Lowering taxes, or possibly raising them
The industrious John Fritze, who got an early copy of the report, reports today that the change "could cost many city homeowners thousands more a year."
If all of the panel's short-term recommendations were adopted, the rate would be cut to $2.017 per $100, which would still be the highest in the state. Officials say the reduction could be made within two years. ... A proposal to lift the annual cap on the increase in assessments on principal residences, known as the Homestead Tax Credit, from 4 percent to 10 percent is likely to be among the most controversial of the panel's ideas. It would cost taxpayers $24.2 million, the report says. That money, in turn, would be used to reduce the tax rate by about 4 percent.
Even with a reduced rate, that plan would force many residents to pay significantly more if their home values continued to climb as they have in the past several years. Under one scenario presented by the committee, the owner of a $300,000 home that increases in value by 25 percent every three years would pay thousands more in taxes.
If I understand the recommendations correctly, the plan would seem to be better for homeowners in a low-appreciation housing market and worse in a high-appreciation one. And it would be better overall for small landlords, who don't get the homestead cap anyway. (This doesn't take into account a proposed increase to the income tax rate to 3.2 percent from 3.05 percent, since I can't easily factor in that effect.)
But -- as a smart co-worker pointed out -- many homeowners are taxed on much less than their full assessed value right now because all those big increases during the housing boom were capped at 4 percent a year. In other words, it'll take some time to "catch up." That means plenty of folks would see 10 percent increases a year for a while if values don't plummet.
Well, Wonk readers? What do you think? The report is being pitched as "ready for public comment" rather than a done deal.