The Other Shoe Drops Directly on Commerical Property Owners in St. Louis County

The St. Louis Post-Dispatch has done a very good job covering assessment issues through the years. Its coverage of the 2001 drive-by scandal broke that issue wide open, after some great legwork by a few councilmen and others. That coverage continued this weekend, when the Post-Dispatch wrote about how commercial property owners are seeing a substantial increase in assessments while residential owners are seeing a decline.

The obvious question that jumps out is whether the county is intentionally raising commercial assessments to offset the tax revenue declines from residential assessments.

The reassessment left Trampe wondering if the county had manipulated commercial figures to offset a potential drop in revenue from the fall in residential values.

“I guess they have to find money somewhere,” he said.

I have no idea if that is true or not, and the county denies it. However, a little-discussed state law may save the day here and prevent the large tax increases on commercial property. St. Louis County is the only county in the state where local officials are allowed to apply different tax rates for different property classifications. (I have looked for the relevant statute citation, but have not found it yet. I’ll add it when I get it, or correct myself if I am wrong.)

So, there is nothing in the law that guarantees commercial property taxes have to go up. In other counties that set the same rate for everything, this would be a big problem, because the residential averages would dominate the totals. Tax rates would rise in order to offset falling residential assessments, and then the commercial owners would see enormous increases. Here in St. Louis County, various taxing entities can set one rate for residential properties that have experienced an average assessment decline, and a different rate for commercial properties that have had an average assessment increase.

The trick, though, is to make certain that all the school districts, fire districts, cities, etc. within St. Louis County do just that, rather than trying to sneak in commercial property tax increases, along with the legal roll-ups of residential property tax rates that we are seeing. I have no doubt that many taxing entities in the county will try to avoid rolling back the commercial rates — or, at least, keep them level, probably out of a lack of knowledge as much as anything.

The one thing St. Louis County itself should do is roll back the commerical property surcharge by 8.3 percent, in order to offset the tax increase commercial property owners will see from county government. St. Louis County has the highest surcharge in the St. Louis area, and lowering it would be good for business in the county.