On Jan. 9, the House Education Committee met to discuss how to remove boards of education from penalties accrued by county assessors not accurately performing their jobs.
House Bill 4002 relates to the computation of local share funds for public school support purposes and, if passed, would nullify previous legislation passed in 2007 with provisions that would begin in 2014.
House Bill 4002 would correct the previous legislation by "getting school systems out of the middle" and not penalizing the school systems for something "they have no control over."
One of the assessing aspects that counties fluctuate in and out of compliance in relates to the sales assessment ratio.
The sales assessment ratio is a statistical study, with the statistics treated in two different fashions. Because the calculation is made at a 90 percent competence level, 54 percent or more is assumed to be within the goal of the 60 percent at the assessment level.
However, if an assessor's indicated ratio is 53 percent it treats the ratio as though it's 53.
Factored into the assessment level percentage are arms-length transactions, or a sale between a willing buyer and a willing seller. If a county is on the border mark, one arms-length transaction can make the difference between a county passing the ratio study at 54 percent and not passing the ratio study. Another problem with arms-length transactions are that what constitutes the sale is objective.
"The bill should, at a minimum, recognize that 53 percent or 52 percent at the 90 percent competence level is more like 58 or 59 percent and the calculations should be made in that fashion," Jerry Knight, owner of Knight Consulting Services and former Director Property Tax Division at West Virginia State Tax Department, said.
Due to a statistical problem with how that statistical ratio assessment works, penalties for counties that may be out of compliance are exaggerated.
And because merely looking at a median ratio and not the underlying data and the underlying circumstances can create inconsistencies and problems, legislative action was suggested as the best way to fix existing problems.
Because there's a lot of judgment that has to go into the numbers, "it's very difficult to take data and take situations that are an art and create a statute that addresses those issues," Knight said.
If left un-repealed, the 2007 legislation would bring more assessments, which would increase property taxes with money increasing depending on how much it would take to bring counties into compliance. The legislation also would call for statistical analysis to identify counties that do not appear to be in compliance and would penalize boards of education to bring them into compliance.
During the meeting, Education Committee Chairman Delegate Mary Poling, D-Barbour, clarified that there are "clearly other ways to enforce correct property appraisals that do not penalize school systems."
Under the 2007 legislation, a grace period is limited, leaving non-compliant counties no time to make the changes needed to come back into compliance. Because of the lack of a grace period, counties have a harder time working out of the non-compliant status and reaching the status of compliant.
By addressing and making necessary changes to the sales assessment ratio, Delegate Jim Butler, R-Mason, asked for clarification that "(the Legislature) is correcting something that should not have been appraised this way to begin with, by putting the correct appraisal on it."
A motion was made for Bill 4002 to be moved to the full House with the recommendation that it does pass but that it first be reviewed by the Finance Committee.