As the adage goes, “Insanity is doing the same thing over and over again and expecting different results”. According to the Census Bureau, Greene County has continued to lose roughly 5% of our population every 10 years. To date, we have lost 33% of our population since 1950. When will this bleeding stop?
This decline is not a monolithic issue. If one issue was causing all these problems, we would simply fix it. Numerous issues are contributing to this decline. We lack public utilities – 75% of our county does not have public sewage; large amounts of land are being donated to the state for game lands; our public schools rankings are below average; our taxes are too high; we lack grant funding from the state; and our EMS and fire services are overburdened and strained.
The one thing we can all agree on is that increasing prices of goods and services are not slowing down. As the cost of insurance, building a park, healthcare, salaries, and cost of materials continue to increase, the taxing bodies (County, Schools and Municipalities) are forced to raise taxes to meet the needs of the community if new development is not coming in. We can discuss the needs for our elected officials to maintain a balanced budget in another article.
The largest revenue source for any taxing body is the ability to collect real estate taxes. If the population is declining and the cost of goods is increasing, it creates a scenario that is unsustainable for the long-term health of our community. If we do not figure out a way to increase the population, in turn, increasing the tax base of Greene County, we will continue down this spiral of raising taxes to a point where no one will live here.
For example, Greene County has a millage rate of 0.0090035, the average Municipal millage rate is 0.00246 and the average School District millage rate is 0.022975. So, when you pay your taxes each year, 67% go to the school district, 26% go to the county, and only 7% go to the municipality. When someone says their taxes are too high, what they are really saying is that their school taxes are too high.
The good news is that not all is lost. We still have time to reverse this trend and start developing Greene County once more.
When you ask our County Commissioners about reassessment, you always get two responses: We are underassessed compared to other counties, and the cost is too great to reassess. The county does not currently have the millions of dollars it would take to do it. The former response is the primary obstacle that Greene County has when it comes to future growth.
The Commissioners are correct when they say we are under assessed. They are referring to what is known as the Common Level Ratio (CLR). The CLR in Greene County as compiled by the state is 38.23%. Which means if you own an existing home with a market value of $100,000, your assessed value should be $38,230.
In my research, I examined the last 50 homes in Greene County on Zillow to compare the market value of the home versus the assessed value of that home. I separated the homes into two sections: those built prior to 1990 and those built after. The research clearly shows that the average CLR of homes built prior to 1990 is 34.4%, and the average CLR of homes built after 1990 have a CLR of 49.4%.
The average Market Value from Zillow of homes built prior to 1990 is $245,300, and the average Market Value of homes built after 1990 is $409,315.
What does this mean to someone buying an existing home? Nothing. When a realtor posts the home and advertises its sale, the assessed value is public knowledge and disclosed for the sale. The home buyer knows what their taxes will be prior to the purchase. For a new home builder, this information is not available until after final construction is completed and the home is assessed for the first time.
If we assume that these numbers are an accurate picture of the county, we can easily see in the example below that Greene County is discouraging development.
The figures below illustrate the difference between buying an existing home for $300,000 compared to building a home for $300,000 by applying the CLR to each home. An existing home built prior to 1990 sold at a cost of $300,000, multiplied by the average CLR of 34.4%, will give you an assessed value of $103,200. A new home built after 1990 for a cost of $300,000, multiplied by the average CLR of 49.4%, will give you an assessed value of $148,200. These assessed values can simply be applied to the average millage rates of the taxing bodies to determine the proposed real estate taxes one will pay.
The numbers don’t lie; Grene County is taxing new development 43.5% more than an existing home of the same value.
I want to take some time to address the misconception most people have that a countywide reassessment will automatically increase people’s taxes. This is not true and is misleading at best. All taxing bodies are required to apply what is commonly known as the revenue neutral rule after a countywide reassessment. For example, if a taxing body collects $1,000,000 prior to the reassessment, the millage rate needs to be lowered to a number that will only allow that taxing body to collect $1,000,000 after the reassessment.
There is no doubt that some residents will see an increase in taxes if they have been under-assessed in the past. There is also no doubt that some residents will see a decrease in taxes if they have been over-assessed in the past. Undeniably true is that if you are looking to move to Greene County, you would have a much better idea of what your total tax burden would be prior to building.
Based on my research, Greene County has an estimated 17,245 housing units with an estimated market value of $150,000. After a reassessment of current Market Values, the County millage rate could drop from 0.0090035 to 0.00343645, the Municipal millage rate could drop from 0.00246 to 0.000938931, and the School District millage rate could drop from 0.022975 to 0.00876908. This would equal a 62% reduction in the current millage rate.
If we use the averages from my research numbers, we can see how the taxes would be affected based on a reassessment:
It is not the intent of this article to call out any one person or even the county commissioners. Rather, the intention is to draw attention to the fact that the current assessment model implemented by the county is clearly burdening new home builders, and, in my opinion, clearly discouraging builders from developing Greene County.
