Highland’s City Council approved an increase of 1.7 percent to its tax levy last week, bringing local property owners’ share of the city budget to $3.9 million.
The increase reflects a forecast 2 percent bump in property values, said Highland Director of Finance Kelly Korte.
Based on that, the city also projected a .3 percent decrease in tax rates, meaning a homeowner with property valued at $150,000 would pad roughly $956 in property tax in 2019.
The estimated increase in equalized assessed valuation, Korte said, is a conservative one based on the past two years that also had 2 percent increases.
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“This is the most conservative method and follows what has been occurring over the past few years,” Korte said.“ We had a two percent increase last year so we’re assuming we’re going to get a two percent this year.”
Property taxes paid to the city help pay for city streets, parks, police and fire protection, ambulance availability, the summer municipal band and Peanut Butter and Jam entertainment, the parks and recreation programs, school crossing guards, as well as necessary employment taxes and retirement benefits, outside financial audits, and the city’s liability insurance.
Property tax revenue amounts to about 8 percent of the city’s overall budget.
The city must pass an estimated tax levy resolution before the actual tax rate can be adopted. That vote is set for Monday, Dec. 17.
The council also approved an agreement that allows the city to assist the Village of Grantfork with rental inspections for roughly 10 locations in the village.
Councilman Aaron Schawrz said he was concerned that the inspections may take up too much of city employees’ time, with little gain for Highland. However, he said doing the inspections was neighborly of the city.
Interim Director of Building and Zoning and Highland EMS Chief Brian Wilson Brian Wilson said the inspections wouldn’t interfere with the city’s own inspections and wouldn’t take up much time. Each inspection in Grantfork will cost $50.
Federal money for roundabout
Federal funds also were accepted from the federal government for Roundabout Construction Project at Veterans Honor Parkway, Iberg Road, Broadway and St. Rose Road.
A development plan for the proposed Highland Pierron Fire Protection District Fire Station at 13208 St. Rose Road was approved, as well as the sale of 914 and 916 Deal Street for $35,500 to Ken Reding.
Understanding a Tax Levy
A tax levy extension is the number of dollars a taxing district — e.g., a city or village, school district, county, township — intends on collecting during the fiscal year.
Property tax bills are calculated by applying tax rates to the equalized assessed value of one’s property. What those rates depend on how much the levy is and how much assessed value there is to tax (Property Tax = Rate x Equalized Assessed Value).
Below are some definitions of terms you will see on your tax bill and how they apply to what you pay.
- Fair cash value: The amount for which a property can be sold in the due course of business and trade, not under duress, between a willing buyer and a willing seller.
- Assessed value: The value placed on property for tax purposes and the basis for determining what portion of the overall tax burden each property owner will bear. Assessed value is calculated at 1/3 of fair cash value. (Example: A home worth $150,000 on the open market would have an assessed value of $50,000.)
- Equalization factor or multiplier: The equalization factor (sometimes called a multiplier) is the tool used to bring all property to a uniform level of assessment, either bringing values up or down if assessments are determined to be too high or low, whatever the case may be, from one taxing district to another.
- Equalized assessed value: The equalized assessed value, or EAV, is the result of applying the state equalization factor to the assessed value of a parcel of property. Tax bills are calculated by multiplying the EAV (after any deductions) by the tax rate.
- Exemption: The removal of the property from the tax base. An exemption may only be a portion of the equalized assessed value, such as a homestead exemption, or for the complete amount of the equalized assessed value, such as a church building used exclusively for religious purposes.
- Tax rate: The amount of tax due, stated in terms of a percentage of the tax base. (Example: $6.81 per $100 of equalized assessed valuation (equal to 6.81 percent). You can obtain this percentage by dividing the levy for a fund by the equalized assessed value for the taxing district. Some funds have a maximum statutory tax rate that may not be exceeded. The sum of the fund rates equals the total district rate.