Attempt to thaw tax freeze goes down in flames

The Ledger-Enquirer is calling the referendum to thaw the Property Tax Assessment Freeze in favor of the No vote.

With 23 of 26 precincts and 56 percent of the early vote counted, the referendum to thaw the freeze is losing by about a 61-39 percent spread. No votes total 27,515 while Yes votes total 17,325.

If the referendum had passed, it would have kept the freeze in place for all who are currently under it, but would have put any homestead property bought after Jan. 1, 2017, under a more traditional fair market value system, where property is regularly reassessed. Those properties under the freeze would have remained so until they changed hands, whether by sale or probate. They would have then go into the fair market value system. Eventually, all frozen property would have changed hands and no property would have remained under the freeze.

The property tax assessment freeze was voted into effect in 1982. It freezes the assessed value of a homestead property at the value at the time of the sale and keeps it there until the property changes hands. It is then reassessed at the current value and again frozen at that value.

It has been challenged before, both at the polls and in the courts, and the challenges failed both times.

Voters initially approved the freeze by a 73-27 percent margin in 1982. A 1991 attempt to repeal the freeze by referendum failed by an 81-19 percent margin.

In the early 2000s, a group challenged the freeze’s constitutionality and won a favorable ruling at the Superior Court level. But the state and then federal supreme courts ruled it constitutional.

Supporters and opponents of the referendum to thaw the freeze have disagreed on whether the new law would be constitutional and what would happen if it were tossed out by the courts. Supporters said the city would just revert to the tax freeze. Opponents say the freeze would have been repealed, so all homestead property would go into the fair market system, instantly lifting the freeze completely.

They have also disagreed about the potential impact on the city’s second Local Option Sales Tax, the OLOST. Opponents have said that because the initial legislation allowing the OLOST referendum had the freeze as an enabling requirement, if the freeze went away, so would the OLOST and its $30 million in revenue annually. Supporters say that is not the case, because the freeze would remain on the books forever, even though eventually, no property in the county would qualify to be under it.

This story was originally published November 8, 2016 at 9:10 PM with the headline "Attempt to thaw tax freeze goes down in flames."