Bill
HB 1766
Requires immediate, subclass-based levy revisions to maintain revenue neutrality after reassessments, with timely notices, CPI-based caps, and limits on inflationary growth.
Status & Procedural Notes
- Introduced as a repeal-and-replace of section 137.073, RSMo (personal property / tax rate adjustment rules).
- Passed by the 2025 legislature and enrolled; recorded as Act 907 (notification dated April 21, 2025). Check the enacted act for the specific statutory effective date.
Purpose and intent
- To update the statutory framework governing (1) how changes in assessed valuation for personal property and defined subclasses of real property are communicated to taxing authorities, and (2) how taxing authorities must revise levy rates to maintain revenue neutrality after valuation changes (excluding new construction and improvements).
- The aim is to require timely notifications of assessment changes, standardize the method for revising levy rates by subclass, and limit allowable inflationary growth adjustments.
Key definitions added/clarified
- “General reassessment”: large-scale changes in assessed value driven by reappraisal, assessor/county equalization actions, or orders of the State Tax Commission/courts.
- “Tax rate” / “rate of levy”: includes each purpose-specific levy (operating, bond/interest, etc.), whether voter-authorized or not.
- “Tax rate ceiling”: the revised tax rate a taxing authority may adopt to comply with this section, subject to voter-approved maximums.
- “Tax revenue”: defined as actual receipts from ad valorem levies in the prior fiscal year, with allowances for billed-but-uncollected taxes and for annexations; excludes certain state-assessed railroad/utility receipts when those moved to state assessment.
Core requirements and changes
- Notification: When changes in assessed valuation are entered for any personal property (in the aggregate) or for any constitutionally defined subclass of real property, the county clerk (or St. Louis City assessor) must notify each political subdivision partly or wholly within the county of the changes—reported by subclass and for personal property in the aggregate—excluding new construction and improvements.
- Rate revision / revenue neutrality: Upon such notification, every political subdivision must immediately revise its applicable levy rates (by subclass of real property and for personal property in the aggregate) as needed to produce “substantially the same” tax revenue from taxable property (again excluding new construction/improvements) as was collected the prior year.
- Voter-approved increases: A political subdivision that obtained voter approval for a tax increase after Aug. 27, 2008 may compute allowable levies by applying the voter-approved ceiling adjusted by the Consumer Price Index (CPI), subject to statutory caps and limits.
- Inflationary growth factor: An optional adjustment for inflationary assessment growth is allowed, but it is limited to the actual assessment growth in the subclass (excluding new construction/improvements and value shifted between subclasses) and capped at the lower of the CPI or 5%.
- State-assessed property apportionment: For school districts, state-assessed railroad and utility property (when relevant) must be apportioned to real-property subclasses based on each subclass’s share of county assessed valuation in the current tax year.
- Technical clarifications: The statute clarifies inclusion/exclusion rules for tax revenue calculations (e.g., treatment of sales-tax-driven levy reductions, railroad/utility assessments, and political subdivisions that were authorized to levy but did not).
Who is affected
- County clerks and assessors (responsible for timely notification of valuation changes).
- Political subdivisions (counties, cities, school districts, special districts) required to adjust levies promptly and in specified ways.
- State Tax Commission (reassignment / oversight context in reassessments).
- Taxpayers: owners of personal property and owners of real property in various subclasses (may see rate adjustments that offset reassessments).
- Tax administration systems: will need to implement the notification, calculation, and immediate-rate adjustment processes.
Practical impacts and considerations
- Administrative burden: counties and taxing authorities must act quickly to compute and adopt revised levy rates by subclass; tax offices may need system and process updates.
- Revenue stability: the mechanism is designed to maintain revenue neutrality after reassessments (excluding new construction), but constraints (voter-approved ceilings, CPI/5% caps) may limit adjustments in some circumstances.
- Complexity: apportionment rules (especially for state-assessed utilities/railroads) and the subclass-specific calculations add technical complexity to levy-setting.
Recommendation
- Local officials and taxing authorities should review current assessment and levy processes, update internal procedures and tax software to handle subclass notifications and immediate rate recalculations, and coordinate with county clerks/assessors and the State Tax Commission to ensure compliance and minimize taxpayer confusion.
Compiled from official sources — confirm details with the bill’s official record.
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