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YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2000-09
February 23, 2000
The following problems were discovered as a result of a review conducted by our office of the Missouri State Tax Commission.
The State Tax Commission (STC) is required to certify the equivalent sales ratio of real property, for each county and the city of St. Louis, to the state Department of Elementary and Secondary Education (DESE) for use in determining distributions of school foundation formula funds. Although statistical consultants hired by the tax commission recommended the use of a weighted ratio in these calculations, the tax commission uses the median to determine the equivalent sales ratios.
The STC certified only three equivalent sales ratios as less than 33.3 (Carroll, Clay, and Newton). Our computations disclosed an additional forty-one counties would also have been certified as less then 33.3 if the weighted ratio had been used. The equivalent sales ratio used in the calculation of the distribution of school foundation formula funds is the higher of the most recent equivalent sales ratio or an average of the three highest of the last four years equivalent sales ratios. Because of this, while many school districts in the forty-four counties previously noted would not have received a lesser amount, the distribution of school foundation formula funds would be affected by using the weighted ratios in determining the equivalent sales ratios.
To determine the accuracy of assessed valuations in the counties, the STC performs ratio studies. The STC selects properties on the tax rolls of local jurisdictions and compares the assessed valuation of those properties to an appraised value determined by a STC appraiser. All ratio studies we reviewed contained numerous individual parcels that were assessed either higher or lower than the STC's established acceptable range, resulting in an excess or insufficient property tax liability for these parcels. As long as the study results in an acceptable median ratio, the STC does not consider these individual parcels to be a problem and does not investigate the reasons for the variance.
According to the Fifty-Third annual report issued by the tax commission, 1998 personal property assessed valuation was approximately $14 billion. Of this amount, approximately $7.4 billion of 1998 personal property assessed valuation pertained to vehicles. When assisting the assessing officers with the implementation of their assessment maintenance plans, the Technical Support Staff did not ensure that vehicles were being assessed in accordance with state law. State statutes provide that the assessor of each county, and each city not within a county, shall use the trade-in value published in the October issue of the National Automobile Dealers' Association (NADA) Official Used Car Guide, or its successor publication, as the recommended guide for determining the true value of motor vehicles.
Although the STC distributed a vehicle valuation guide in March 1999 which includes assessed valuations based upon the NADA guide trade-in values, the STC did not require the Assessors to use the guide.
