Property taxes make people’s brains hurt

Here’s a pop quiz: If the value of your house goes down, what happens to your property taxes?

Most of us would say, “Well, of course the amount of taxes should go down too.” The real answer is “not necessarily.” In fact, taxes sometimes go up as property values drop. That fact and just about everything else to do with property taxes is pretty confusing for most of us mere mortals.

I wrote a short story earlier this week that talked about the City Council’s consideration of a 1 percent property-tax rate increase. The city said the tax would amount to about $2 more than last year for a home assessed at $250,000. That bit of information flummoxed and/or angered a lot of readers. One reader wrote, “Excuse me but 1 percent of $250,000 is NOT $2…Either the proposed tax is not 1 percent or the proposed tax increase on a $250,000 house will be $2,500. Is this an example of willful ‘disinformation’ or is someone just stupid?”

A continual challenge for me as a reporter is to explain complicated, often dry information in a way that normal people can understand. I don’t get too many words do it, either.

Let’s give it a go. The assessor collects a set dollar amount of taxes on behalf of the city. In 2011, that amount was in the neighborhood of $32 million. The 1 percent proposed increase applies to that dollar amount – not the amount of each property owner’s tax bill.

The assessor uses a formula to determine a levy rate for each $1,000 of assessed property in the city. The levy rate is calculated by dividing the amount of the tax to be raised ($32.2 million) by the total assessed value of all the properties in the city ($12 billion). In 2011, that came out to $2.61 for the regular levy plus 50 cents for the EMS levy, for a total of $3.1076. If you own a home valued at $276,090, you paid a of total of $857 of city property taxes — $719 is the regular property levy and the rest goes toward EMS.

Keep in mind that’s just the property taxes that go toward the city. The total tax levy rate was $11.90 this year and all the rest of that money went to the state, the county, the port and the school district.

Back to the proposed 1 percent increase. The city doesn’t have firm numbers for 2012 yet but if the City Council approves it, the best estimate numbers are $2.93 for the regular levy and 50 cents for the EMS levy, for a total levy rate of $3.43. If you take that same house and compare the homeowners tax bill this year and next, they would pay $1.91 more in 2012 — a total of $859. Keep in mind that the total assessed value of all the properties in the city has dropped since last year, and that affects the calculations.

Thanks for sticking with the post this long. If you still aren’t getting the answers you need, the city has put together a fairly straightforward explanation of how property taxes work. You can watch it here. Click on item No. 5. I’ve also attached a copy of the presentation which includes all the numbers and the math so you can check it yourself.

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