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January 28, 2014

State mandating compliance with uniform assessment system

Ada — One way to increase state revenues is to get all county assessment offices figuring property taxes the same way with the same method of assessment.

 That hasn’t been the case for at least two decades in Oklahoma, but apparently it’s never too late to take a stab at conformity.

 Thirty-five Oklahoma counties, Pontotoc included, flunked a state performance audit recently conducted by the Oklahoma Tax Commission. Those counties were under-utilizing state-supplied technology provided more than 20 years ago.

Oklahoma Auditor and Inspector Gary Jones and other state officials are trying to gradually bring these counties into compliance over the next couple of years.

By “artificially low” property values in those counties, Jones said they’ve been able to keep property values lower for their tax-paying constituents, much to the chagrin of wealthier counties like Oklahoma and Tulsa.

“Their tax base doesn’t represent fair market value, (and) the school aid formula recognizes that they have very little ability to collect taxes, and so they get a disproportionate higher share of the school aid funds,” Tulsa County Assessor Ken Yazel told the Tulsa World last week.

CAMA (Computer Assisted Mass Appraisal) is the computer software program that allows county assessors to determine values of real estate on multiple parcels at one time. Which is all well and good, if, in the end, the formulas make sense and an accurate assessment is achieved.

The fix the state has in mind for this inequity could prove costly to Pontotoc County property owners, with 3-percent increases in homestead property and a 5-percent increase in non-homestead property, built in annually, Byrd said.

Those increases, once they begin, probably in 2015, will raise property values deemed undervalued as in Pontotoc, until they reach what the state determines as fair market value, as determined by the CAMA program provided by the Oklahoma Tax Commission.

For some, this property could have owners paying the extra 3 percent for years to come.

If things go as planned in this year’s legislative session beginning Feb. 3, a new program could be funded, probably through fee programs, to help bring all counties up to fair market value over the next couple of years.

Under the current system, Pontotoc and other county officials have been establishing property values once every four years.

If a house was valued at $50,000 and no improvements were made and no comparable sales in the neighborhood, the assessed value would remain unchanged until improvements are made or until the property sells.

Once a new system is in place, the computer will automatically increase property values by 3 percent every four years, probably starting in 2015.

Those 3-percent tax increases in Pontotoc County are expected to continue until the CAMA program determines the property is being taxed at fair market value.  

Pontotoc County Assessor Debbie Byrd doesn’t like the changes coming but says the county has no other option at this point but to comply.

“We’re doing this because they’re forcing us to do it," she said. “We walked the dog as long as we could for the benefit of citizens of the county,” Byrd says. “I just hope they (Pontotoc County taxpayers) realize, we are now being forced to utilize the CAMA program to generate our values,” she said.

“They’re (Oklahoma Tax Commission) giving us a chance to rectify the problem by forcing us to use their computer software,” she said. Byrd added the software isn’t compatible with the current assessment administration software.

Jones explains his reasoning:

“It’s unfair to say ‘we’re just going to artificially keep our rates low while somebody else is doing it right and their taxes are higher,’” he said.

The inequity problem began way back in the early 1990s when politicians passed a tax reform bill, earmarking funds at the time giving counties the CAMA technology. Problem was, it didn’t work well, if at all.

Most Oklahoma counties set it aside after a while and went back to traditional ways of generating property values.

“We’d enter information, but it was not generating our (property) values,” said Byrd.

The few counties who made the system work were the wealthy counties who bought their own computers and software, thus achieving compliance  through superior technology.

As a result, constituents have been paying higher property taxes for years. The upside is their homes are worth a lot more.

Non-compliance in some ways has produced happy consequences for counties like Pontotoc — at least up to now.

Byrd, who has been an employee in the Pontotoc County Assessor’s office for 31 years, used as an example a property valued at $80,000. “When that value was entered into the CAMA program, they might find it came out with a valued at $59,000 — or $125,000.” They couldn’t use it.

“As one assessor put it, they gave us a brand new car, but never instructed us how to drive it,” she said.

“Bottom line, I work for the tax payers,” she said. “My first obligation is to look out for them.”

On the plus side for the county, higher property values will bring in more revenue for schools, Byrd said.

Ada school superintendent Dr. Pat Harrison isn’t so sure about that. He said any increase in property taxes in the county would probably result in a wash for the local school district.

“The way the school funding formula works is that if there is an increase in local taxes, it results in a decrease of state funding. I don’t know, but I’m guessing right now, this would be a wash for schools,” Harrison said.

Harrison said he had a much better idea of what could be done with any increased county funding.

“If the Legislature was so inclined as to put those additional funds back in public schools, it could help offset the $220 million that have been cut in public school funding since 2008,” he said.

Harrison said Oklahoma has cut education funding since 2008 more than any other state.

Whatever develops, it would appear the days of low property valuations may be coming to a painful end.

“For the last 20 years, we’ve tried to save our citizens tax dollars,” Byrd said. “Now we’re trying to stay in compliance with the tax commission. That’s our main goal.”

Byrd said Gov. Mary Fallin is expected to sign bill this time around.

She predicts this legislative session that will produce a new statewide, all-in-one computer system to streamline the counties and bring about more equity.

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