Homeowners Perplexed by Revised Property Tax Rate

Homeowners Perplexed by Revised Property Tax Rate

Memphis City Council members say you will think they're increasing taxes by fourteen cents; it will sure look that when you do the math. But because of property values dropping, they say it won't be a tax increase at all.
MEMPHIS, TN (abc24.com) - Memphis City Council members say you will think they're increasing taxes by fourteen cents; it will sure look that when you do the math. But because of property values dropping, they say it won't be a tax increase at all.

You remember what you paid in property taxes. Your house might be worthless now after the latest property value reassessment, which means the city isn't getting as much money.

State law says that can't happen. The city has to raise taxes in order to keep the current level of services. But you won't notice anything different, even though the base tax rate would go up from $3.11 to $3.25.

"The actual dollar amount that the average homeowner would pay out would be the same. And in order to do that, because of the reduced property values, the tax rates have to go up," explained the city's Chief Administrative Officer, George Little.

Confused? OK, let's try this.

"If someone has a hundred thousand dollar house and their rate is reduced, their value is reduced by four percent. And then you apply the $3.25 rate to that reduced value, their taxes will be identical from one year to the next," stated Memphis City Council attorney Allan Wade.

It would seem to make sense. If the city needs a certain amount of money, and the houses have dropped in value, the city isn't getting what it needs. Raising the tax rate isn't raising the tax rate, it's just sort of making things equal.

Try explaining that to taxpayers. Those we talked to didn't get it, and they're not alone.

"I would venture to say out of the 13 members of council, maybe one or two understand it completely, right now as of today," said Councilman Bill Boyd.

The city council can cut taxes, but George Little warns if that happens, services will be cut.

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