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BUDGET YEAR 2002

BUDGET YEAR 2003

BUDGET YEAR 2004

BUDGET YEAR 2005

"PAYING FOR IT" -- POSSIBLE SOLUTIONS

YEAR-TO-YEAR BUDGET OBSERVATIONS

"PADDING THE BUDGET"

MORE INFORMATION

QUESTIONS & ANSWERS

FORUM

[The following data was used as the outline and hand-out for a 4/21 seminar on budgeting and millage rate issues. Ideally, you should have attended the seminar to fully understand the information presented. This presentation is based on publicly-available information. It was not prepared by, nor approved by the City of Clarkston. The opinions expressed are those of the author, and do not necessarily reflect those of any other individual, including Clarkston city officials. The process for setting the millage rate is based on information found at www.millagerate.com.]

You should begin here and view the data in order, following the link at the end of each page.

The Budget Process – An Overview

1. 4th quarter – city determines expected expenditures for upcoming year; identifies revenue sources. Comparison to historical, current data. Public hearings
2. January – adoption of budget
3. 1st quarter – Tax Commissioner assesses property values, computes tax digest
4. April – City receives updated tax digest info
5. May – City advertises tax increase, schedules hearings, if necessary. Sets millage rate.
6. June – City notifies Tax Commissioner of millage rate (for cities for which the county bills property taxes. For cities who bill their own property taxes, this usually occurs later in the year)
7. Mid-year – Budget review (recommended)

Setting the Millage Rate

All non-exempt real property in the city is supposed to be equally valued at "fair market value"-- which is a legally defined term with a specific meaning. "Fair market value" and, thereby, the "assessed value" (the 40% of FMV upon which your taxes are assessed) is determined by the county Tax Commissioner and the Tax Assessors. The city should base its millage rate on the assessed value of taxable property within its city limits.)

The total value of all taxable real property within the city (minus exemptions and special assessments) is known as the "real property net tax digest." As you can easily conclude, the net tax digest is a specific dollar amount.

Meanwhile, the City Council is spending your tax dollars according to a budget. Budgets have to be balanced... each year, the Council decides what it will cost to run the government, and then determines how much of that figure will be covered by fees, fines and other revenue. The amount that remains unfunded must be covered by you-- the taxpayer.

The millage rate is the product of an equation: "A" divided by "B" equals the millage rate. "A" and "B" change every year, so the relationship between them and the result -- the millage rate-- should change every year.

Here's where the equation described above comes into play. "A" is the portion of the budget that must be funded by tax dollars. "B" is the net tax digest. Divide "A" by "B", move the decimal (to permit the "per $1,000 of value" computation) and you've got the millage rate.

To repeat, the millage rate represents the number of dollars that you pay in property tax on every $1,000 of value. If the millage rate is 11.57, you're paying $11.57 on every $1,000 of assessed value which, as I said above, is 40% of your FMV as determined by the Tax Assessor.

As you can see, it is by this simple computation that the cost of government (at least, that which is not funded by fees and other non-tax revenue) is spread evenly across every dollar of taxable property value in the city.  (Go here for a detailed description of the correct millage computation process.)

We will discuss details later, but for illustration and “shock value”—

For 2005 the City of Clarkston has budgeted $2,301,774 in expenditures.  The City anticipates only $1,398,210 in non-tax revenue.  This means that $903,564 will have to come from reserves, borrowing, bond sales or you, the taxpayer.

The net tax digest (40% value) has been computed by the Tax Commissioner to be $85,582,920. (My estimate, based on historical data, is slightly higher. The figure supplied by the Tax Commissioner is actually lower than last year’s digest. This is unlikely.)

To determine the millage rate, you divide the portion of the budget to be funded by tax dollars – in our example $903,564 -- by the net tax digest, 40% figure ($85,582,920). The product of this equation is the millage rate.  The equation spreads the unfunded portion of the budget equally across every dollar of taxable property value.

Your tax rate will be 10.55 mills—if you, the taxpayer, are required to pay the entire bill this year.

(Last year, the millage rate was 4.614.  Historically, the City of Clarkston has adopted an arbitrary, mathematically-incorrect millage rate. This is a common practice among taxing authorities in Georgia.)

How to Compute Your Property Taxes 

A “mill” is one dollar of tax on every thousand dollars of taxable value.  You are taxed on 40% of your property’s assessed value, after all exemptions.  To compute your city tax bill, multiply your assessed value (from your property tax notice) by .40.  Then multiply that figure by the millage rate set by your taxing jurisdiction(s).

Based on our computation above, the owner of a $150,000 home would pay $633.00 in city taxes.  ($150,000 times .40 (40%) equals $60,000. A millage of 10.55 means that you pay $10.55 for every thousand dollars of taxable value. 10.55 times 60 (60 thousands, your taxable value) equals $633.00.

The computation works the same for your county, school and other property taxes.  The county also collects .25 (1/4) mill which is paid to the state.  To compute your total property tax bill, add together all of the applicable millage rates, then multiply that number by 40% of your assessed property value.

Next: The City of Clarkston - A Three-Year History