Property Tax Administration

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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 propertys 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 propertys 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 districts
  revenues? What happens to your tax bill if your
  neighbors property increases in value and yours
  doesnt?
• In a rate-based system, what happens to tax rates
  if you add to the tax base? To a districts
  revenues? What happens to your tax bill if your
  neighbors property increases in value and yours
  doesnt?