GRAVETTE -- The taxable value of real estate in Benton County increased 16.7 percent after a countywide update by appraisers earlier this year. The increase raised both the tax bill and the ire of state Rep. Kim Hendren, R-Gravette.
On Oct. 5 in Little Rock, Hendren will propose to the House Revenue and Tax Committee a review of how real estate is appraised for taxes. His witnesses will include Jonathan Barnett of Siloam Springs, a former state representative and former Arkansas Highway and Transportation Department commissioner.
County appraisal
A county appraisal estimates how much real estate in the county is worth. Only 20 percent of that figure is “assessed,” or liable, for calculating the owner’s property taxes bill. Other exemptions may apply. For instance, the state freezes the appraisals for taxes on homes of Arkansans older than 65. The final value assessed for taxes is multiplied by the prevailing millage rate to calculate a property owner’s tax bill. That can be further reduced by, for instance, the “homestead” exemption of $350 for each homeowner’s primary dwelling.
After all these factors are taken into account, the “effective taxable value” of real estate in Benton County grew by 16.7 percent after a reappraisal this year.
Property taxes based on the appraisal’s new numbers will not be applied to the property taxes to be paid this year. There is a one-year delay.
In all, the “taxable assessed value” of real estate in Benton County after this last reappraisal was $3.88 billion, county records show.
Source: Staff report
Both men believe they received inflated appraisals for property they own and that inaccuracies are widespread. They have the means and the time to appeal these appraisals, but not all property owners do, they said.
"I know the system and how to appeal my appraisals, but how many of my constituents do?" Hendren said Wednesday. "Even if they know, how many of them can afford to do all the work you have to do to prove your case in an appeal? How many can take a day off work and go make that appeal? For many of them, it's cheaper and easier to pay the increased tax."
During an interview, appraisers and administrators for the Benton County assessor's office noted the Board of Equalization, which hears appeals of property tax assessments, had fewer cases brought before it this year than in previous years.
Also, the appraisals were made in accordance with both standard practices and state law, they said. Those who participated in the interview were: Roderick Grieve, chief deputy assessor; John Williams, reappraisal manager; and senior appraisers Aaron Coffee and Marty Brewer.
This year's real estate appraisal update was the county's first in five years, the county's appraisers and administrators said Friday. Much of the 16.7 percent increase comes from added construction and improvements to buildings and homes on the tax rolls that weren't on the books five years ago, they said.
The 16.7 percent increase averages about 3 percent a year for five years, figures show. How much of the increase is new construction isn't a figure readily available, the assessor's spokesmen said.
The value placed on the land itself increased 1.3 percent on average in those five years, according to county figures. That amounts to little more than one-quarter of 1 percent a year for each of the five years.
"This is in a county that includes downtown Bentonville, one of the hottest real estate markets anywhere," Williams said.
The state Legislature in 1999 and a constitutional amendment passed by Arkansas voters in 2000 addressed sudden increases in the value of property on the tax books. The changes set a schedule where each county was appraised every three years. One-third of the state's 75 counties were appraised each year.
Two things happened in later years that undermined that plan and allowed Benton County to wait five years, said state and local tax administrators.
First, the Legislature created an exception in 2003 so some counties wouldn't have to pay for an appraisal every three years. If an appraisal didn't add at least 15 percent of value to the tax rolls, the county didn't have to have a new appraisal for five years. This spared poor, rural counties from having to pay appraisers for results that made little difference from year to year.
Then the bursting of the national real estate bubble in 2008 and the recession turned every county in the state into a slow-growth county eligible for the five-year interval.
Despite the long wait, Benton County property value grew slowly enough to prevent a major shock to property owners, Williams said.
"This has been the lightest year for appeals to the county's Board of Equalization that I've seen in 21 years," he said.
Neither the changes of 1999 nor any since have addressed one serious problem, Barnett said. The appraisal and appeal process is a closed system, he said. The appraisers set the value. Anyone who wants to dispute the value appeals to the Equalization Board. That board in every county is made up of members appointed by cities, school districts and the county judge and quorum court. Cities, school districts and county government all benefit from increases in property taxes.
If a property owner's appeal of his appraisal fails before the board, he can only appeal to the county court -- one of the few remaining judicial functions of the county judge, a county government's chief administrator.
"We have representative government. We elect people to make these kind of decisions," Barnett said Thursday. "When taxes go up like this, that needs to be debated in public. There needs to be a public debate on whether these increases -- whatever the cause -- are right and fair."
Metro on 09/26/2016