Lowndes County supervisors agreed to put roughly $110,000 in money collected from the city and county schools back into its general fund to reimburse five Section 42 Housing property owners for over-charges in ad valorem taxes.
The board passed the proposal by unanimous vote during its Monday board meeting.
The proposal came at the recommendation of county tax assessor Greg Andrews. In 2013, Andrews recommended the county hold $240,000 in reserve to satisfy potential claims from 14 Section 42 housing owners in the county. He said Monday that only five of the 14 owners had successfully completed the appeals process. Andrews said the total amount of the reimbursement would be roughly $179,000, with $70,000 of that coming from county ad valorem collections.
He told the board he had collected $10,350 in ad valorem tax revenue from the Lowndes County School District and $99,884 from the Columbus Municipal School District, recommending supervisors put the money in the county’s general fund for future payment
At the center of the issue is a six-year-old court case that began in Humphreys County after the state senate passed legislation changing how taxes were assessed for federally-subsidized housing, called Section 42 housing.
Ad valorem taxes are based on the appraised value for home owners. For rental properties, however, taxes are based on the income the property generates. Under the law passed in 2008, the portion of the rent subsidized by the federal government could not be considered as income for tax assessment purposes, which dramatically reduces an owner’s tax liability.
Humphreys County filed suit, arguing that the new law violated the state’s constitution, which said that like properties must be taxed alike.
“What that means is if you have a rental appraised at $145,000, your taxes would be $1,825,” Andrews said. “But if you had a Section 42 house appraised at that same $145,000, the tax assessment would be $508 after you take out the federal subsidy. That doesn’t sound like you’re taxing the properties the same to me.”
The Supreme Court denied the Humphreys County claim, which counties throughout the state have considered a precedent. Statewide, more than $12 million in over-charges of ad valorem taxes for Section 42 Housing could have to be reimbursed based on the Supreme Court ruling.
During discussion, board president Harry Sanders said guidelines require any potential developer building Section 42 housing to obtain a letter from the county’s highest elected official, which would be Sanders.
“I told them I’d only sign that letter if they agreed to pay their ad valorem taxes,” Sanders said. “They wrote back and said they would pay their taxes, but I’m not sure what they mean by that. What I would propose is that we have Ralph Billingsley (the county’s chief operations officer), Greg Andrews and Berk Huskison (an attorney who has been handling the Section 42 issue for the county) get together and put together a policy for this.”
In separate votes, the board unanimously approved putting the money collected from the schools in the general fund and appointing Billingsley, Andrews and Huskison to draft a Section 42 policy for the county.
In other business, District 4 supervisor Jeff Smith briefed the board on the Mississippi Department of Transportation’s study on the intersection of Highway 45 Alternate and Tarleton Road.
“As you know, there are a lot of wrecks at that intersection and MDOT is planning to do traffic studies too see what can be done about it,” said Smith, who also formally announced his intention to run for a third term as supervisor.
The board also approved a proposal that will close all county offices on Dec. 25-26 for the Christmas holiday. The board had previously approved closing county offices on Jan. 1-2 for the New Year holiday.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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