A surprise $2 billion drop in Mecklenburg County’s property values happened because the consultant, Pearson Appraisal Services, put off the most questionable assessments until the end, the county tax assessor said Thursday.
Since the fall of 2013, Pearson has been re-examining all county property to correct mistakes from the 2011 revaluation. The initial revaluation left many homeowners and businesses upset about the tax value assigned to their property.
Mecklenburg County Tax Assessor Ken Joyner told a Charlotte City Council committee that Pearson had first examined property that appeared least problematic. Because the early properties examined didn’t change much in value, Pearson had estimated the total drop in taxable value would be about 1/2 percent.
When the revaluation was finished, there was a 2.2 percent drop in taxable value – a dip that has played havoc with the city’s budget.
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The reason, Joyner said, is that Pearson waited until the end of the project to review commercial property that was expected to have large swings in value.
“The most difficult (properties) were still to come,” Joyner said.
Pearson had originally hoped to have the entire revaluation finished in December, but it wasn’t completed until February.
The drop will cost the city about $14 million for the upcoming fiscal year, which begins in July. Charlotte has also lost $18.1 million after the General Assembly repealed the Business Privilege License tax.
In January and February, as the city began reviewing its budget, the city expected it would only have to plug the $18.1 million gap from the loss of the business tax.
But in early March, city staff members learned about the possibility of losing an additional $14 million. Council members heard about the new shortfall last week.
“We can’t have this variability,” council member Vi Lyles told Joyner at Thursday’s meeting. “It’s untenable.”
Council member Greg Phipps, the chairman of the budget committee, said he is concerned he didn’t learn about the “bombshell” until mid-March.
Joyner said he relayed the information to county officials in late February, and then it was passed on to the city March 6.
Mecklenburg County, which funds schools, parks and social services, will also be impacted by the drop in taxable value from $91.6 billion to $89.6 billion. It will probably lose around $25 million in property taxes for the upcoming year.
But the county is not in a crisis mode like the city.
“We have a conservative budget process,” said Assistant County Manager Mark Foster.
But the county also isn’t impacted by the loss of the business license tax. That means it has a smaller budget shortfall to plug.
State law requires counties to assess property every eight years. The work done in 2015 is correcting the 2011 valuation, which means the county will be doing another revaluation in 2018 or 2019, Joyner said.