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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 ManagementDistricts

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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 LevyProperty 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

ResidentialReal Estate

CommercialReal 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?