Opinion ID: 1789805
Heading Depth: 1
Heading Rank: 13

Heading: Constitutionally Flawed Foundation

Text: The principal opinion adopts a narrow view of the constitutional language. Unless the constitutional language is specific, there is nothing there to enforce. Fair enough. But there is specific constitutional language about equalization of property tax rates. MO. CONST. art. X, sec. 14. [42] The 2005 law builds the school funding system on a flawed foundation that operates contrary to the constitution and to the laws under which property tax assessments are to be equalized. More specifically, the 2005 school funding law adopts the 2004 valuations and freezes them until 2013. Section 163.031.4, RSMo Supp.2008. What difference does this make? If a county's assessed valuations are below the legal requirement, a school district in the county would receive more state aid than it otherwise would be entitled to receive. There may be a problem granting standing to taxpayers and schoolchildren in other countieswith fairly correct assessmentsthereby permitting them to complain that other districts are getting more than their fair share of state dollars. The Court should focus instead on school districts in counties that have deficient assessments. What if a local school district aspires to be more than adequate? If the district with unlawfully low assessments wants to raise its tax rate to yield funds beyond the adequate level, the tax rate will not produce the property tax revenues that it should, and the children of the district will get less than they would otherwise be entitled to. The districts, their taxpayers and their children surely have standing to raise this point. Of course, if valuations are low, the district's voters could approve higher rates to compensate for the low property valuations. But this assumes that the property valuations in a county are uniformly low, which they may not be. For instance, a property owner might acknowledge that property valuations are low in his or her county, but the property owner would be reluctant to say that his or her own property is undervalued for tax purposes. The argument that voters can raise the rates to compensate for low valuations also assumes that voters are informed sufficiently to understand the relationship between tax rates and valuations. In a world where, typically, a minority of households in a district have children in the schools, that would be expecting a district's voters also to be particularly generous and communitarian. But even assuming that the district's voters were unusually generous with their own tax money, the constitution places limits on their ambitions. [43] In other words, the property tax system is especially rigged against school districts in counties where the valuations are not assessed properly. Moreover, there are school districts that never may get even to adequacythose whose voters will not approve a tax rate of $3.43which is the amount section 163.011 sets as the performance levy needed to qualify for funding to the adequacy level. [44] School district plaintiffs have a further point that should be addressed: Even if the assessments eventually are equalized as required by the constitution and statutes, [45] the 2005 education law freezes the levels at the 2004 level for purposes of state funding. Even if the state tax commission corrects the constitutional and statutory defects, the defects will continue to deny various districts and schoolchildren of the revenues they should receive because state funding is dependent on the 2004 assessments, not on current valuations. Section 163.031, RSMo Supp.2008, sets forth the calculation for determining the amount of funding each district will receive from the state. A district's local effort the amount of school funding the district receives from property taxesis deducted from the amount of state aid. [46] For purposes of the state funding formula, the amount of such local funding is determined based on property tax assessments from 2004-2005. Section 163.011(10)(a), RSMo Supp.2008. There are, unquestionably, substantial disparities in the way individual counties assess property tax under the state's current property tax assessment system. According to the state tax commission, the assessed valuation of property for property tax purposes should be not less than 95 percent of its market value. [47] In many counties, however, property assessment data reveal that property tax valuations fall significantly below the 95 percent level. One major reason for the discrepancy in market value as compared to assessed valuation is that, in certain counties, assessments are based on a property's appraisal value as reported by the county assessor, rather than on the true, or market, value of the property based on comparable sales. In counties that base tax assessments on appraisal rather than market or sales value, the reliability of property tax assessment data depends on the accuracy of the appraisal values reported by the individual county assessors. Due to the lack of uniformity in the assessment system, the assessed valuation of property in certain counties is disproportionately low. The 2004-2005 property tax assessment data reflect these disproportionate assessment values. Because section 163.011(10)(a) bases the proportion of school funding a county receives from local effort on the 2004-2005 property tax assessment data, the inequities of the current property tax assessment system affect the amount of school funding each school district receives from the state. The result under the current school funding formula is that school districts in counties with more accurate assessments receive less state funding for public schools. Put another way, counties where property assessments fall well below market value are rewarded with increased state funding for schools.