ELLSWORTH — Discussions of budgets, mill rates and taxes often bring glazed eyes and heavy sighs — until it’s time to pay, that is.
But while the budgeting process may be complex, the math that determines how much each resident will pay in property taxes is fairly uncomplicated.
With the City Council in the midst of budgeting talks for fiscal year 2019, here is a quick reminder on how mill rates and property taxes are determined.
The amount of money that must be raised via property taxes is calculated by taking the city’s revenue — how much money it will take in from sources other than property taxes, such as state and federal grants, licensing fees, excise taxes and tax increment financing (TIF) funds and subtracting that figure from the budget approved by City Council.
In other words: Budget minus revenue equals the amount that must be raised via property taxes.
To determine what each resident will pay, officials take the amount of money that needs to be raised and divide that figure by the valuation (the assessed value of all the property in city limits).
For example, in fiscal year 2018 (which runs from July 1 2017 through June 30 2018), the city needed to raise $19,421,732 (which includes local share of the school budget) to cover expenses; the total valuation of all of the property in Ellsworth was $1,080,786,440. The calculation would be: $19,421,732 divided by $1,080,786,440 equals 0.01797.
This means each resident pays $0.01797 per $1 of property he or she owns; or (to make the math easier) $17.97 per $1,000. At that rate, a resident with $200,000 worth of property would pay $3,594 in property taxes.
It is a common misconception that if the valuation of a municipality increases, so do property taxes. On the contrary, if the value of all property in the municipality increases — with no change in the budget — property taxes would decrease.
As it stands, taxpayers can expect to pay a little more next year, with the proposed budget (not including the School Department numbers) up .27 mills, or 1.50 percent, which would add $54 to the tax bill of a resident with $200,000 worth of property.
After several weeks of public workshops and months of discussion, city councilors will vote on the Ellsworth city budget on June 4.
But it doesn’t end there. Voters must first approve the School Department numbers at the ballot box on June 12. The final budget and property tax rates will likely be finalized at the City Council meeting on June 18.