Utah League of Cities and Towns

Making Life BETTER

Projecting Property Tax Revenue

Each year I receive phone calls from municipal officials asking me how to estimate different pieces of the municipal revenue pie. Specifically, local officials are often frustrated because they don’t have access to the proposed certified tax rate when projecting property tax revenue.

When I attended a Spring Training seminar offered by the State Auditor’s Office I received some information from the State Tax Commission Property Tax Division that I thought you might find useful.

It is important to note that this information is for ad valorem (value based) revenue and does not include age based revenue (such as motor vehicle fees) or fees in lieu of taxes.

THE FOLLOWING IS RE-PRINTED FROM INFORMATION RECEIVED FROM THE STATE TAX COMMISSION – PROPERTY TAX DIVISION

HOW TO ESTIMATE REVENUE FOR THE COMING YEAR WITHOUT THE CERTIFIED TAX RATES

All calendar and fiscal year entities set their budgets without knowing what the certified tax rate will be for the new year.

This year’s certified tax rate will generate the same ad valorem property tax revenue equal to last year’s budgeted property tax revenue, plus the additional revenue due to last year’s growth.

For Example:

The county treasurer reported $10,000 budgeted for the previous year.

The county assessor will then estimate the amount of new growth.

Assume that last year’s new growth was reported at $2,000,000 and last year’s value was $50,000,000. The new growth then is the product of $2,000,000/$50,000,000 or 4% new growth. You then multiply 4% by last year’s collections to estimate this year’s additional revenue due to last year’s new growth. Four percent times $10,000 is $400 which is the amount of new growth revenue.

You can then estimate that the revenue from this year’s certified tax rate should be approximately $10,400: $10,000 from last year’s budget and $400 from new growth.

So, if you know the last year’s value;

2004 Value

and if you know last year’s total budgeted collections;

2004 Budgeted Revenue

then call your county assessor to find out the projected growth and you can use the formula from the article to roughly estimate what your community’s collection will be for the coming year, even though you don’t know the certified tax rate.

Happy projecting and budgeting and, as always, please contact the League office if we can be of assistance.