15 percent of Mecklenburg neighborhoods, revolt leaders demanded the revaluation be done over – and refunds handed out back to Jan. 1, 2011.
Many argued if Pearson’s found three dozen major inequities in its small sample, there’s no telling how many there are countywide.
So trying to restore public confidence, commissioners rehired Pearson’s last week to expand its appraisal study to every residential and commercial neighborhood – far beyond its initial sample – to identify and fix major inequities.
They adopted other actions, including: starting immediately on “reworking” neighborhoods already identified with problems; building a plan to deal with minor problems and another plan to address future revaluations.
McLaughlin and David Baker, director of the local government division of the N.C. Department of Revenue, couldn’t recall another county ever hiring an outside firm to review a revaluation.
Nor could Baker, with the Revenue Department for 25 years, remember another county asking for authority to retroactively refund overbilled taxes.
Legislators speak up
Rep. Bill Brawley of Matthews, a Republican, has said he felt legislation could be customized to help only Mecklenburg without disrupting other counties.
Last week he said he stood ready to help the county with the problem.
As outgoing Cornelius mayor, Republican Sen.-elect Jeff Tarte was a leader of the taxpayer revolt. He’s gone around the county in recent weeks, telling residents he’s ready to help the county get whatever authority it needs to make the refunds legal.
He said he “can’t imagine a scenario” where lawmakers wouldn’t grant Mecklenburg the authority to make refunds.
“I’m no lawyer, but it would seem like a massive contradiction if you’ve set up a system: ‘We can overbill you, but we can’t give your money back if you overpay,’” said Tarte, who’ll be sworn in Jan. 9. “Bottom line, the county messed this thing up. And if the county can’t make the refund, that’s stealing.”
His satisfaction will rely on three basic achievements:
Fixing the 2011 revaluation and refunding money to taxpayers that were overcharged.
• Establishing steps to ensure the same problems don’t crop up in future revaluations.
• Updating the county’s property data base – which hasn’t been done in 17 years.
Legislators, Tarte said, want the county to work out the problem.
“We are not here to hijack the process and stick ourselves into the middle of it,” Tarte said. “We want the county board to do their job. At this point, we’ll judge their job by: Does everybody have a fair and equitable property value?’
“If they don’t, we may require some steps be taken.’”
N.C. Sen. Malcolm Graham, a Democrat from Charlotte, said he’s in a “wait-and-see” mode, but is willing to help. He said a new county board of commissioners sworn in on Monday could “go another direction” on the revaluation controversy.
“I would love to see the new county commission discharge their duties aggressively to resolve the problem at home,” Graham said. “This is a county issue. … Hopefully they’ll find a resolution without state intervention.
“But the more I see and watch and hear, I’m not sure that’s going to be possible.”