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What’s the deal with my property tax bill?

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revised-pie-chartIt’s no secret: Property taxes have taken a significant turn upward the past decade in Rio Rancho.

The city’s official mill rate of 35.93 is second highest among the five largest cities in the state, with Albuquerque at the top.

The Southern Sandoval County Arroyo Flood Control Authority adds 2.076 in additional mills, which brings the total rate for most Rio Rancho homes to 38.006.

About half of the property taxes collected go to the City of Rio Rancho and Sandoval County, with each getting about a quarter. Rio Rancho Public Schools takes 28 percent of the total. Central New Mexico Community College takes 10-15 percent, with a similar percentage shared by the two hospitals in Rio Rancho.

Property taxes for a typical Rio Rancho home with a median assessed value of $94,107 in 2004 were $919. By 2013, the median assessed value had climbed to $136,716 (as illustrated in the chart above), with a tax bill of $1,656, based on values provided by state and county agencies.

“I’m a little surprised by those numbers,” said Sandoval County Commissioner Don Chapman, who expected Rio Rancho to rank below Las Cruces and Santa Fe.

A housing bubble drove up most prices just before the Great Recession.

In mid-Rio Rancho, the average sale price in 2003 was $121,380. By 2007, the average sale price in that region had risen to $190,268, according to data from the Greater Albuquerque Association of Realtors.

The average home price is determined by adding up the amounts at which homes sold and then dividing by the number of homes. The median sale price for homes occurs at the point where half sold for more and half for less.

PROPERTY-TAXES-LARGE-CITIES-CHARTIn the last few years, local voters have approved mill levy expansions that increased the property tax rate. In 2007, the CNM district extended into northern Rio Rancho. The following year, voters supported a new hospital mill levy.

In future years, local voters will revisit some of the things that show up on their property tax bill. The CNM and hospital mill levies will be up for renewal in 2016. RRPS will ask voters to reapprove bonds in 2018. SSCAFCA periodically asks voters to renew its bonds.

Chapman said he prefers creating jobs and growing jobs to raising taxes. He said he is very pleased the city and county have come together to help create the Sandoval Economic Alliance.

In the last quarter of 2013, according to GAAR, the median sale price in Rio Rancho was $159,000 and the average sale price was $182,631. Sandoval County spokesman Sidney Hill said the median assessed home value last year in Rio Rancho was $136,716.

When calculating property taxes, the county starts with a property’s assessed value, which is usually tied to, and somewhat below, market value. It then sets taxable value at one-third of the assessed value and subtracts any relevant exemptions, such as for veterans and heads of households.

Larry Polanis, treasury controller for Sandoval County, said the $2,000 head of household exemption, for which most eligible households have probably not applied, is subtracted from the taxable value for a house before making a final calculation of property taxes.

Applying for that exemption takes about five minutes, he said, and qualifying homeowners each ensuing year save about $75 on their property tax bill.

The state Department of Finance and Administration each fall sets a residential rate in mills for local houses, or an amount due in property taxes for every thousand dollars of taxable residential property.

DFA spokesman Tim Korte said state law contains a yield control formula, which adjusts the mill rate when market values fluctuate, “to provide a steady and reliable revenue stream for county and municipal governments.”

The local mill rate increased from 32.901 in 2009 to 35.93 in 2013. From June 2009 to October 2013, the median home price in Rio Rancho fell from $199,628 to $145,000.

A local home assessed in 2013 at $200,000 paid $2,457.73 in property taxes, with a head of household exemption. Ten years earlier, with a lower mill rate, the property taxes on that home, assuming its assessed value had not changed, were $2,032.15.

The municipality, school district and state also have tax assessments, as well as special assessments in neighborhoods such as Cabezon and Mariposa, which contribute to the overall property tax rate for homes in Rio Rancho.

If Las Cruces has a lower tax rate than Rio Rancho, Chapman said, then maybe Doña Ana County has figured out some ways to make its government more efficient and Sandoval County could learn from those lessons.

Rio Rancho has a higher mill rate than most communities around the state, but it might face more serious cases of tax lightning, given indications of the growing gap between its assessed and market home values.

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