Bill to reduce property appraisal cycles advancing in Senate

By Sabrina Bates

Staff Writer

A proposal designed to eliminate some of the “sticker shock” with current reappraisal cycles for property owners in Tennessee is making its way through the House and Senate.

Sen. Page Walley (R-26) of Savannah presented a bill that would reduce the county property reappraisal cycles from a 4-6-year cycle to a 2-4-year cycle. 

Madison County Assessor of Property Frances Hunley said a bill that calls for more frequent reappraisals could help save counties and cities from losing revenue due to the “sales ratio” that occurs every two years. A sales ratio in real estate is determined by dividing the property value by its sale price.

“An estimate of tax revenue lost for 2024 due to the Sales Ratio could be as high as 25 percent on Tangible Personal Property and Office of State Assessed Properties,” Hunley explained. “For Madison County, an estimate using last year’s assessments, is $2,438,000 and for Jackson [it is] $1,355,000 in tax revenue.”

Hunley said in 2022, the county saw an increase in property values during the reappraisal cycle. She added by the end of 2023, values were down around 25 percent as a result of the sales ratio. 

“The public was shocked initially, but eventually realized that the real estate market supported the values,” Hunley noted.

The proposal is still revenue-neutral for counties, meaning counties cannot bring in more revenue from a property tax reassessment cycle than the previous year. To balance out the tax revenue, the state sets a recommended Certified Tax Rate for counties and cities during their reappraisal cycle that keeps the entities’ revenue neutral. If a city or county chooses to adopt a higher Certified Tax Rate, a published notice must be given to residents for a public meeting and a public hearing must be held by the entity. The governing board must vote on the Certified Tax Rate if they choose to increase it, after giving adequate public notice and holding a public hearing. Those requirements are still in place under Walley’s proposal.

The proposed bill’s attached fiscal note warranted more clarity from the state’s Senate State and Local Government Committee that reads, “$100 million in property tax collections would have been realized under a more frequent reappraisal system” in tax year 2023.

Thirty-eight of Tennessee’s 95 counties were in a property reappraisal cycle in 2023.

Tennessee’s Comptroller of the Treasury Jason Mumpower told committee members he would not bring a bill if it raises taxes. He explained there are no new tax revenues expected with this proposed legislation.

It was explained the Fiscal Note was likely based on property valuations and not taxations. 

Sen. Adam Lowe (R-1) of Calhoun explained many counties in the state have tax cycles that are lengthy.

“Many of us have served in local government. Market fluctuations that are happening are more frequent than those tax cycles. To adjust for that, this bill says we are going to give them the option to assess more frequently in order for them to time and adjust for those market fluctuations,” Lowe said. He added county commissioners and property assessors asked the General Assembly for this proposal.

“How they (property assessments) can be calculated is not in the bill. … it’s how frequently they can be calculated.

Sen. Ken Yager (R-12) of Kingston announced he served as county executive for 24 years and went through four or five county property reappraisal cycles.

“This is a good bill because it mitigates the sticker shock from waiting four years to reassess your property. The consumer is going to like this instead of it being spread out, that sticker shock is going to be mitigated,” Yager said.

County property assessor offices would bear any additional burden of work due to a decreased reappraisal cycle. 

The measure saw unanimous support from the Senate’s State and Local Government Committee, passing 9-0. This week, Senate Bill 1946 was moved to the Senate’s Finance, Ways and Means Committee’s final calendar.

As proposed, this bill applies to a county reappraisal program beginning on or after July 1, 2025. Each county must adopt a reappraisal program in accordance with this bill by June 30, 2030. A county-reappraisal program in effect prior to July 1, 2025, may continue until the conclusion of the existing county reappraisal cycle, at which time, the county must adopt a reappraisal program in accordance with this bill.

Madison County will have its next reappraisal in 2027.

Sabrina Bates, sabrina@richardsonmediagroup.net