Truth in Taxation Explanation

The goal of Senate Bill 13 is very simple. If a taxing jurisdiction desires to increase the neutral revenue stream, the jurisdiction must hold a public meeting to inform the public that the tax dollars being budgeted will increase more than the previous year. This Bill requires that it eliminate the tax lid that existed. Instead, Senate Bill 13 reduces the mill rate based on the increase in the current valuation. The new tax rate would generate the same aggregate property tax dollars. To assist in explaining this concept, I have created a quick visual.

For the sake of the example:

The Assessed Value is $10,000,000 from the previous tax year. The new Assessed Value is $10,450,000 representing a 4.5% increase due to new construction and revaluation. The taxing jurisdiction budget was $2,500,000 in the previous year and a $2,850,000 budget for the new year.

Previous Year Calculation:

Assessed value: 10,000,000

Budget: 2,500,000 Divide Budget by the Assessed Value equals the mill rate. 

Mill Rate: .25


Bar balanced equally on tip of triangle.

Current Year Calculation: Neutral Revenue

Bar balanced unequally on tip of triangle.

No Change in Mil Rate: Above the Neutral Revenue Taxes

The mill rate would be reduced to assure the total taxes collected is the same amount as the previous 

Bar balanced equally on tip of triangle.

If there was no change to the mill rate given the increased Assessed Value, the amount of Property Tax collected would reflect a 5% increase.

Key Note:

It is important to understand that the market value established by the Appraiser’s Office must meet the Statutory requirements and Department of Revenue’s Directives.