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Saturday, February 06, 2010
Senators Work on Tax Lightning
By Sean Olson
Journal Staff Writer
Three senators have until Monday to come up with a bill to fix "tax lightning," and the likely proposal would lead to higher property tax bills for more than half of the state's homeowners.
The proposal will be based on Senate Bill 160 from Sen. Steven Neville, R-Aztec, which would bring every residential property in the state up to near market value, then cap the amount a property's assessed value can rise in the counties' rolls at 5 percent per year.
The plan would fix inequities created by a 2001 law that caused tax lightning and extend the cap on rising home values to homes that change ownership. Those homes are not protected by the state under current law.
Neville said his bill would return the state to a fair system that wouldn't cause the unintended consequences of the 2001 law.
"My goal is to just fix Mother Nature where we screwed it up," Neville said Friday.
The higher values would probably increase the tax bills of about two-thirds of the state's homeowners by between 5 percent and 10 percent, said Tom Clifford, chief economist for the Legislative Finance Committee. Tax rates would also drop, which would soften the blow of the increase. People who had been hit with tax lightning would likely see a drop in their tax bills.
Neville said he would support phasing in the increases and decreases over a period of years.
Sens. Tim Eichenberg, D-Albuquerque, and Mark Boitano, R-Albuquerque, also proposed tax lightning bills and promised to work with Neville to write a substitute bill based on Neville's plan before appearing before the committee Monday.
Tax lightning is a phenomenon in which people who move into a home see a large jump in their tax bills the following year. The increase occurs because a 3 percent annual cap on increasing assessed home values — created by the 2001 law — applies only to people who stay in their homes. People who move are not protected by the cap, and their new home's value increases to near market values. The results have been people paying as much as three times the property taxes that their neighbors with similar homes pay.
A provision in Neville's bill, which mirrors proposals from both Eichenberg and Boitano, would extend the cap's protection to homes even when they are sold, eliminating a big part of the cause of tax lightning.
New construction is not addressed in any of the bills, however, and new homes would continue to go on the market with values near market levels — which would cause the same types of inequities the state now faces.
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