What is a mill levy and why do we keep talking about it?

‘Tis the season when we write a lot of stories about city budgets here at shawneemissionpost.com. Which means that we use the term mill levy endlessly. A reader recently reminded us that mill levy has little meaning in the world beyond taxes and asked for a short explanation.

Prairie Village is planning to hold its mill levy steady at just over 19 mills for 2014.
Prairie Village is planning to hold its mill levy steady at just over 19 mills for 2014.

So, here is the sequence of events leading up to all these budget meetings (with a little help from the staff at the Johnson County Records and Tax Administration office). Earlier this year you received a notice of value for your home from the Johnson County Appraiser’s Office. On that sheet — it’s the one that said, “This is not a tax bill” — was listed your 2013 appraised valuation, meaning what your home is worth roughly.

When you receive that notice, you have about a month to appeal the assessment. The notice contained both an appraised value and an assessed value for your home. The assessed value for the home is 11.5 percent of the appraised value.

When cities, schools and other taxing units pass budgets, they need to raise tax dollars to pay the bill. Part of that mix is property tax. For that they determine a mill levy. Simply put, a mill is equal to $1 for every thousand dollars of your assessed valuation — not appraised valuation.

Let’s say your house is appraised at $200,000. We divide that by 11.5 percent and get $23,000. If we divide that by 1,000, it leaves us with 23. If your city passes a mill levy of 18 mills, then multiply the 18 (remember it is dollars per thousand) times 23 and you get $414. That is your tax bill to support city services next year.

As noted, you don’t just pay for city charges. Besides, libraries, fire districts, state taxes, schools and so on, some cities charge fees on the tax bill for trash service or storm water.

After all the governments pass budgets this month, your total tax bill is compiled and sent out in late November or early December. You can pay half on Dec. 20 and half next May 10. That’s the money that helps pay the bills for 2014 for government.

But it only pays part of the bill because governments also rely on a host of other tax related revenue, such as sales tax, franchise fees, court fees and a bunch of other taxes and fees. But the mill levy is the number that is important for property tax.

Class dismissed.