Question from Fiscal Administration 9th ed: Pg. 529 #3 Knightstown has a propert

Question

Question from Fiscal Administration 9th ed: Pg. 529 #3 Knightstown has a property tax base with an appraised value consisting of $150,000,000 of taxable real property and $85,000,000 of taxable personal property. The assessment ratio is 50 percent. Exemptions for the elderly reduce assessed value by $3,000,000. The city has a planned budget of $15,000,000 and expects to receive $800,000 in nonproperty tax revenue. a. Compute the statutory property tax rate? b. Compute the effective property tax rate? c. The Smith family lives in Knightstown. Their property has an appraised value of $42,000. What is their city property tax bill?

Explanation / Answer

Particulars $ Planned budget      15,000,000 Less:Expected nonproperty tax revenue            800,000 Property tax revenue (a)      14,200,000 Taxable real property 150,000,000 Taxable personal property      85,000,000 Total Taxable poperty (b) 235,000,000 Statutory Property Tax Rate c= a/b              6.0426% Assement Ratio d                   0.50 Effective Tax Rate c*d              3.0213% Smith family city property tax bill($42000*3.0213%)                1,269

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