Glossary of Terms

Assessed Value

An estimate of value assigned to taxable property by the assessor for purposes of taxation.  State law requires all assessments to be at 100% of market value.  Assessed values are closer to market value following a revaluation.  In non-revaluation years, assessed values reflect a fraction of market value due to the assessments remaining the same while properties increase in value.

Market Value

The amount a typical, well-informed purchaser would be willing to pay for a property.  For a sale to represent market value, the seller must be willing (but not under pressure) to sell, and the buyer must be willing (but not under any obligation) to buy.  The property must be on the open market for a reasonable length of time, the payment must be cash or it's equivalent, and the financing must be typical for that type of property.

Revaluation

When the assessor assigns a new value to all taxable property in a given year using current real estate sales activity.  A revaluation is performed to assure each property is assessed at market value and pays only its fair share of taxes.

Tax Base

The total assessed value of all assessments in the City.

Tax Levy (budget)

The total amount of property tax money that a taxing body (such as the schools, City, County, etc.) needs to provide services.

Tax Rate

The tax levy (budget) divided by the tax base.  It is often expressed in terms of dollars per thousand ($30.13 per thousand or .03013).

Property Tax

Assessed value multiplied by the tax rate (150,000 X .03013 = $4,520).

Tax Incremental Financing

A method of splitting the cost of public improvements in certain areas (tax increment districts) with the other taxing bodies that will benefit from an increase in the tax base.  Basically, it works as follows: Any increase in value in the TID above the base value (the value at the time the TID was formed) is not included in determining the tax rate; however, the tax rate is applied to all taxable property in the TID.  This additional revenue generated (the tax increment) is used by the municipality to help pay for the public improvements that stimulated the increased value in the TID.  This process continues until the improvements are paid for, the legislative body terminates the TID, or 23 years have elapsed.