Hot Report: Options for Implementing Revaluation

OLR Report 2012-R-0115 provides information on which states give municipalities options for implementing a property tax revaluation that captures increases in a property's fair market value.

Connecticut and Georgia allow municipalities to mitigate increases in property values that a revaluation captures. Connecticut allows them to phase in the increase over five years, while Georgia allows counties to freeze the pre-revaluation value for owner-occupied homes.

Five other states require municipalities to mitigate increases and specify how they must do so.

1. Arkansas limits the increase to a specified percentage of pre- revaluation values and freezes the values for elderly homeowners and those with disabilities.
2. Colorado requires municipalities to adjust the assessment ratio for residential property so that its share of the assessed value for all types of property is 45%. (The assessment ratio is the portion of a property's fair market value that is subject to the tax.)
3. Maryland and Montana require municipalities to phase in the increase in assessed values over a specified time.
4. Lastly, Delaware limits the extent to which counties can increase tax revenue after a revaluation.

Most states, including several listed above, attempt to mitigate annual increases in property taxes regardless of whether property was revalued by imposing annual limits on increases in assessed values (i.e., assessment limits), property tax rates (i.e., rate limits), or revenue collection (i.e., levy limits). Some impose a combination of these limits. As Attachment 1 shows, 19 states, including Maine, impose assessment limits; 31 states, including Massachusetts, impose rate limits; and 31 states, including Maine, Massachusetts, Rhode Island, and Vermont, impose levy limits.

For more information, read the full report.