If you keep up with the city’s budget process, including the setting of a tax rate, you probably have heard of a couple of tax rate terms.
One is “no-new-revenue” and the other is “voter-approval”.
In a bid to help the public better understand property tax assessments, officials are required to spotlight two key tax rates: the no-new-revenue tax rate and the voter-approval tax rate.
The no-new-revenue tax rate is designed to offer a clear comparison between taxes from the previous year and the current year. This rate is calculated to generate the same amount of revenue from properties that were taxed both last year and this year.
In simpler terms, it reflects the rate at which taxes would remain consistent if applied to the same properties.
While the calculation can be complex, the no-new-revenue tax rate generally equals last year’s total taxes divided by the current taxable value of the same properties.
This rate serves as a benchmark for comparing last year’s revenue with this year’s property values.
On the other hand, the voter-approval tax rate is the maximum rate a taxing unit can levy without requiring voter consent.
It is calculated to cover operational expenses and debt service for the coming year. Specifically, this rate is designed to provide cities and counties with enough revenue to match their previous year’s operational spending, plus an additional three and a half percent for operations and to cover debt obligations.
Most taxing units break down the voter-approval tax rate into two categories: maintenance and operations (M&O) and debt service. This separation provides transparency in how tax revenues are allocated between daily operations and long-term financial commitments.
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