Calculating the Mill Rate For FY2012

The Town of Waterford budget was set on May 4, 2011 by the Representative Town Meeting (RTM) at $74,335,161.  On Wednesday May 18, 2011 the Board of Finance (BOF) set the mill rate that will determine what taxes will be paid by automobile, home and business owners at 18.79 to finance that $74.3 million budget.

There are a number of factors taken into account in determining the mill rate.  The first factor is the Net Taxable Grand List for October 1, 2010.  By State Statute, the Assessor is required to publish the Grand List by the last day of February.  This permits home and business owners sufficient time to appeal the assessment to the Board of Assessment Appeals if they believe the assessed value of their home or business is too high (I have never heard of anyone appealing an assessment as too low).  The Board of Assessment Appeals (BAA) is required to hear and rule on all appeals by April 30 of the year to insure that an accurate Grand List is available for setting the Tax Rate.  This year the Net Taxable Grand List for October 1, 2010 after actions by the BAA  is $3,699,831,413.  By some quirk in the data, this is actually higher than the Grand List of the Assessor’s February 28, 2011 memo of $3,696,959,618.

At full value of the grand list, one mill would be $3,699,831.41.  However, tax collection is never 100%.  According to the FY2010 Comprehensive Annual Financial Report (CAFR), the collection rate for FY2010 was 99.05%.  In the previous ten years, the total collections including late collections were never less than 99.57% and in three years were greater than 100%.  In March, the Tax Collector reported that the FY2011 collection rate was at 98% compared to the 98.5% collection rate in February 2010.  Since the Tax Collector supervises an aggressive late tax collection program that ultimately leads to a greater than 99% collection rate, the BOF assumed a collection rate of 99.1% for a Net Collectible Grand List of $3,666,532,930.28.  The value of a mill at the collectible value is $3,666,532.93.  If the mill rate is changed by 0.5 then the collectible value is changed by $1,833,266.40.

You may have read articles on line or in local newspapers regarding various Town Chief Executives concerned about aid from the State.  Revenue from the State and Federal Governments plays a large role in the determining of tax rate.  For a change, the state has a budget before the tax rate has to be set, so the estimated revenues should be closer to reality.  Due to market conditions and investment limitations set by State Statute, the investment income is expected to be $200,000 less than last year.  Last year was the final year for the System Benefit Subsidy so that entails a revenue loss of $1,088,015.  Reduction in property transfers and remortgages reduced the conveyance tax receipts by $75,000.  The State budget includes a new Property Tax Relief grant of $151,105.  According to a preliminary analysis by the Connecticut Conference of Municipalities (CCM) Waterford’s state grants will be up by $147,902 or 6.5% to $2,432,511.  Other sources of revenue include State, Federal and private grants, Fees from the various departments for services, equipment rentals, and other transfers of fund.  This year the estimated revenue is $5,448,256

Subtracting the revenue from sources other than taxes from the budget amount yields the amount that must be collected from taxes.  This year that amount is $68,886,905.00.  Divide that amount by the net collectible Grand List times 1000 yields the required mill rate of 18.79 for FY2012.  The FY2011 mill rate is 18.04 so the 0.75 increase is a tax increase of 4.15%.

Changing the estimated collection rate can have a definite effect on the mill rate.  If the collection rate was estimated to be 98.5% then the mill rate would have to increase by 0.86 to 18.9, a 4.78% tax increase.  If the collection rate was increased to 99.24%, the mill rate would be increased by .72 to 18.76 or a 4.00% tax increase.  A 4.00% tax increase would also have been attained if the BOF chose to apply $93,574 from the unreserved fund balance of the general fund toward the tax rate with the collection rate at 99.1%.

With a mill rate of 18.79 to determine your tax that will be due in July 2011 and January 2012, multiply the assessed value of your home on your last tax receipt by 0.01879.  For example, a home assessed for $100,000 the tax would be $1,879.00 with $939.50 due in July 2011 and $939.50 due in January 2012.  A typical home in Waterford is assessed at $188,000 so that tax would be $3,532.52 with $1766.26 due in July 2011 and $1766.26 due in January 2012.  This a $141.00 increase from the taxes paid in July 2010 and January 2011.  A home with an assessed value of $200,000 would have a tax of $3,758 with $1879 due in July 2011 and $1879 due in January 2012.  If your car is valued at $8,000, the tax due in July 2011 is $150.32.

Feel free to ask any questions in the comment section and I will try to respond.