School Finance Basics

Ad Valorem Tax: a tax assessed according to the value of property.

Assessed Valuation (AV)the total valuation for taxing purposes on the county auditor’s real, personal and public utility property lists.

BondAn interest bearing securities certificate used for raising capital which promises to pay the owner a specified sum on a certain date.

General Obligation Bonds (GO Bonds): securities issued with a pledge of the full faith, credit and general property taxing power of the issuer (voted bonds are GO Bonds).

Mill: a tax rate expressed as a fraction of a dollar (0.001). One mill is equal to a tax of one dollar ($1.00) per one thousand dollars ($1,000) of assessed value.

Note: a security, usually maturing in one year or less, the interest on which is payable at maturity – often issued before bonds ( i.e. “bond anticipation notes”).

Example:

If I own a house with a “true” (i.e. market) value of $150,000, what would be my taxes due on a proposed new property tax or bond issue that says it would be 5.0 mills?

  1. the assessed valuation of real property is fixed at 35% of true value
    $150,000 x .35 = $52,500
  2. divide by 1000 to determine how many dollars per mill you would pay
    $52,500 / 1,000 = $52.50 per mill of tax
  3. multiply by proposed millage
    $52.00 x 5 mills = $262.50
  4. subtract out state rollback of 10% or 12.5% for owner-occupied residential property for owner-occupied: $262.50 – 32.81 = $229.69
  5. subtract out homestead exemption for persons over age 65 and the handicapped