Opinion No. 83-83

Topics:

CONSTITUTIONAL LAW.
HANCOCK AMENDMENT.
PROPERTY TAX.
RFASSESSMENT.
TAX LEVY.
TAXATION-TAX RATE.

Summary conclusion

The words “new construction and improvements", as used in Article X, Section 22(a), Missouri Constitution, mean betterments to real property, including the creation of new structures and additions to, replacements of, or remodeling of existing structures, that occur subsequent to the last annual assessment date for such property; the county clerks and the assessor in the City of St. Louis determine when a rollback in tax rate is required by Article X, Section 22(a), Missouri Constitution.

September 22, 1983

Dr. Arthur L. Mallory
Commissioner of Education
Jefferson State Office Building
Jefferson City, Missouri 65105

Dear Dr. Mallory:

 This official opinion is issued in response to the following questions:

 Article X, Section 22(a), Missouri Constitution, states in pertinent part:

 Your first question asks the meaning of the phrase “new construction and improvements", as used in the Constitution. We believe that the word new modifies both the word construction and the word improvements. We note that the annual assessment date of property in Missouri is January first of each year. ysection 137.080, RSMo 1978. Although the annual assessment requirement has not been enforced (see, e.g., State ex rel. Cassilly v. Riney, 576 S.W.2d 325 (Mo. banc 1979); Section 137.750.1, RSMo Supp. 1982), we believe that, under the law, new construction and improvements occur subsequent to each annual assessment date.

 In dealing with this question, we must utilize the accepted principle for construing constitutional provisions reaffirmed by the Supreme Court of Missouri in Roberts v. McNary, 636 S.W.2d 332, 335 (Mo. banc 1982). That is, the meanings to be ascribed to words used in the Hancock Amendment are the ordinary and commonly understood meanings derived from the dictionary. Turning to the dictionary, we find the following definition of the word improvement:

 The word construction finds its root in the word construct which is defined in part as: “[T]o form, make, or create by combining parts or elements: . . ." Id., at 489.

 Thus, we conclude that the words “new construction and improvements", as used in Article X, Section 22(a), Missouri Constitution, mean betterments to real property, including the creation of new structures, and additions to, replacements of, or remodeling of existing structures, that occur subsequent to the last annual assessment date for such property. [Footnote 1]

 Your second question asks who determines when a rollback in tax rate is required as a result of Article X, Section 22(a). Although the Constitution is silent on this question, it specifically states that the levy applied in each county or other political subdivision must be reduced to keep property tax revenues at existing levels, with an adjustment for changes in the general price level permitted. Since the levy adjustment is to be made by local authorities, we believe the determination as to when a rollback is required must also be made by local authorities. Presumably, such a determination will be made in a manner similar to that required by Section 137.073.2, RSMo Supp. 1982. That is, the county clerk in the counties and the assessor of City of St. Louis will notify all taxing authorities within the relevant taxing area that a rollback is necessary on the basis of information indicating that the rollback is required by law. See Opinion No. 46-83.

 Your third question asks about the basis for a determination that a rollback under Article X, Section 22(a), is necessary. As we have stated, a rollback is required when the assessed valuation of property, as finally equalized but excluding the value of new construction and improvements, increases by a larger percentage than the increase in the general price level from the previous year.

 Two comparisons are necessary. First, the total assessed valuation of all property in the county from the previous year must be compared to the total assessed valuation of all property for the current year, as finally equalized by the State Tax Commission excluding the value of new construction and improvements. Section 137.115, RSMo Supp. 1982, requires the assessor in all counties and the City of St. Louis to list and value all real and tangible personal property within their jurisdiction. See, Sections 137.245, 137.375, 137.515, RSMo 1978. In addition to the review by the various county boards of equalization, the State Tax Commission must annually equalize the value of property in all of the counties and the City of St. Louis. Section 138.390, RSMo 1978. Notice of the equalized values is to be provided annually to the county clerks and the assessor in the City of St. Louis. Section 138.400, RSMo 1978.

 If the assessors have prepared the tax books in such a manner as to show the value attributed to new construction and improvements, if any, on each parcel, which we believe they are required to do under the terms and conditions of this constitutional provision, the total value of the current assessments in each county and in the City of St. Louis, as equalized by the State Tax Commission in the current year, less the value of new improvements and construction, can be easily compared with the total assessed value of property from the previous year, and the percentage of increase noted. It remains only to compare this percentage to the percentage increase in the general price level from the previous year.

 The term “general price level" is defined in Article X, Section 17(3), Missouri Constitution, as the Consumer Price Index for All Urban Consumers for the United States as defined and officially reported by the United States Department of Labor. The Consumer Price Index for All Urban Consumers is published monthly by the Bureau of Labor Statistics, United States Department of Labor. It is an index, with 1967 as its base year (1967 100), which is used to measure price changes in a fixed “market basket" of goods and services. The “market basket" is designed to reflect the actual purchases of goods and services by the average urban consumer. Since the annual assessment date in Missouri is January first of each year (Section 137.080, RSMo 1978), it would appear that the percentage of increase in assessed valuation from the previous year should be compared to the percentage of change in the Consumer Price Index during the same period. The latter percentage can be obtained by comparing the index published at the beginning of the previous year to the index published at the end of the previous year. When the percentage increase of the assessed valuation is greater than the percentage increase of the general price level, a rollback of tax levies is required by Article X, Section 22(a), Missouri Constitution.

CONCLUSION

 It is the opinion of this office that:

Very truly yours,

John Ashcroft
Attorney General