Source: Tennessee Comptroller of the Treasury records
The true cost of the housing bubble could soon be felt by Tennessee's county governments, whose most important source of revenue is property taxes.
Next year, Hamilton County must reappraise each parcel in the county, as required by the state every four years. Assessor of Property Bill Bennett said his office is bracing for the possibility that the overall value of the county's real property will decrease as a result.
"This may be the very first time in the history of reappraisals that it might go down some," Bennett said. "If we lose, then they're going to have to up the tax rate to generate the same amount of money as the year before."
Once the reappraisal is complete, the state's Board of Equalization recommends a new certified tax rate to yield the same revenue the county received the year before, excluding new construction, a requirement under state law.
The new appraisals, which Bennett plans to send out in February, could affect areas where there have been high rates of foreclosures or decreased home sale prices, he said.
A Tennessee Advisory Commission on Intergovernmental Relations report released last year predicted that much of the impact of the economic downturn would be felt during reappraisals, notably during those in 2012 and 2013. The 2012 reappraisals are the first to account for price drops since 2008 -- the final year of the state's housing price peak.
"Since falling residential and commercial industrial market values have only a limited immediate impact on assessed values, much of the impact of falling property market values will appear during reappraisals," the report stated.
Cumberland County is one of the few local counties just finishing its 2012 reappraisal. David Simcox, the county's property assessor, said his office had to shave off $55 million from its tax rolls based on falling home values.
"We are having -- every county is having -- a problem," Simcox said.
For Cumberland County's property tax revenue to stay at last year's levels, the state recommended a certified tax rate of $1.50 per $100 of assessed value rather than its previous level of about $1.43, Simcox said. Cumberland County hasn't yet finalized a rate.
The story is similar in Franklin County.
"The certified tax rates had to go up because the values went down quite a bit," Franklin County Property Assessor Phillip Hayes said.
For Hamilton County, Bennett is requesting an extra $588,751 to fund the 2013 appraisal. County commissioners will vote whether to approve the amount on Thursday in the 2013 fiscal budget.
Meanwhile, Bennett said his office staff is busy entering data for about 160,000 parcels in the county.
Contact staff writer Ansley Haman at firstname.lastname@example.org or 423-757-6481.