Property Tax
Administration
Tax Districts
District Tax Calculation
Assessment
Calculation of Tax Obligations
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Fire Districts
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School Districts
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Waste Management
Districts
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District Tax Levy
• Compute tax base (add up the assessed
values of all the taxable real property
in the district = $100 million).
• Set the budget ($2.5 million)
• Subtract intergovernmental aid ($1M)
• Divide the remainder ($1.5 million) by
the tax base ($100 million) to calculate
the statutory property tax rate = .015 or
1.5 percent or 15 mills
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Mill Levy
Property tax rate.
A mill is equal to $1.00 of tax for each
$1,000 of assessment, or .1 percent.
To calculate the property tax multiply the
assessment of the property by the mill
rate and then divide by 1,000. For
example, a property with an statutory
assessed value of $500,000 located in
a municipality with a mill rate of 10 mills
would have a property tax bill of
$5,000.00 per year
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Rate Based Systems
• Specify a Mill Rate (or
Percentage Tax Rate)
• Apply to tax base
• Fit budget to anticipated revenues
• Propose a change in tax rate
consistent with spending plans
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Rate Based Systems
• Specify a Mill Rate (or
Percentage Tax Rate, e.g., 15 or
1.5%)
• Apply to tax base
• Fit budget to anticipated revenues
• Propose a change in tax rate
consistent with spending plans
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Rate Based Systems
• Specify a Mill Rate (or
Percentage Tax Rate, e.g., 15 or
1.5%)
• Apply to tax base ($100M =
$1.5M)
• Fit budget to anticipated revenues
• Propose a change in tax rate
consistent with spending plans
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Rate Based Systems
• Specify a Mill Rate (or
Percentage Tax Rate, e.g., 15 or
1.5%)
• Apply to tax base ($100M =
$1.5M)
• Fit budget to anticipated revenues
($2.5M = $1M + $1.5M)
• Propose a change in tax rate
consistent with spending plans
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Rate Based Systems
• Specify a Mill Rate (or
Percentage Tax Rate, e.g., 15 or
1.5%)
• Apply to tax base ($100M =
$1.5M)
• Fit budget to anticipated revenues
($2.5M = $1M + $1.5M)
• Propose a change in tax rate
consistent with spending plans (if
necessary)
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Assessment
• True market value
• Method of comparables
• Econometric (hedonic
pricing) assessment*
• Book (acquisition cost minus
depreciation), replacement
cost, cash flows
Residential
Real Estate
Commercial
Real Estate
*Accuracy is a function of frequency
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Proportional
Assessment
• Usually expressed as as
proportion of market value
• Often used to discriminate in
favor of certain property types
• Other statutory standards
Oregon = AV 1994 plus 3%
Per annum = 1.65(AV 1994),
or MV, whichever is less, in
FY2011
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Statutory vs Effective
Property Tax rates
• Property tax bill is calculated by
multiplying the sum of tax rates
that apply to the property by the
property’s AV.
• The effective tax rate is found by
dividing the tax bill by MV
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Statutory vs Effective
Property Tax rates
• Property tax bill is calculated by
multiplying the sum of tax rates
that apply to the property by the
property’s AV.
• The effective tax rate is found by
dividing the tax bill by MV (a
better measure might take account
of the MV of all the property in a
jurisdiction and not just the taxable
property).
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Thought Questions
• In a levy-based system, what happens
to tax rates if you add to the tax base?
To a district’s revenues? What happens
to your tax bill if your neighbor’s
property increases in value and yours
doesn’t?
• In a rate-based system, what happens to
tax rates if you add to the tax base? To
a district’s revenues? What happens to
your tax bill if your neighbor’s
property increases in value and yours
doesn’t?
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