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Budget Blog week of May 18, 2015

In early June, County Manager Hannes Zacharias will present his proposed 2016 budget to the Board of County Commissioners. One of the biggest topics of discussion every year during the budget process centers around the County’s mill levy rate.  Whether it goes up, down, or stays the same has a huge impact on not just the budget process, but County operations as well.  Correspondingly, where to set the mill levy is one of the biggest decisions the Board of County Commissioners makes in putting together the budget.

Understanding Johnson County’s mill levy and how it is calculated requires an understanding of three concepts:

Concept 1: A mill levy is taxed on the assessed value of an owner’s property.

There are several types of property. The Johnson County Appraiser’s Office determines the appraised value (fair market value) of property, and then the assessed value is the fraction of the appraised value on which the owner is taxed. That fraction is set by the state.

Real estate
Appraised value x 11.5%  = assessed value

Commercial property
Appraised value x 25% = assessed value

Agricultural property
Appraised value x 30% = assessed value

Concept 2: What is a mill? It’s similar to the relationship between a meter and a millimeter.

1 millimeter = 1/1000 of a meter

1 mill = $1 taxes per $1,000 assessed value

Concept 3: The County budget includes three taxing districts, each with its own mill levy. The 2015 budget includes:

Johnson County Government
17.764 mills

Johnson County Park & Recreation District
2.349 mills

Johnson County Library
3.157 mills

17.64 + 2.349 + 3.157 = 23.270 mills for the 2015 budget

Now you can calculate the County portion of property’s taxes on a piece of property.

Appraised value of a house $250,000
Assessment rate X 11.5%
Assessed value $28,750
Per mill / 1,000
Property tax per mill $28.75
2015 County mill rate X 23.27
2015 County property tax $669.01

Substitute the appraised value of your property at the top of this equation, choose the assessment rate (see Concept 1) and calculate how much property tax the County will collect on your property in 2015.

If you look at your annual property tax bill, you will see that the total amount you pay in property taxes is higher than what Johnson County collects. That’s because depending on where you live, you also pay levies to additional taxing districts like school districts or cities. We’ll talk about that more in next week’s Budget Blog.