Opinion ID: 1789805
Heading Depth: 1
Heading Rank: 14

Heading: Appraisals v. Sales

Text: Article X, section 14 of the Missouri Constitution, which mandates creation of a commission to equalize assessments as between counties, is intended to prevent the kind of disparity that the current property tax assessment system and, by extension, the school funding formula, creates. Section 138.390, RSMo Supp.2008, describes the manner in which the state tax commission must equalize the assessment values. If the tax commission believes that the assessed valuation of a certain class of property in a county is below its real value in money, section 138.390.2(1) directs the commission to equalize the assessed valuation of the class by adding such amount or percent as will increase the same in each case to its true value.  (Emphasis added). With its express requirement that the commission use the real value in money, the law states that the commission must base its equalization on the market value of a particular class of property. Rather than equalizing the 2004-2005 assessments based on market value based on comparable sales, however, the state tax commission used appraisal ratios to equalize assessments between counties. An appraisal ratio compares the assessed valuation of a home to the assessed valuation of a comparable property, rather than to the market or sales price of a comparable property. Because the tax commission's adjusted property assessments among counties is based on appraisal rather than market values based on sales data, the 2004-2005 property tax assessment valuations are not truly equalized as required by article X, section 14 of the Missouri Constitution. As such, it is constitutionally impermissible for the state to rely on these values in allocating state funding for public schools. By disproportionately taxing some Missourians but not others, the current property tax assessment system also violates the constitutional requirement that taxes be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax. MO. CONST. art. X, sec. 3. [48] A school funding system based on unconstitutionally disparate taxation cannot be upheld. State ex rel. Sch. Dist. of City of Independence v. Jones, 653 S.W.2d 178 (Mo. banc 1983). That the current funding formula is time-limited does not lessen the need to remedy its unlawful unfairness. The formula locks in the 2004-2005 assessments as the basis for determining the amount of state aid a county will receive until 2013. This is not a case of making the best of a bad situation; it is perpetuating a bad situation. Many of the children disparately impacted by the funding formula will have graduated by 2013; locking in the formula's inequalities for so long is constitutionally unacceptable.