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Ask Mr. Answer Person: "I am stunned" by my property tax increase

Posted: Mon, Mar 13, 2017 10:53 AM

(Deborah e-mails: "Here I was worried that the November elections would mean loss of public services resulting from campaign promises to lower taxes.  Instead, Winneshiek County raised my property taxes significantly.  The Assessor's Office said the average increase countywide was 15 percent, but they increased the assessed value of my rural land in Highland Township by 75 percent and my home by 28 percent.  They blamed recent sales above assessed value, but how could the county be that far off?  Are there no restrictions to how much taxes can go up in one year?  I am stunned."):

Mr. Answer Person says: "Your property tax bill depends on two calculations--"assessed valuation" and "mill rate." 

"Assessed valuation" is the figure you're talking about in your e-mail.  It's the figure the County Assessor's Office thinks your property is worth. 

Let's say your house and land used to have an "assessed valuation" of $200,000.  If your combined "assessed valuation" is now $275,000, you'd be looking at a 37.5 percent increase in your property taxes if that were the only factor used to calculate property taxes.  But there's still the other part of the formula--the "mill rate."

The "mill rate" is the other half of the formula used to determine your property taxes.  This is the figure set by city councils, county boards, school districts and other local governments to determine how much money they get from property taxes.
Local governments like to talk exclusively about the "mill rate," because they can act like you won't be paying higher property taxes if they keep the mill rate steady.  But because of higher assessed valuations they can collect more property tax without seeming like they have raised taxes. 

So BOTH figures are important in determining how much money each local government gets from property taxes.  The increases in assessed valuations won't take effect until next year's budgets.  That's when it will be important to get local government representatives to reduce the "mill rate" so your overall property tax bill doesn't go up by 37 percent, for instance.

To do this, you'll need to force them to talk in terms of total property taxes--not just half of the formula.  As your e-mail says, residential assessed valuations in Winneshiek County have increased by 15 percent.  If the "mill rate" isn't lowered next year, your property tax bill will increase by 15 percent.  If the mill rate is reduced by 10 percent, your property tax bill will still go up--but only by 3.5 percent (trust me on the math!).

This year there were no comments by the public at the city's budget hearing nor at the hospital's budget hearing.  It's unlikely there will be crowds at the county's or school district's budget hearings in the near future.  So the lesson in this ought to be: make your voice heard at next year's budget hearings, or expect to get a significantly higher property tax bill.