With all the alarm this week about how much Mecklenburg County property values have skyrocketed since the last revaluation in 2011, residents should remember one crucial thing: When it comes to your property tax bill, it doesn’t much matter whether property values have gone up 10 percent or 100 percent. What matters is 1) what county commissioners and City Council members do to the new tax rate, and 2) how much your property’s value rose compared with the countywide average.
The Observer’s Ely Portillo correctly reported this week that Mecklenburg residents might suffer sticker shock when they learn their new values in January. Values have jumped an average of about 51 percent since 2011, Assessor Ken Joyner says, with residential values up 38 percent and commercial properties up 79 percent.
But it would not be surprising for your property’s value to jump 35 percent – a number that might prompt initial sticker shock – yet for your tax bill to shrink.
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Mecklenburg commissioners and Charlotte City Council members will set new tax rates in June 2019. The higher property values will allow them to bring in far more tax revenue while leaving the tax rate the same. So they can, and usually do, cut the tax rate enough so they are bringing in the same total amount of money.
If they do that, the revaluation is not about bringing in more revenue, but about shifting the tax burden to where it belongs. If your property has appreciated, even a lot, but a good bit less than the countywide average appreciation, your tax bill would shrink under a revenue-neutral rate. If your property has bolted up far more than the countywide average, your bill will grow, as it should. If it didn’t, you’d be getting an unfair break at the expense of other homeowners. In fact, you’ve been enjoying that break for years without realizing it.
Let’s take a specific example, using very general numbers. Your house’s current tax value is $200,000. Your county tax bill on that property is $1,646. Your new value next January is $270,000, a 35 percent jump. Your new tax bill if commissioners leave the rate at its current 82.32 cents is $2,223, a hike of $577. But if they cut it to a revenue-neutral rate of, say, 60 cents per $100 of assessed value, your tax bill would drop a tad, to $1,620. (The actual revenue-neutral rate might be a good bit lower than 60 cents.)
The key, then, is where county commissioners and City Council members set their tax rates. If they were to keep the rates the same, that would be a massive tax hike, and they shouldn’t suggest it isn’t. The starting point should be a revenue-neutral rate, followed by transparent discussions over whether they want to raise or lower taxes, or keep them the same.
Revaluation is an important tool for making sure everyone is paying their fair share, no more, no less. It should not be a tool used to sneak a tax hike by unwitting residents cloaked in a small tax rate cut.