Assessor projects millage rates
Fayette County’s chief assessor has released projections showing most of the county’s eight school districts would see millage rates plunge from the 50s into the low teens if they adopt revenue-neutral budgets in 2003-04. James A. Hercik, CPE, cautioned that the numbers should only be used as an estimate of next year’s school taxes, as true millage rates won’t be known until school districts adopt budgets this time next year.
“We wanted to get these out now, as there is a lot of confusion with taxpayers attempting to take their new assessments and using the old unadjusted millage rates,” said Hercik.
For the most part, school district millage rates would move from the low 50s into the 10- to 13-mill range. Under state law, school districts must correspondingly slash their millage rates in the year of any reassessment.
One caveat, however, is that school districts can take in up to 10 percent more revenue in that year. That doesn’t mean that everyone’s tax bill would increase 10 percent; only that the school district’s total increase from real estate taxes is limited to 10 percent.
A hypothetical example from the accompanying chart can help property owners understand how to compute their revenue-neutral school tax for next year. Say you currently own a property in the Albert Gallatin Area School District that is assessed at $10,000.
For the current fiscal year of 2002-2003, Albert Gallatin’s millage rate is 51.8 mills. That means you’d pay $518 in school district property taxes this year – a figure derived by multiplying your current $10,000 assessed value by the millage rate of .0518.
But next year, under Hercik’s revenue-neutral scenario, Albert Gallatin’s millage rate would plunge to 11.3 mills. You’d pay only $113 in taxes per each $10,000 of assessed value. However, that doesn’t mean you’d have a lower tax bill, because your assessed value is likely to increase several times.
A more realistic scenario is that your property’s assessed value rises to $50,000 because of the reassessment. You’d need to multiply $50,000 by .0113 to get your new revenue-neutral assessment, which would be $565.
Likewise, if your new assessment rises to $45,000, you’d end up paying $508.50 in school district property taxes using the revenue-neutral millage rate of 11.3. That figure comes from multiplying $45,000 by .0113.
The terminology “revenue neutral” doesn’t mean that each property owner’s taxes would remain the same; only that the school district’s overall financial take would. Under reassessment, some property owners will pay more, some will pay less and some will remain about the same.
Individual property owners could see great increases or great decreases in taxes, depending on how their property has been valued in the current market by Cole Layer Trumble, the firm that performed the county’s first reassessment in 43 years.
Additionally, Hercik said that an influx of state financial aid that was approved after local school districts passed their 2002-2003 budgets could drive down the current millage rates used as the basis for his next-year projections.
“Hopefully, with the school boards reopening their budgets, some of these rates can be cut,” said Hercik.
“If that happens, then the projected rates would be likewise cut for the following year.”
Hercik noted that school districts aren’t legally obligated to take in an extra 10 percent in revenue in the year of the reassessment. They can opt to follow the county commissioners’ lead and approve budgets that are revenue-neutral when it comes to property taxes.
“We calculated all the rates as being revenue-neutral, so if the school takes the 10 percent, that would increase the (millage) projection,” said Hercik.