Trying to Understand Assessed Value?

The property tax rate is a simple calculation of dividing the amount of taxes needed by the total assessed value of all taxable property in the City. The three main components to the property tax are the levy, assessed value, and levy rate.
1. The levy is the total amount collected from the taxpayers by a taxing district.
2. The assessed value and the levy rate are the tools that are used to distribute the property tax burden equally to all taxpayers.
3. Tax Rate = Levy ÷ Total Assessed Value
Step One: Begin with a Budget
The process is similar to how you must budget your paycheck to pay for housing, food and clothing; you need to know where your money is going (expenditures) and how it is coming in (revenues).
First, City departments prepare budget requests that details how much money (revenue) is needed to cover planned expenditures. These requests are submitted to the Finance Department and Mayor for review. The Manage presents his recommended budget to the departments, usually in June. The departments provide their modifications by July. The Executive Budget is than submitted to the Council in September. The Council modifies the budget and a public hearing is held on the Council’s budget, usually on the 1st Tuesday of November.
Step Two: Calculate the "Property Tax Levy"
After determining how much revenue Lake Mills will receive from the state and other non-property tax sources, the difference is made up with property taxes. The property tax levy is the total amount of revenue needed from property taxes to cover General Fund expenditures, debt service costs, and other expenses. As Lake Mills has high property values, the City receives relatively little in state shared revenues according to the state formulas. The total City tax levy for the 2012 budget (including TIF Districts) was $3,714,486.
Step Three: Calculate the Property Tax Rate
To figure out the property tax rate you must know two things: the tax levy (just explained) and the city's total assessed value. Assessed value is the value of all City of Lake Mills properties for tax purposes and is determined by the City Assessor. The City's total assessed value of real and personal property as of January 1, 2011 (assessment date for tax purposes) was approximately $483,024,300.
How to Calculate the Tax Rate
Tax Levy / Assessed Value = Property Tax Rate
So, $3,714,486 / $483,024,300 = .007690.
Tax rates are reported per $1,000 of assessed property value; therefore, the local tax rate for December 2011 tax bills (used to fund 2012 budgets) was $7.69.
Step Four: Calculate Your Tax Bill
To calculate the City of Lake Mills portion of your tax bill, a tax rate of $7.69 means that for every $1,000 of property you own you are taxed $7.69 for city government services. For example, a Lake Mills resident who owns a home assessed at $164,000 paid $1,261 on the December 2011 tax bill (164 x 7.69 = 1,261) for City of
Lake Mills services such as cultural activities, public safety, public works and parks. This amount does not include costs to educate the community's children or provide judicial and human services. Those services are paid from the Lake Mills Area School District and Jefferson County portions of your tax bill.
Your Tax Bill: The Big Picture
Your property tax bill adds together the tax levy of five different taxing jurisdictions. These "taxing jurisdictions" are the City of Lake Mills, Lake Mills Area School District, Jefferson County, Madison Area Technical College, and the State of Wisconsin. Because these taxing jurisdictions cross municipal boundaries - there needs to be a value equalization method.
What is Equalized Value?
Is calculated by dividing the property's total assessed valued by the average assessment ratio. This ratio is applied to all property, including personal property, regardless of type or location of the property. In theory, this should approximate the current market value of the property as of January 1st in the year the assessment was determined. This value estimate is determined by the Department of Revenue (DOR). It is used to apportion tax levies among municipalities and is used in the distribution of shared revenues.
The assumption is that the market value of property changes with each year’s inflation (or deflation). Even though there is a new assessment roll every year, the City Assessors don’t review and revalue the assessments yearly. That means in a year without a revaluation, the assessed value does not reflect the property’s market value.
Because the other four taxing districts depend on the separate assessors from the municipalities in their districts, and because they do revaluations in different years, the values between municipalities will not be comparable.
Why do we care? Remember, the school districts, the county, the vocational schools and special districts like lake rehabilitation districts also collect part of their budgets from the local property tax. These overlying taxing jurisdictions need to collect the levy they need from each of the municipalities they lie within. The municipality’s share of those budgets will be passed on to each property owner. Fairness demands that the Department of Revenue (DOR) compare “apples to apples,” by making sure that we use one consistent standard in estimating the taxable value of each municipality. Then those overlying tax levies can be fairly apportioned to each municipality. That is a primary reason for the Equalized Value.
The fact that both assessed and fair market (equalized) values are shown on property tax bills underscores the fact that Wisconsin has a dual system of property valuation. Individual parcels of property are valued (assessed) by local assessors (except for manufacturing property, which is assessed by the state) while the estimated value of all taxable property in each municipality (Equalized Value) is determined by DOR. The local assessor is concerned with equity between property owners in the municipality, while DOR is concerned with equity between municipalities and counties. This Equalizing procedure assures that school taxes, county taxes, and major state aids are apportioned fairly to the state's 1851 municipalities.
What is the Assessment Ratio?
The relationship between the assessed value and equalized value of all taxable property within a municipality. For example, if the assessed value of all the taxable property in the City is $150,000.00 and the equalized value is $160,000.00 the assessment level would be 93.75%.
State law requires that assessors be within 10% (higher or lower) of the state's equalized value ratio at least once in every 4 year period. The Department of Revenue allows this leeway because appraisal is not an exact science, and to allow for the different standards used by them versus a municipality.
The local 2011 assessment for the City of Lake Mills also had an assessment ratio of less than one. The state assumed that the city was under assessed. The Wisconsin Taxpayers Alliance has provided a pamphlet regarding reassessment. The basic tenet of the document is that the levy and the property assessment must change to lower or raise the individual tax bill.
Assessed Value
The Assessor's primary responsibility is to find the fair market value of your property, so that you and other taxpayers may contribute a fair share of support for the community services you receive.
The four agencies, as well as the city, must levy taxes. The other taxing agencies include the Lake Mills Public Schools, Jefferson County, State of Wisconsin and the Madison Area Technical College. Here again, state laws define the powers of these taxing agencies and the kinds of properties that are exempt from taxes, such as schools, scout camps, and churches. Taxes levied by these other agencies are included in your tax bill with the taxes levied by the City of Lake Mills.
Each year the governing bodies of the various taxing agencies propose budgets for the next year. To finance the expenditures in the budget, they total all expected sources of revenue such as state aids and shared taxes, license fees and tuition. This is subtracted from the estimated expenditures. The remainder, which is the total amount to be collected through property taxes, is called the "tax levy."
The tax rate is calculated by simply dividing the amount of taxes needed (levy) by the total assessed value of all taxable property in the City.
Tax Rate = Levy ÷ Total Assessed Value
Once the rate is set, the assessed value of your property is used to determine your portion of the levy. The tax rate when multiplied by the assessed value of your property equals what you owe in taxes - your tax bill. The tax rate is often expressed in terms of dollars per thousand, or as a "mill rate."
The entire taxation process requires the cooperation of several parts of City government. The Assessor sets the value of residential and commercial property, the Department of Revenue determines the value of manufacturing property, and the Council determines the cost of City services and sets the levy. The levy and assessment are used to establish the tax rate necessary to generate funds for governmental services.