SKYROCKETING ASSESSMENTS = TAX WINDFALL FOR THE CITY
[from April 2002 issue]

PRIOR EDITORIALS ARCHIVED HERE


But is this a good thing? City Council members who are pushing to allow the next step of piddling little personal income tax reductions be continued this year are suddenly emboldened in their fight with the mayor who urges caution. They are emboldened because they just were handed a report that shows current income taxes being collected at a higher rate than originally believed would be the case. Also, they are getting good news about hotel occupancies--actually higher than last year at this time--suggesting that the economy is really recovering at a nice clip.

We do not disagree that the local economy is recovering, but that doesn't mean we have money to toss around. We still have significant budgetary problems and have not figured out how to reign in some out-of-control costs, especially by the education and health care agencies.

Rather than keep pushing for small tax reductions on the income side, we would prefer that the council members and the mayor seriously consider lowering the 96-cents per $100 assessed valuation on owner-occupied homes. If there was built into the real property tax rate schedules an automatic "trigger" that would adjust the actual dollar amount per $100 as the assessments increase (or decrease, should the trend ever reverse), then we would have a more sensible taxing program than now is the case.

But, there is no incentive on the part of the politicians because they see higher assessments as making for easy windfall cash to avoid potential deficits that would otherwise make them look bad. Except that when the system is so bizarrely skewed, as it is this year whereby typical increases in assessments--which without intervention amount to the same percentage increases in actual taxes to be paid--bring about such a hue and cry that the politicians hastily act to impose a retroactive cap on the amount of dollars that will be charged. So, we are told our actual tax bills will not increase more than 25 percent over last year, even though homeowner assessments across the city have shot up as much as 50 to 70 percent or more. This is no way to conduct the fiscal administration of a complex government; nor is it a reasonable burden to impose on cash-strapped homeowners.

In the past couple of years the council did tinker with the real property tax system and did a couple of very odd things. For example, the council, apparently at the behest of its finance committee chairman, did away with the higher rate for abandoned properties. That higher rate had been widely applauded when implemented a few years prior as a way to get those properties productively back into use and producing real estate tax receipts. Yet that special rate was repealed so that homeowners who take good care of their homes are, in effect, subsiding the land speculation of absentee owners who are destroying neighborhoods so that someday they will be able to make a real killing on sales. By repealing that provision, the council, apparently with the support of the mayor, reinstated the incentive to do harm for private gain and at the same time add more tax burden to owners who maintain their properties in good order. Is that fair or good public policy? We think not.

Homeowners are told they shouldn't complain about the rapidly escalating values of their homes that they may have purchased many years ago for much less. After all, they are making a good profit. But for most homeowners, the home is home and not a truckload of widgets to sell to the highest bidder. If the city's leaders are not careful, they will end up driving out the middle class which is where the real civic leadership comes from and which is the glue that holds the neighborhoods together.

Assessment methodology needs to be rational. Many astute and knowledgeable observers have been reporting that DC's assessment methodology is way out of whack from the norm in the U.S., that the standards applied here are just not in accordance with recognized modern assessment practices. Making matters even more egregious this year, according to information obtained by The InTowner, is that the city's new chief assessor ordered that the re-assessment calculations ignore residential property condition, use codes, whether the owner-occupied home has a couple of income-producing rental units. No wonder people think it's not fair. If government wants willing tax compliance it must avoid appearing to be trying to cheat its citizens.

Even adjoining homeowners have discovered inexplicable disparities between them. For example, in one instance homeowner Lot A, when compared with that of neighboring homeowner Lot B, has been discovered to have increased by 84 percent compared with B, which increased by only 57 percent--yet Lot B is 25 percent larger than Lot A! What could account for that 27 percent larger increase on a smaller property than next door? Further, how can it be that the 87 percent increase on the 25 percent smaller Lot A compared to the 57 percent on B represents a greater proportionate increase in relation to Lot B than was assessed three years ago when at that time the differential spread was only 18 percent?

Why is Lot A considered so much more valuable than B on a per square foot basis in 2002 than it was in 1999 even though no improvements were made to the property but yet improvements were made to Lot B? There is no rational answer because there is no rational assessment methodology. Nor will there be any incentive to make it rational or to fix the tax rate itself unless and until the politicians are put on notice that they will be thrown out come election day.