Levies are the total amount of money to be raised from the property tax, as set forth in the budget for the local government or tax jurisdiction, also called a taxing district. The cost of providing public services determines your property tax. Local government consists of various taxing districts including fire districts, regional library, cities, county government, roads, hospitals, ports and many others. The levy, whether higher or lower than the preceding year, is determined by the budget-making authority of the local government. A portion of the tax is distributed to the state for local school support. In addition, taxes are collected to pay for special voter-approved levies, such as school maintenance and operation levies and bonds and emergency medical levies. The levy rate (or tax rate) is expressed as dollars per $1,000 of assessed value.
Each year the commissioners or directors of each taxing district meet in open session to adopt a budget for the following year. The district submits the budget to the Assessor, who verifies that the budget is within statutory and constitutional limitations, and computes the required levy rate. The levy rate is the amount to be collected divided by the total assessed value of the geographic area the district serves, and is expressed in dollars per thousand dollars of assessed valuation. The formula for determining a taxing district’s levy rate looks like this:
Taxing District Budget (limited to 1% growth) ÷ Taxing District Assessed Value x 1,000 = Levy Rate
In reviewing the formula, you will note that when assessed values rise and the taxing district budget is a fixed amount, the levy rate decreases. When assessed values fall and the taxing district budget is a fixed amount, the levy rate increases. In both cases, the levy rate is adjusted to generate adequate revenues to fund the taxing district’s budget.