July 18, 2008
Property tax rates
This is the time cities and counties in North Carolina are setting their property tax rates for next year. But in counties that have gone through a recent property reevaluation, like Wake, it appears that rate increases on top of value increases can result in a large tax hike. Is this accurate? Listen
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"You have to be careful here. Of course the property tax bill - the tax you pay - is going to be a function of the value of property and the tax rate. And of course, as you said, in counties where there's been a recent reevaluation, your value of your property has definitely gone up. Now, when you hear about, however, your county or city increasing your tax rate, first you have to ask, What are they increasing it from? And usually what happens in counties and cities that have had a reevaluation is first, they will adjust the property tax rate to what's called a revenue-neutral rate. That's a rate that will give the tax bill that the average person pays no increase over the previous year. So then what happens if they say they're going to increase their tax rate, usually it's from that revenue-neutral rate, which is going to be much lower than the rate last year. So the bottom line here is that, yes, people may see their tax bill go up and they may look at the reevaluation and the tax rate increase and say, 'My gosh, this is going to be a gigantic increase.' But usually it's not, and it's because you have to be very careful in looking at that tax rate increase and make sure that you're looking at it from the basis of the revenue-neutral rate, which is going to be much lower."
Posted by Dave at July 18, 2008 08:00 AM