Talking Taxes in Troy -- What's with the numbers?
If you drive around Troy, Michigan you will see signs encouraging you to vote no on the upcoming 1.9% millage. These signs, as I've noted in earlier posts suggest that this is an increase of 29%. Well, if you add 1.9 to 6.5 that would seem to be 29%, but that's the problem with simplicity. It doesn't take into consideration that taxes aren't figured that way. Property taxes are based on assessed value. If, values are going down, then the basis upon which your taxes will be figured will go down. So, with a 1.9% millage, taxes might go up slightly, but no where near 29%.
To get a better idea of what this means, I went to the City Web site, and under frequently asked questions, this information becomes available. I would encourage you to take a look at this. Now, some of you will say that the city is lying to us -- that we shouldn't trust their numbers. But why should we believe they are lying to us? And even if you don't trust the numbers, are you willing to take the risk of what voting no could bring. If police and fire are cut, what will that do to your housing values? What about fire and homeowners insurance rates? Are you willing to take the chance?
I keep hearing that my City taxes on my home will increase 29% with the passage of the proposal. Can that be true?
- No. Your City tax bill will not increase by 29%. While the Operating Millage may increase by 1.9 Mills with the passage of the proposal, Operating millage is only 70% of the total City taxes you pay. You also pay Capital, Debt, and Refuse taxes to the City. The current total City millage rate is 9.28 Mills. Taxes are a function of Rate (Mills) times Value (Taxable Value), or T = R * V. This is important to understand. A 1.9 Mill City increase is 20% above the 2009 'Rate', not 29%. However, coupled with an estimated 12% drop in the average Taxable 'Value' the actual change in City taxes is 3.4%. ($1,151.54 / $1,113.73 = 1.0339). Not 29%, not 20%. It's 3.4%. While the Rate may increase by 1.9 mills, the Value has decreased. Thus, the overall change is neither 29%, or 20%, but 3.4%. And this is only on the City portion of your tax bill. All of the other taxing jurisdictions are expected to show a significant drop in their taxes on your property because of the reduction in Value. Thus a net overall reduction in the average tax bill of $392.78 (which is a 9.5% overall reduction). This is graphically displayed under the first FAQ, with the first example. If you happen to own one of the few homes in the City that will only be receiving the .997 CPI reduction in your Taxable Value, the average overall tax change from 2009 to 2010, with the 1.9 City Mill increase will be 5.18%, not 29%.
To see this laid out graphically, click here.