Sales ratio stirs discussion
Polk County officials announced that its property tax rate of 52 cents per $100 of valuation is the 25th lowest in the state.
North Carolina has 100 counties, making Polk’s tax rate in the bottom quartile.
The Polk County Board of Commissioners met Monday, Aug. 15 and held a lengthy discussion regarding the county’s sales tax ratio, or the percentage of the county’s tax evaluation compared to home sale prices. Polk County’s current sales tax ratio is almost 89 percent, which means homes are selling at 11 percent higher than the county’s assessed property values (see chart at bottom for Polk’s sales tax ratio by year).
Commissioner Tom Pack questioned the manner in which the state measures the sales tax ratio.
“I have a hard time telling people property values have risen 11 percent,” said Pack. “I don’t trust the random sampling.”
The sales tax ratio is based on random sampling of qualified property sales. Polk County Tax Assessor John Bridgers said the state really wants counties to have sales tax ratios between 90 and 110 percent to ensure assessed property values are close to actual retail value. Polk County did its last revaluation in 2009, which should have brought property valuations on target with retail values as of Jan. 1, 2010.
Pack questioned why the sales tax ratio is so different when the county includes all qualified sales for the month of July instead of only the 11 sales randomly sampled.
Bridgers said the county turns in all sales to the state and the state does the random sampling. Bridgers also mentioned one home that the county had assessed at $842,150 that sold in July for $1.1 million.
According to July figures, the cumulative sales ratio based on random sampling of 11 qualified sales is 0.93 percent, meaning in July, Polk County properties were selling for prices 7 percent higher than the property valuation. If the county counts all 18 valid, or qualified sales, the sales tax ratio is 1.03 percent, meaning homes were selling for less than the county’s assessed values.
“There is a 10 point swing between random sampling and including all of the sales,” Pack said. “I’m just saying random sampling on something like this is not as accurate as it used to be.”
Polk County does property revaluations every eight years as required by state statute. Some counties do revaluations every four years to lessen the shock of increased property values. Revaluations are required to balance assessed values with actual current retail values.
Polk County lowered its tax rate to match the average increase in property values during the last revaluation. The county’s tax rate dropped from 68 cents per $100 of valuation to 52 cents per $100 of valuation in 2009, which meant the average property owner did not see an increase in property taxes even though most property values increased during the revaluation. Property owners who saw an above average increase in value would have had a tax increase, while owners whose property value decreased or increased less than the average would have seen a reduced tax bill.

Polk County sales tax ratio 2000-2011
Year    Tax rate    Sales ratio
2011    0.52    0.8857
2010    0.52    0.8789
2009    0.52    0.9390
2008    0.68    0.6080
2007    0.68    0.6216
2006    0.68    0.6842
2005    0.68    0.7560
2004    0.5876    0.7634
2003    0.5876    0.8376
2002    0.5376    0.8934
2001    0.5376    1.0000
2000    0.6563    0.6796