Saturday, February 13, 2010

Senate fixes tax lightning

The New Mexico State Senate tonight took the hit out of tax lightning that has largely struck Bernalillo County by passing SB 160- Property Tax Methods by a vote of 22 to 16.

The bill is expected to make property taxes fairer in Bernalillo County and across the state where tax disparities have been striking since a law changed several years ago to remove a cap on property taxes when ownership of the property changed.

That resulted in an alarming tax disparity among property owners because when there was a change of ownership a 3% annual cap on property valuations was not extended to the new owner. That often resulted in property taxes skyrocketing for the new owner whose property was assessed at current and correct values compared to neighbors whose taxes were still being limited by the 3% cap on valuations.

Sen. Steven Neville, R-San Juan,, said the goal of the bill is to equalize valuations and thereby property taxes that have gotten out of whack over the past several so everyone pays their fair share to run government.

“The cap for some and not for all went against the principle of fair and equal taxation,“ Neville said. “Some neighbors were paying more than their fair share of services compared to their neighbors. The new owners were subsiding their neighbors and that is not fair.”

Neville says his bill will help equalize taxes by allowing the 3% property valuation cap to remain in place even when there is a change of ownership.

He said it also calls for the county assessors to determine the current and correct values for all property in their counties over the next five years so taxation can be based on those current values.

While that might mean some taxpayers whose property that has been greatly undervalued will see their property taxes increase
when the current and correct value is determined, overall taxes in the county should not rise because of a law called yield control.

Neville said because of yield control, taxes are not arbitrarily raised when property values increase in a county. If property values go up in a county, tax rates applied to the property go down because of yield control, resulting in tax collections in general remaining the same.

“Correcting the problem will be spread out over five years so there will not be a shock for those who have been subsidized in recent years. Facts are, there will be a slow rise in taxes for those who have been subsidized. Those who have bought property over the past several years and experienced unfair taxes should see their taxes slow down over the next five years when valuations become more accurate,” Neville said.

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