Question

Determining of property tax rate

The county legislature approved the budget for 2019. Revenues from property taxes are budgeted at $800,000. According to the county assessor, the assessed valuation of all of the property in the county is $50 million. Of this amount, property worth $10 million belongs to the federal government or to religious organizations and, therefore, is not subject to property taxes. In addition, certificates for the following exemptions have been filed:

Homestead $2,500,000
Veterans 1,000,000
Old age, blindness, etc. 500,000

In the past, uncollectible property taxes averaged about 3 percent of the levy. This rate is not expected to change in the foreseeable future. Using all of this information, determine

a. the property tax rate per $1,000 of assessed valuations that must be used to collect the desired revenues from property taxes.

Round answer to two decimal places.

Answer

b. the levy on a piece of property that was assessed for $100,000 (after exemptions).

Use rounded answer from above. Round final answer to the nearest whole number.

Answer 1

a) We need to collect $800,000, but as uncollectible property taxes ar 3% of the levy we need to collect

800,000/(97%)=$824,742.27

Which should be collected from the value of all properties less that with exemptions. That is

`$50`

`-$10` Government

`-$2.5` Homestead

`-$1` Veterans

`-$0.5` Old age, etc.

___________

`$36` million

The tax rate would be
`(824,742.27)/(36,000,000) = 0.02291` that is $22.91 per $1,000 of assessed valuations.

b) $100,000*0.02291= $2,291