Question

QUESTION a: is from Fiscal Administration 10 edition by John L. Mikesell

Set the property tax rate for each taxing unit. Report each rate in dollars per $100 of assessed value.

Central County includes five townships (Nixon, Reagan, Davis, Greasy Creek, Navaho) and one city (Booneville). It is served by two independent school districts: Seagram United (Davis and Greasy Creek Townships) and Yeltsin Consolidated Schools (Nixon, Reagan, and Navaho Townships). Each government in the county levies a property tax to finance its activities, although Booneville has also enacted a local earned income tax (it is expected to yield $750,000 in the next year). Property tax rates are applied to assessed value, defined to equal 50 percent fair cash value. Local unit tax rates fully overlap. The county assessor reports the following fair cash values for units within the county:

Nixon Township    $69,535,000

Reagan Township    $35,000,000

Davis Township    $23,720,000

Greasy Creek Township    $15,922,000

Navaho Township    $27,291,000

Booneville (Davis Township)    $88,450,000

Booneville (Greasy Creek Township)    $75,392,000

The township value data are for the area outside of any city or town that resides in the township. Values within a city must be added to obtain the township total. Planned Expenditure by Taxing Units The following presents the amounts that each taxing unit has budgeted to spend in the next year:

Central County    $3,428,000

Booneville City    $4,539,000

Nixon Township    $ 99,000

Reagan Township    $ 150,000

Davis Township    $ 250,000

Greasy Creek Township    $ 175,000

Navaho Township    $ 83,000

Seagram United Schools    $6,350,000

Clinton Consolidated Schools    $3,800,000

Answer 1

The problem is just about knowing the property's assessed value on which property tax is to be charged and also using the correct property tax rate, which varies according to local tax laws for city or township. Now, we are provided that each of the five township governments applies property tax to fund their operations, which are determined as follows:

Property Tax= tax rate* assessed value= tax rate*0.5* fair cash value (as per definition of assessed value)

Now , we are given the amount that each township has planned to spend next year. As given in the question, we understand that amount planned to spend next year has to entirely come from property tax levied in the five townships. However, in case of Booneville (city) the amount to be spend next year will partly come from property tax and partly come from local earned income tax of $7,50,000.

From the data of planned expenditure given in the question, fair cash value of units located in each township and the methodology as explained in the paragraph above, we can deduce the property tax for each of the five townships and the Booneville (city) as per the table below:

It may be noted that we have added total planned expenditure of Boneville city from Boneville (Davis Township) and Boneville (Greasy Creek Township), same was done because the township value data for 5 townships are for the area outside city.

This answers from the above, however, you may notice that there are other planned expenditure which we have not accounted for in the above calculation like Central County expense of $ 3,428,000 and independent school district expenses of $6,350,000 and $3,800,000. In case, we wish to incorporate these taxes, what we can do is distribute cental county expense equally amongst 5 townships and 1 city and independent school district expenses equally amongst the townships to which they cater to and then calculate the property tax, however, since the question is silent on the same we won't add these expenses.