January 2, 2012

As house values fall, why don't taxes?

Whether a property owner is paying his or her fair share can be in the eye of the beholder, leading many Mainers to challenge their property assessments.

By Kelley Bouchard kbouchard@pressherald.com
Staff Writer

Aaron Amirault has good reason to question the property tax assessment on his three-bedroom, 1,900-square-foot home on Middle Road in Falmouth.

click image to enlarge

Aaron Amirault bought this Falmouth home last January for nearly $100,000 below the town’s assessed property value. He challenged the assessment and it was decreased, shaving $478 off his tax bill. “I’m not against paying my fair share,” Amirault said. “I just want it to be based on the real value of my property.”

John Ewing/Staff Photographer

click image to enlarge

Amirault and his wife, Sally, bought the two-story house last January for $235,000 -- nearly $90,000 below the town's $322,800 assessed value. When Amirault challenged the assessment, Town Assessor Anne Gregory dropped it to $286,100, whittling his annual tax bill from $4,173 to $3,695.

But the 39-year-old lawn-care contractor still isn't happy. The lingering $51,000 difference between what he and his wife paid for their house and what the town says it's worth troubles him like a stone in his workboot. Falmouth's assessments meet state standards for being close to market value, but to Amirault, the process seems arbitrary and suspect, and his tax bill remains inherently unfair.

"I'm not against paying my fair share," Amirault said. "I just want it to be based on the real value of my property."

He's not alone.

As the median sale price for homes in Maine continues to fall -- from a high of $194,000 in 2007 to $169,000 for the year ending Nov. 30 -- many homeowners across the state are asking why their property taxes aren't falling.

The answer they're most often hearing isn't likely to please them: The gap between assessed values set by municipalities and market values established by recent sales is still generally narrow, falling within 10 percent statewide.

More importantly, when municipalites do lower assessments, property owners see little change in their tax bills because towns and cities simply raise the tax rate to cover the cost of running local government. The only real way to reduce municipal budgets or tax bills is to reduce spending on police, schools or other public services.

"If you roll back property values for everybody by 10 percent, it shouldn't change their tax bills," said Dave Ledew, director of the state's Property Tax Division.

"Assessors are expected to assign equitable values to similar properties so each taxpayer pays a fair share of the cost of local government."

STATE'S TWO TESTS OF FAIRNESS

But whether a property owner is paying his or her fair share can be in the eye of the beholder, leading many Mainers to challenge their property assessments.

Two or three people call or visit Gregory's office in Falmouth each week, asking her to review or reduce their assessments.

She stands by her property values, based on a 2008 townwide revaluation, and makes minor adjustments when warranted. She's nice about it, but she tells people, "When the market value was going up and your assessed value was lower, you weren't in here asking for your assessment to be increased. Well, the reverse is true now."

Still, the high level of public interest led Gregory, a board member and former president of the Maine Association of Assessing Officers, to give a presentation on the local TV channel on the nuts and bolts of property assessments.

Maine Revenue Services uses two methods to test whether property assessments -- and the tax bills they generate -- are valid and fair.

The assessment ratio compares the average assessed value with the average sale price of all homes sold during a specific period. Under state law, a town's assessments should not be more than 10 percent higher or 30 percent lower than average sale prices.

The second method -- the quality rating -- determines the percentage of individual properties in a town that deviate from the assessment ratio. That number should fall below 20 percent.

Each of Cumberland County's 14 munipalities passes both tests. (See chart.)

"Our assessments remain equitable," Gregory said in an office interview. "Just because the real estate market isn't great right now, it doesn't mean our assessments aren't valid."

(Continued on page 2)

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