Who is impacted by the property valuation cap?

The property taxes collected from owners of residential properties in Santa Fe are shared by the state, county, city, Santa Fe Community College and Santa Fe Public Schools.

Critics of the 3 percent cap on annual increases in market values for residential properties say the tax beneficiaries are being shortchanged because not all property is taxed at full market value.

“Why are we sabotaging our tax base and tax equity?” asked Mike Loftin, CEO of Homewise.

Added Katherine Miller, the Santa Fe County manager: “Who’s hurting from that [3 percent cap] is our public schools, the city, the county and the entities that are supposed to be providing services, paving our roads better, landscaping our medians, giving better education to our kids, paying our teachers better.”

If the 3 percent cap were rescinded and all property in the county was taxed at full market value, the total amount of taxes paid by residential property owners would increase an estimated $9.5 million a year, according to county staff. The county currently collects about $180 million annually from residential property owners.

Also, without the 3 percent cap, the annual tax burden for residential property owners would be spread across a larger base of taxable property value. That means the tax rate for all residential property owners would decrease, according to Miller, a former head of the state Department of Finance and Administration.

“You broaden the base and lower the rate,” said state Senate Majority Leader Peter Wirth, D-Santa Fe.

Owners of the nearly 9,000 homes now being taxed at full market value would see tax cuts if the 3 percent cap were eliminated and the tax rate reduced.

For residential property owners benefiting from the 3 percent cap, the tax changes would depend on how much their properties are currently below market value for tax purposes. The owners of residential properties now receiving large tax breaks would see tax increases.