Assessment Just Part Of Tax Story

December 13, 2006
OPED By ART FELTMAN

Hartford property owners just received assessment notices from the October revaluation. Most are dismayed that the city believes their home values have doubled or tripled, when they doubt a buyer would pay that much, and the housing market keeps softening. The assessment report on my house, for example, shows its market value more than doubling over the past five years, which I find difficult to believe.

Homes are assessed by comparing them with recent sales of nearby homes of comparable size, age and condition, and with similar features. This yields the assessor's estimated "market value" of a home: what the city thinks your home is worth.

Look at the 2006 "market value" listed in bold print on the upper left side of your notice. Compare it to recent home sales in your neighborhood. If nearly identical homes have sold for less, you've been over-assessed. If so, file an appeal with the assessor at city hall by Feb. 20. An independent board may adjust your assessment.

If you decide not to appeal, don't despair. Your taxes depend less on your assessment than on the assessment ratio (which differs based on property type) and the tax rate applied. The assessment ratio determines how much of a property's market value will be taxed: In an income tax context, it's similar to the difference between gross and taxable income. A parcel of commercial property in Hartford valued at $100,000, for example, is taxed on 70 percent of that value, or $70,000. In taxing this property, the assessment ratio applied was 70 percent.

Revaluation, required every five years, monitors market fluctuations to adjust tax burdens to current property values. However rational this may sound, in practice it often whacks taxpayers. Relief measures soften the blow.

This year, based on a citizen's proposal, I wrote and the legislature passed a law that drops the assessment ratio on Hartford homes from 70 percent to 20 percent in the first year, rising slowly thereafter. In other words, higher assessments notwithstanding, residents will be taxed on only one-fifth of their home values. Over five years, the share of all taxes paid by residential taxpayers as a whole, compared with other taxpayers, will grow only from 24 percent to 30 percent.

Another measure I presented to the House, which became law, lets other towns phase in higher assessments on those hammered hardest by revaluation. West Hartford legislators pushed for this change.

One group whose tax bills strain fixed incomes is senior citizens. That's why I revived an old concept: a property tax freeze for homeowners 70 years of age or older. Under this law, towns can set a ceiling on property taxes for seniors earning less than $28,000 per year, or couples earning less than $34,000. Unfortunately, Hartford has yet to consider this tax freeze; it isn't even on the assessor's website.

Your property tax bill is determined as follows: the property's estimated market value (as shown on your bill), multiplied by the assessment ratio, multiplied by the tax rate.

The assessment ratio is the percentage of your home's value considered taxable; for homes, this is 20 percent in the next fiscal year. The tax rate, set at city hall, is the level of taxes needed to support the city budget. (The tax rate is measured in mills: A mill is equal to $1 in taxes on each $1,000 of assessed property value.) Last year, the tax rate was 65 mills.

For example, a home valued at $150,000, under the new law, would be taxed as follows: $150,000 multiplied by the assessment ratio (0.20) and then multiplied by the tax rate (0.065). This equals a $1,950 tax bill.

The tax rate varies with a municipality's budget: up or down, depending on municipal spending. In the past two years, Hartford's budget has jumped $42 million: that's 50 percent faster than inflation. Over the past two years, before revaluation, city taxpayers saw their tax bills go up by 8.5 mills. In addition to relief provided by state law, city leaders can relieve the pain of revaluation by exercising fiscal discipline. As with a family's budget, this means not buying every goody your family would like to have.

Wise people say that the only givens in life are death and taxes. With modern health care, we can postpone the former. With sharp-penciled budgeting, we can ease the latter.

State Rep. Art Feltman, D-Hartford, serves on the General Assembly's Finance Committee.