Lagging valuation

Stable property valuations may or may not allow local governments to hold the line on property taxes.

Local residents concerned about rising property values in Douglas County may soon get to experience the flip side of the valuation coin.

County Appraiser Marion Johnson has notified city, county and school officials that residential and commercial properties in the county will see an average valuation increase of less than 3 percent this year. That compares with annual increases ranging from 5 to 7 percent in recent years. Johnson estimated that up to 4,000 residential properties will see a decrease in valuation.

Many property owners will welcome this trend. They have rightfully noted that even when local city, county and school property tax levies remained steady, property tax bills continued to rise because of increased valuations. Their cost of living was going up while their standard of living was remaining constant. Although they benefited from higher property values when they sold their homes, in the meantime, the higher valuations simply meant higher tax bills to pay.

The only problem is, steady or lower valuations may not result in steady or lower property tax bills for local residents. City, county and school district officials have been able to minimize mill-levy increases in recent years because rising property valuations helped bring more money into their coffers. Now, the question will be whether local units of government will be able to maintain their current level of services without raising the mill levy or getting new revenue from increased sales tax. If they raise the mill levy, property taxes will be higher even though valuations are steady or slightly lower.

This situation again emphasizes the need for Lawrence and Douglas County to build its non-residential tax base. Figures reported by the League of Kansas Municipalities almost a year ago, showed that residential property accounted for a whopping 69 percent of Lawrence’s total valuation. That compares to 40 percent of the statewide valuation. It’s easy to see why any decline in the local residential housing market is going to have a big impact on the county’s valuation totals.

Some moderation of Lawrence’s booming real estate market probably was to be expected and isn’t all bad considering that the community had begun to be concerned about the availability of affordable housing. At the same time, the city and county must live within their means. Unless the community can boost its commercial and industrial tax base, it will be difficult to even maintain local services, let alone pursue desirable new amenities or tackle major infrastructure needs.