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Ad valorem property taxes are taxes based on the assessed value of a property. The most common ad valorem property tax examples include:
Property tax statements will be issued after mill rates are finalized and taxes are calculated, on or before November 1.
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Revenue neutral is when a taxing jurisdiction budgets the exact same amount of property taxrevenue, in dollars, for the upcoming budget year as they did for the currentyear. i.e. If a city uses$1 million of property tax revenue in 2023, being revenue neutral means theyplan to only use $1 million in 2024 as well.
If a taxing jurisdiction plans to use more property tax revenue in the next budget year compared to the current year, even $1 more, they would exceed revenue neutral and need to hold a public hearing.
The revenue neutral rate is the mill levy rate that would generate the exact the same amount of property tax revenue as the year before, using the current tax year's total assessed valuation.
A jurisdiction doesn't only increase revenue to provide new services; they often need to increase property tax revenue to provide the same level of service as the year before.
While the revenueneutral law is an important step for municipal budget transparency, it does not take inflation into account. As property values are rising, so are the cost of goods and services.
To provide residents with the same (or better) level of service, it costs more. Cities often "exceed revenue neutral" and use a modest increase in revenue to help pay for things like the increased cost of chemicals for the city pool, asphalt for streets, mowing services, and other community priorities.
If the City were to stay revenue neutral every year, they would have to provide this year's services, with this year's prices, on last year's budget.
No.The average property in De Soto increased in value by 11% this year, but yourtaxes would not increase by that same amount. The City lowers the mill levy tohelp re-balance the "appraised value to collected property revenue"scale.
If the City does need to increase the property revenues for the upcomingyear, it would be by a modest amount compared to the increase in appraisedproperty values.
Propertyowners are going to receive a letter in the mail explainingeach jurisdiction's intent (or non intent) to exceed revenue neutral (usemore property revenues than the year before).
Since the law is in place to promote transparency,we want to help property owners understand the notification they receive.
The mill levy rate is the only influence the City has on your tax bill; to help offset the increase in property values, theCity lowers the mill levy rate. This way, there is not a 1:1 increase in your tax bill whenthe County increases the City's property values.
Sample Notice of Estimated Ad Valorem Taxes
(A) The revenue neutral rate of each taxing subdivision relevant to the taxpayer’s property;
(B) the proposed property tax revenue needed to fund the proposed budget of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate;
(C) the proposed tax rate based upon the proposed budget and the current year’s total assessed valuation of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate;
(D) the tax rate and property tax of each taxing subdivision on the taxpayer’s property from the previous year’s tax statement;
(E) the appraised value and assessed value of the taxpayer’s property for the current year;
(F) the estimates of the tax for the current tax year on the taxpayer’s property based on the revenue neutral rate of each taxing subdivision and any proposed tax rates that exceed the revenue neutral rates;
(G) the difference between the estimates of tax based on the proposed tax rate and the revenue neutral rate on the taxpayer’s property described in subparagraph (F) for any taxing subdivision that has a proposed tax rate that exceeds its revenue neutral rate; and
(H) the date, time and location of the public hearing of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate.