What is a 5% Cap?
5% yearly increases are not for everyone!!!!!
A 5% increase will occur only when the "fair cash" value is greater than the "taxable fair cash" value. The statute reads "up to" 5% because not all properties "automatically" get a 5% increase. Some may receive 0%-4% depending on the difference in fair cash to taxable fair cash value. The 5% cap does not allow an Assessor to choose between 0%-5%, but to ensure property will not exceed a 5% increase unless it is sold, transferred, conveyed or new construction is added to the property.
There is a lot of discussion and interpretation of the 5% cap. The truth is the Assessors do not have any discretion in lowering the 5% cap on applicable properties. It would have to be lowered by legislation. Due to the confusion surrounding the 5% cap the Attorney General's office was asked for an opinion. In opinion #01-36, particularly paragraphs 18, 19, and 20-3a, the Assessor's limited use of the cap is clearly defined. In paragraph 20-6 it explains when a lower percentage would come in to play. It dictates we must raise the property less than 5% if such an increase is required to assess at fair cash value. This is the only provision for the cap to be less than 5%.
Please feel free to get this opinion and read it. The Attorney General's site is, www.oag.state.ok.us. Go to Opinions and find the one for the year 2001. You can also encourage your legislators, as I have, to support bills that lower the cap or give Assessors the discretion to lower it. If you have any questions we will be glad to answer them. Remember, we do not automatically raise "everyone" by 5% each year. It is only those accounts that have higher fair cash than taxable fair cash value that will go up and not always by 5% nor greater than 5%.
This office is audited by the Oklahoma Tax Commission for compliance with all tax commission rules and regulations and all legislation that pertains to Ad Valorem taxes. A yearly ratio study is done to be sure the Assessor's office is always in compliance with these studies. The Wagoner County Assessor's office has never been out of compliance with these studies. You may contact the Oklahoma Tax Commission, Ad Valorem Division, regarding the use of the 5% cap or any other questions you have on our proper use of rules, regulations and statutes. We might not always agree with the rules, but we are obligated to follow them.
"Fair cash value means the value or price at which a willing buyer would purchase property and a willing seller would sell property if both parties are knowledgeable about the property and its uses and if neither party is under an undue pressure to buy or sell and for real property shall mean the value for the highest and best use for which such property was actually used, or was previously classified for use, during the calendar year next preceding the applicable January 1 assessment date[.]" 68 O.S. Supp. 2000 S 2802 (18).