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Property Assessment Reforms Needed, PAR Says

The governor is to be commended for her efforts to begin addressing serious problems in Louisiana’s property tax assessment system. The administration’s proposal to require assessors to post property assessments on the Web and the apparent energizing of the Louisiana Tax Commission to take a more active role in policing assessors’ work are welcome developments. However, more extensive reforms will be required to achieve accurate and equitable property assessment statewide.

Louisiana’s elected assessors owe their political strength and livelihoods to keeping a majority of the voters happy. Too often, this has meant keeping homeowners’ assessments low, opposing property tax increases and championing the homestead exemption. In effect, the successful assessor often works at cross-purposes with the local governments responsible for providing the services homeowners demand. The political influence of the assessors and a lack of resources have traditionally kept the Tax Commission from adequately supervising assessments.

Making assessment data available online, as some assessors are already doing, will help create public pressure to keep the valuations equitable. And, the Tax Commission’s threat to undertake a reassessment of properties in New Orleans, if the seven assessors fail to do so, should encourage some movement. However, keeping assessments at current values over time will require a change in process, not just a forced reappraisal every decade or so when assessments get far enough out of line to draw media attention.

One essential change would be to require annual reassessment of all real property. Currently the law only requires that real property be reassessed every four years, and typically, this has only resulted in a partial reassessment. Formula-based computerized assessments should be done every year with quadrennial reappraisals to test their accuracy. Since 1984, when PAR first made this recommendation, advances in computer software have made it relatively simple to track real estate sales, determine changes in values by neighborhood, and estimate costs or values based on building specifications. Annual reassessment would assure that new and old properties are taxed equitably.

The Tax Commission staff should be strengthened to allow it to conduct adequate sales-ratio studies and other tests to ensure the accuracy of assessments. Property tax data collection should be expanded and improved to provide a complete picture of local government property tax use and to permit the analysis of tax policy. For example, the state does not currently collect municipal property tax information, except for New Orleans; and, the homestead-exempt value of homes is reported, but the taxable portion is not. These and other data omissions make it difficult to accurately assess tax policy options.

The above recommendations could be accomplished by statute. Another PAR recommendation would require a constitutional amendment. It would make all parish assessors appointive and consolidate the seven district assessors in New Orleans. Appointment, together with stringent professional requirements, would help to ensure that assessments are calculated objectively rather than politically. Oversight from the state Tax Commission would further help to reinforce the non-political nature of the process. Eliminating the constitutional standing of this office would make it more amenable to supervision by the Tax Commission.

Improving property tax assessment would help to restore public confidence in the fairness and equity of the tax system. Ensuring equity is particularly important to those taxpayers who are being forced to carry the extra burden to make up for the under-assessment of other properties.

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