Rising property values result in property tax increases

Recently, the Hot Springs County assessor’s office mailed out estimated tax assessments for 2022 to property owners, with many seeing a noticeable increase. There has been discussion and questions throughout the community as to the cause of the increase.

Hot Springs County assessor Dan Webber provided some answers and insights into the matter and said, “The process really starts out with me setting a fair value on every property in the county. The term fair value is different for different classes of property. Residential, commercial, industrial, all those types of property are valued at market value. We’re trying to value them at what a knowledgeable buyer would be willing to pay for that property. Agriculture land is actually different. It’s valued for its productive capability. Typically that’s a lower value than market value. But at the end of the day, what this office is trying to do is not set taxes, but to value all property at its fair value.”

Webber added, “The Department of Revenue sets rules with authority from the legislature. They set the parameters of what we are to use to reach that fair value. We have a long set of rules that we follow and basically what we’re doing is using sales from the previous three years that are trended for time to develop a market value on all the property…. residential and commercial are valued at nine and a half percent of their market value. That’s called their assessment ratio.”

Industrial property is 11.5% and minerals are assessed at 100%. Webber explained that his office only deals with locally assessed properties, not state assessed properties. That does not include minerals, and public utilities, such as electric companies, railroad companies, pipelines, satellite TV, and phone companies. 

Webber continued and said, “By law, when we send out those notices, we have to also give an estimate of what next year’s taxes would be using last year’s mill levy… the questions that you’re getting is because we’re taking a new value and using last year’s mill levy and estimating their taxes.”

Webber then referred to some recent reporting where realtor’s in Hot Springs County mentioned the increase in property values across the area. Webber said that the number and what his office assessed is “almost the exact same number,” which is up about 12.5% county wide. Webber confirmed that the reason property tax estimates have increased is due to the area’s land values increase. There is a limited inventory of properties and a high demand for them, which causes sale prices to increase significantly. Webber added, “it’s gone up because those values went up on average 12 and a half percent countywide… what I’m talking about is residential.”

Notices have been sent out to property owners. In them, it will state the estimated taxes based on the value of the property. The final taxes will come later, after this estimate. Webber said property owners have 30 days from the notice to discuss with the assessor’s office what they think the true value of the property is. 

Webber added, “What I’m concerned with is the market value. So when you come in here to talk about it, I know most of the complaints are about their taxes going up, but that’s not really what we deal with. We’re dealing with that market value. So let’s look at the value I put on it and let’s discuss your problems with that.”

Webber continued and explained the process from setting up estimates to finding the actual tax. He said, “After I get through that 30 days, then there’s a lot more that goes through the process to actually get to the taxes. This is kind of one of the important things that I want to get people to understand is once I set that value, then I get all those state-assessed values. I’m going to get our public utilities. In this county, it’s mainly minerals. That’s the big one. When those numbers come in and I put those in, I will come up with a countywide total assessed value. That value is what entities such as the school districts, the county, the hospital district and weed and pest use. All these are going to take that value and set their mill levy off of it. So that’s where the actual taxes come in.”

Webber then added a call to action where he described how the citizens need to go to the public meetings where the various entities receive money from mill levies and they decide or discuss their budgets. Webber said, “Hardly anybody goes, and the mill levies hardly ever change… Most of them take the maximum number of mills allowed, which is going to result in an estimate of what’s on their sheets.” However, those particular entities could lower their mill levy to keep their budget the same as last year and not increase taxes. Webber added, “In theory, an increase based value doesn’t necessarily equate to increased taxes.”

In the assessor’s 2022 Value Estimate report, locally assessed values were $60,076,732. In 2021, the county valuation was $111,434,456. However, 2022 is $163,645,226, which is about a 40% increase. Most of the other categories that contribute to the total county valuation include state-assessed utilities, railroads, hard minerals, and oil production, which was $89,551,920 in 2021.