For this example, we are going to use fictional city.
Last Year
The total taxes levied by Owl City last year were $500,000.
The total value of the real property in Owl City last year was $30,000,000.
Therefore, the mill levy was 16.667
That is the total tax levied: $500,000 divided by the total value: $30,000,000 then multiplied by 1,000.
Increase
The next year Owl City sees its total value increase. It has two types of increase, the first is growth (new construction). The second is a market value increase (that is the price of homes on the open market has increased).
The city’s new total value of real property is: $55,000,000. An increase of $25,000,000.
Of that $25,000,000 increase $2,000,000 was growth, the rest was a market increase of $23,000,000
So, growth caused a 6.7% increase in the city value.
The market caused a 76.7% increase in the city value. (The city cannot use the market value increase in their calculation for increase of taxes levied)
Calculating the New Mill Levy
The city can use the growth value percentage to increase the total taxes they levy. They can also use the CPI (Consumer Price Index) which can be set as high as 3%.
Growth plus the CPI: 6.7% + 3% = 9.7%
$500,000 x 9.7% = $48,500 <- this is the maximum amount the city can increase their taxes levied
So Owl City can levy a total tax of $548,500 in the new year.
Owl City’s new total value was $55,000,000
The new mill levy is 9.92
That is the total tax levied: $548,500 divided by the total value: $55,000,000 multiplied by 1,000
