Troubled Jackson County assessments spur state lawmakers’ push for potential penalties
KANSAS CITY, Mo. (KCTV) - A battle between the Jackson County assessor and the Missouri State Tax Commission (STC) opened a can of worms and revealed that the state agency had little power to make a county comply with its orders. State lawmakers are working to change that.
“There needs to be consequences. I don’t think anybody ever thought that the state tax commission, if they issued an order that it wouldn’t be complied with,” said Rep. Ron Fowler, a Republican from Blue Springs.
When the STC ordered Jackson County to lower most of its property tax assessments, the county executive sued, saying the order was illegal. A judge this week ruled that the order is legal. It remains to be seen whether it complies, but it raised an issue lawmakers hadn’t considered: What if they don’t?
If a county doesn’t comply with an STC order, all the state can withhold is the money it provides for a county to conduct the assessment process. It’s a small amount based on the number of parcels, about $1 million for Jackson County. The county’s budget exceeds $150 million.
Fowler sponsored HB 999 with the of other lawmakers representing Jackson County. The bill would give the state leverage to enforce orders.
House Bill 999 would allow the STC to direct the Department of Revenue (DOR) withhold a portion of a non-compliant county’s sales tax revenue until an order is followed.
Holding sales tax revenue hostage could be crippling. Jackson County’s General Fund budget shows that 40% of its revenue comes from sales taxes.
The bill’s summary describes the amount the state can hold back as “The amount of local sales tax that may be withheld up to 100% of the total dollar amount of the improper assessments that were in excess of the statutory allowed amounts.”
READ MORE: Judge rules against Jackson County over troubled property tax assessments
Fowler emphasized that the words “may” and “up to” make it clear that the STC doesn’t have to withhold the entire amount or any at all.
“The State Tax Commission has a little bit of latitude to look at the situation and realize that they get the incentive to match the situation,” Fowler said.
The STC routinely intervenes with county assessments. It did just that not long ago when it told Jackson County its assessments were undervaluing property.
The bill would apply only to orders that require assessments be lowered. The punitive measure is made possible by the mechanism with which local governments get their tax revenues. Sales taxes don’t go straight to the county. The state collects it then distributes it.
Opposition testimony at a hearing said it’s not right to withhold sales tax due to a problem with property tax.
Fowler said the state was limited in what pot they could use to motivate compliance.
“All those property taxes go straight to the county. They do not go through the Department of Revenue at the state level,” Fowler said. “About the only thing the state gets at state level is the sales and use tax.”
The bill ed easily in the House with 135 voting yes, 12 voting no and 8 voting present. It had a Senate committee hearing this week. It has not yet been scheduled for a Senate committee vote.
Even if this bill becomes law, it’s not retroactive. So, it wouldn’t impact the STC’s 2024 order about the 2023/2024 assessment cycle. It’s more a matter of giving the state something it can do to push a county to comply if this happens again.
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