Commission adopts tax levy; property taxes remain ‘revenue neutral’

Published 11:15 am Thursday, July 21, 2022

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The Claiborne Commission unanimously adopted a tax levy that, while actually reducing the rate, will remain “revenue neutral” for the county.

At first glance, the new rate of $2.00 per $100 of assessed property value – down from last year’s $2.5777 – looks to be more than a one-fifth reduction in the amount of property taxes. However, the rate is just half of the equation. The second half is the uptick in the value of the ‘penny’ which determines just how many of those copper coins will eventually make it into each of the county revenue funds.

The ‘penny’ just got its automatic readjustment from its former estimated $50,578 to its new estimated value of $65,878 – a $15, 300 jump designed to keep the county property taxes revenue neutral.

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The county has nothing to do with resetting the value of the penny. The county tax assessor has no authority to do so, either. Tax rates are set by the state of Tennessee.

If another recession were to occur, the tax rate would likely increase while the value of the penny would decrease – much like the ups and downs of a seesaw.

Claiborne County tax assessor Shane Breeding explained the phenomenon during a previous interview.

During a tax year, the state will not allow the county to collect more dollars than the previous year. The state comptroller sets what is called the certified tax rate to revenue neutral, which lowers the rate to absorb the majority of the increases in value.

The unprecedented increase in property values over the last couple of years necessitated the comptroller’s change in the certified tax rate.

The pandemic, mixed with a bull housing market and the timely reappraisals created the perfect storm for homeowners. Many saw their property values elevated by an average 34 percent with others having their values adjusted to nearly 50 percent – all in just the five years between reassessments.

Blame it on timing. Breeding said during the previous interview that the 2017 reappraisals were done using property values from 2016 when the country was digging its way out of the recession.

“Our values were low at the time. Two years later, we did a ratio study and, at that time, we were 21 percent low. But it kept increasing and increasing.

“A lot of folks are not concerned with what their value is as much as they are what their taxes are. That’s where your county commission comes in when they set the tax rate,” said Breeding.

The county could have played with the numbers, increasing or decreasing the tax rate. However, there would have to have been a public hearing to allow input from county residents. The budget committee and the Claiborne Commission likely decided against this measure.

Most property owners will not see a major increase or decrease in their taxes this go-around. If not for the state-controlled ‘revenue neutral’ readjustments, property taxes would have likely skyrocketed.