The Tax Man Cometh By More Often
Based on the Guilford County Board of Commissioners unanimous vote – with no discussion – at their Thursday, Feb. 6 meeting, one might think that everything about shortening the longstanding eight-year property revaluation cycle to a new five-year cycle is nothing but terrific for the county.
However, the reality is that, among other drawbacks, revaluations are very expensive, and conducting them more often will mean higher costs for taxpayers.
At that same meeting, the Board of Commissioners passed a sneaky tax increase on early taxpayers by cutting in half the 1 percent break the Tax Department has given in the past to those who pay their property taxes early.
In the modern era, every eight years, Guilford County has conducted a countywide property reevaluation. The last one was in 2012 and the next revaluation was scheduled was 2020. However, now the Tax Department will revalue all property in 2017 and every five years after that.
At the Feb. 6 commissioners meeting, none of the nine commissioners spoke either for or against the major change in how Guilford County government operates – and no one at the meeting addressed the fact that revaluations are expensive and time consuming, or that, in the past, when the county has conducted revaluations, it has hired extra tax assessors for that purpose.
To be fair, while the board didn’t discuss the matter at all on Feb. 6, the commissioners have debated the change extensively at meetings and workshops last year, at their two-day retreat in January of this year, as well as in the Guilford County Tax Committee meeting held a few days before the Feb. 6 vote.
In all of those discussions, it was difficult if not impossible to find any opponents of the move – either among county staff or the county commissioners – but there are drawbacks nonetheless.
Guilford County Tax Director Ben Chavis said, after the vote by the board to shorten the revaluation cycle, that, in the 2012 revaluation, the county added several tax assessors to the payroll and spent about $200,000 on those extra employees. In 2004, Guilford County added even more tax workers to help with the effort, but Chavis said that, in recent years, technology has helped bring down the need for outside help.
He also said that, once the revaluation is finished, the county lets those additional employees go.
Chavis said there’s also extra postage costs for the county. He said that, in each revaluation year, the county spends about $100,000 on postage. For one thing, it sends out roughly 210,000 notifications of new value to property owners.
In addition to the roughly $300,000 for extra tax assessors and postage, there’s also overtime pay for the county’s Tax Department employees and other ancillary costs associated with the massive year-long, countywide effort.
The timing of the Feb. 6 vote by the commissioners took just about everyone by surprise – including Chavis. The matter wasn’t originally on the commissioners’ agenda that night; it was a last-minute addendum that surprised many commissioners, reporters and staff who only saw the item when they got to their seats at the meeting.
The addendum had two other resolutions on it as well – both also approved by the Board of Commissioners. Just as the board voted to shorten the county’s revaluation period, the commissioners also voted to reduce the county’s discount for paying taxes early, from 1 percent to a half percent. In discussions that date back several months, the board had arrived at a consensus on the half-point reduction in the discount for early taxpayers – a move that’s estimated to bring in about $1 million in extra revenue each year since the conscientious taxpayers will get less of a discount.
The board did not present the move as a tax increase, but there is no way around the fact that now those who pay their taxes early will be paying more in taxes due to the move by the Republican-majority board.
In addition, the board voted to stop the county’s practice of widespread and redundant publication of the names of the delinquent taxpayers in the News & Record, the High Point Enterprise and the Carolina Peacemaker. Instead, the county will now put that service out for bids to find the lowest cost single provider for the service.
Advocates for cutting the advertisements of delinquencies said they wanted to do only the bare minimum required by North Carolina law, which states that counties must advertise the names in a subscription-based newspaper of general circulation, but other than that leaves the details up to the counties.
As for drastically cutting the money spent to advertise the names of those not paying their taxes on time, several commissioners, along with Tax Department staff, have argued for months that it wasn’t an effective tool in getting people to pay up.
Chavis said he knew before the Feb. 6 meeting that the board was going to address the advertisement issue, but he added that he was very surprised the commissioners moved forward on cutting the discount rate to a half percentage point and shortening the revaluation cycle.
Chavis said he supports both those moves; he just thought they would happen later in the year. So the tax director was beaming with delight after the three rapid-fire votes that instantly gave him three big outcomes he desired, ones he’d been asking for for a long time. Chavis also got a 1 percent raise at the meeting to boot, so he was batting 4 for 4.
After the meeting, Chairman of the Board of Commissioners Bill Bencini said that shortening the revaluation cycle to five years was the strong will of the county’s Tax Department, the unanimous opinion of the Guilford County Tax Committee, and the will of the full Board of Commissioners as well. He said it was simply time to move on the matter since the commissioners had already talked about it extensively and had reached an agreement.
Bencini said that, even though the next countywide revaluation is still three years off – now 2017 – there’s a lot of preparation for the change so he wanted to move swiftly to make that happen.
“Ben said he needed to get things lined up,” Bencini said.
Practices across the state on revaluation cycles span the gamut from some counties that do a revaluation every few years to counties that do it just once every eight years. In 1959, the State of North Carolina passed the law that requires all property in the counties to be revaluated at least once every eight years, but gave counties the option of doing it more frequently if counties desired. In the past 65 years, just over half of the state’s 100 counties have gone to a revaluation cycle shorter than eight years, and now Guilford County has joined that group with a five-year cycle.
According to Chavis, infrequent revaluations lead to property equity problems, since different market areas and different classes of properties appreciate or depreciate at different rates. He said there are less extreme value changes when a revaluation is done more often. Chavis said it also helps his staff discover unlisted property that might be missing from the tax base.
Also, Chavis said, a shorter revaluation cycle gives Guilford County the option of pushing back the time, if the department encounters problems while preparing for the revaluation. Otherwise, he said, if something goes wrong, then the county is up a creek.
“It gives us some wiggle room to delay the revaluation,” he said. “It gives us flexibility.”
If a county is on an eight-year cycle, there can be no postponement without action by the NC General Assembly, he said.
It’s not clear that there’s actually any real penalty for violating that law. It’s unlikely the state would, say, come in and arrest the tax director and the commissioners for not doing a revaluation on the eighth year of a cycle. Chavis said he isn’t aware what the actual penalty is from the state if a county goes past the deadline.
At a recent meeting of the Tax Committee, Guilford County Attorney Mark Payne made the interesting point that there was no penalty for breaking the state’s law when it comes to advertising the names of delinquent taxpayers.
Chavis said there has only been one time since the revaluation law passed that any county has gotten an extension from the state. That happened when Robeson County, which has Lumberton as its county seat, was on an eight-year cycle and experienced massive problems with its tax collection software.
“Robeson County went to the General Assembly in a quandary and said there was no way they could pull it off,” Chavis said.
The tax director also said that citizens’ fears that revaluations create a hidden tax increase aren’t justified.
He said that in fact, revaluations usually lead to a larger tax base, which can reduce the burden on existing taxpayers. He added that revaluation years don’t typically lead to tax increases. According to Chavis, “In the last five revaluations, the commissioners have lowered the tax rate during the revaluation year.”
Chavis points out that the county is required to publically announce the “revenue neutral rate,” which allows citizens to know if their taxes have gone up, gone down or stayed the same in a revaluation year.
The tax director added that more frequent revaluations should help limit the appeals of property values that occur during revaluations. Its conceivable that the Tax Department will end up with more appeals on its hands overall because there will be more revaluations and more opportunities for people to complain about their assessed property values.
In 2012, one county staffer said that the Board of Equalization and Review, which hears complaints from taxpayers about assessed property values, held meetings that lasted “from morning until night.” There were also a lot of taxpayers who appealed to the state after the 2012 revaluation when they felt they didn’t get satisfaction from the county’s Board of Equalization and Revue, known better as “the board of E&R.”
Chavis said that the reality is that more frequent revaluations help limit the number of appeals.
“Appeal rates typically go down,” Chavis said.
Chavis said a shorter revaluation cycle keeps properties closer to their actual market value, and that gives people a right to appeal.
By the way, not everyone wants their tax values to go down: At a Guilford County commissioners meeting last year, Commissioner Carolyn Coleman complained the revaluation wasn’t fair to some of her constituents because the Tax Department had valued their property too low.
Coleman said she believed that meant a lower resale value for the homes whenever the owners decided to sell. What it actually means is simply that the owner pays less in property taxes.
The truth is that it is virtually impossible to get accurate decision on every piece of property in Guilford County in one year: The department uses a lot of drive-by appraisals, aerial photos and other short-hand techniques to arrive at the assessed values, and, in many cases, that value is either above or below the actual market value, even though market value is the target. The Tax Department often presents stats that say the assessed values are very close to tax values but the experience of many property owners says otherwise.
One prominent and experienced area Realtor said that in his experience the tax value of a piece of property is practically irrelevant to the true value of homes on the market. He said that the only time the tax value plays a role is that it lets the prospective buyer know how much he or she will be paying in property taxes each year.
To give an idea of how haphazard the values can be, when the 2012 revaluation was conducted in Guilford County, the appraised value of much of the county’s Prison Farm land was drastically devalued by the Tax Department for no apparent reason.
BY Scott D. Yost
February 13, 2014
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