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VOL. 124 | NO. 82 | Tuesday, April 28, 2009

Reappraisal Numbers Up Almost 9 Percent Countywide

By Andy Meek

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Certified tax rolls released this month by Shelby County Assessor of Property Cheyenne Johnson provide a snapshot of the local real estate market over the past few years – particularly how property values are changing and where those changes are occurring.

An analysis of the tax rolls shows an 8.8 percent gain in the assessed value of property in Shelby County as a result of the 2009 countywide reappraisal, which became official April 20.

The figures also show most of the county’s increase in assessed value – the percentage of property value on which taxes are paid – occurred within the city of Memphis.

Comparing this year’s certified tax rolls to last year’s figures also shows Memphis and Shelby County with roughly the same percentages of the county’s overall tax value in 2008 and 2009. In other words, the 2009 reappraisal did not result in a major shift of the county’s tax burden to taxpayers outside Memphis, as some feared might occur to compensate for declines in the city.

Local governments use the updated figures to guide their budget planning discussions for the coming fiscal year.

Minced words

Memphis officials already have given an idea of the direction they’re going with the tax rate. City finance director Roland McElrath told Memphis City Council members last week the city’s tax rate of $3.25 per $100 of assessed value likely would be lowered.

But Friday, Memphis Mayor Willie Herenton sent the council a letter recommending the council allocate 82 cents of the city’s tax rate to funding for Memphis City Schools.

“My advice to the council is to reinstate the previous 82 (cent) tax rate allocated for schools and let’s move on to other priorities for the city,” the mayor wrote.

Meanwhile, here’s more of what the new certified tax figures show:

  • Overall, the county saw a $1.5 billion increase in tax value after the reappraisal. Of that, a little more than $1 billion came from within the city of Memphis, and a little more than $500 million came from outside the city.
  • The assessed value within Memphis comprised about 61.4 percent of the county’s overall tax base in 2008. The county outside the city last year comprised about 38.5 percent of the county’s overall tax base.

This year, Memphis comprises 61.8 percent of the county’s overall tax base, and the county outside the city comprises 38.1 percent.

Minced numbers

Those numbers all either reflect or relate to increases in assessed value. The assessed value for residential property owners is 25 percent of their property’s appraisal. For commercial and industrial property owners, the assessment is 40 percent. Property tax rates are applied to each $100 of assessed value.

This year’s figures reflect adjustments from the latest countywide property reappraisal, something that happens once every four years to make sure the local tax burden is spread equally among taxpayers. The adjustments are supposed to ensure an up-to-date property value is identified so taxpayers aren’t paying too much or too little because values are out of line.

The adjustment results in an increase in tax value for some property owners, but the way a reappraisal is conducted in Tennessee means local governments don’t get an increase in revenue from a reappraisal in and of itself.

This month’s certified figures don’t break down how much of the 2009 increases result from new construction and corrections from past errors in value calculations. Those figures will be identified and then set aside before local governments go through the process of identifying the certified tax rates that would bring in the same total tax revenue levied last year.

That process is the way local governments are kept from getting a revenue windfall from the reappraisal.

The certified figures also will be adjusted further as challenges from property owners succeed in knocking some value off the tax rolls, either through the assessor’s office or the county Board of Equalization.

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