1. Baseline Scenario The Excel spreadsheet at hand shows a property tax analysis for different scenarios.

It is divided in four subparts, i.e. property tax determination, local government budgets, impact assessment and distribution of TAD receipts. The local governments budgets are important for calculating the property tax levy for city, town and county. The levy is a positive number if the governments spending exceeds its income (sum of aids and other revenues); else it is equal to zero. It is computed by subtracting the overall income from the overall spending. In the section property tax determination the assessed value of the parcels (divided into land and improvements) is given. In the example at hand there are two tax administration districts (TAD), a city and a town. In the city there are two parcels; thus the overall assessed value in the city is computed by summing up the total values of the parcels. In the town there is only one parcel. The county includes both, city and town. Hence the overall assessed value in the county is computed by adding the assessed values in city and town. With the help of the assessment ratio (given) the equalized value in the city and in the town is computed by dividing the assessed value by the assessment ratio. The percentage distribution states how much of the countys equalized value stems from either city or town. The column apportioned levies shows the levies that have to be covered by property tax payments from either the city or the town. Thereby the levies for the county are split according to the given percentage distribution. The assessed value tax rate is the percentage of the overall assessed value in city or town that has to be paid in property taxes to the local governments. The Tax Bill column shows how much tax every resident has to pay (assessed value tax rate times assessed value). The TAD tax receipts sum up all taxes in the city or the town that its residents have to pay. The distribution of the TAD receipts shows the tax amount that town, city and county receive and the amount that residents in city and town pay. The tax received equals the property tax levies. The impact assessment section computes the impact of new scenarios compared to the baseline scenario. Baseline and scenario tax are stated for every property and for the city and town. The impact is computed by subtracting the scenario tax from the baseline tax. Taking the ratio of the scenario tax and the baseline tax and subtracting one computes the percentage change.

2. Use value assessment The value assessment of agricultural land leads to a shift in the liabilities of the property owners; the residents in the city have to pay higher taxes, since the value reduction of parcel 3 leads to a scenario where the city residents have to cover a greater proportion of the countys levy. The value assessment leads to a decrease in the assessed value of land and thereby automatically to a decrease in the equalized value. The percentage distribution of value increases in the city (0.606) with the effect that the apportioned levies for the county rise in the city and drop in the town. Accordingly TAD receipts in the city increase (63.357) and decrease in the 1

town (33.160). The tax bills rise for parcel 1 (59.397) and parcel 2 (3.960) and drop for parcel 3 (33.160). The distribution of the TAD receipts underlines the findings that payments in the city rise, whereas they decline in the town. The impact assessment shows that the taxes for parcel 1 and 2 increase by 14.6%, whereas the tax for property 3 decreases by 19.6%. The tax rates in both TADs go up (0.253 percentage points in the city and 0.662 percentage points in the town).

3. City police protection The increase in police protection affects neither town nor county. However, the increase in city spending leads directly to an increase in the property tax levy of the city. Accordingly, apportioned levies and thereby the assessed tax value rate for the city increase. Tax bills for parcel 1 and parcel 2 are higher than in the baseline scenario (192.443 for parcel 1 and 12.830 for parcel 2). The distribution of the TAD receipts shows that the increase in city spending is fully covered by the increase in taxes. The impact assessment shows that both, property 1 and 2 have to pay 271.4 % more taxes. The tax rate for both city residents increases 4.688 percentage points.

4. County police protection Compared to the previous scenario, residents in both the city and the town have to pay for the increased police protection, since both are located in the same county. The calculations are similar to those in case 3. An increase in county spending increases the property tax levy. Accordingly, apportioned levies and the assessed value tax rate go up. Tax payments to the city and the town remain unchanged. The tax bills (115.099 for parcel 1, 7.673 for parcel 2, 123.744 for parcel 3) and also the tax receipts increase. Furthermore, the tax receipts in both TADs increase and so does the countys tax income. Overall the taxes increase by 122.1% in the city and by 200% in the town. The tax rate in the city increases by 2.109 percentage points; the town tax rate by 2.578 percentage points.

5. Rezoning parcel 2 The rezoning and redevelopment of parcel 2 increases the city spending and thereby the levy by 300.000. Since the expenditure doesnt affect the budgets of either the town or county these tax rates remain unchanged. The city has to increase the tax rate (now 0.06385) in order to finance the redevelopment. Residents of the city solely cover the cost for this development. Thereby around half of the tax levy increase is covered by parcel 2. The assessed value and automatically also the equalized value increase tremendously by the redevelopment. Thus parcel 2 can bear a much higher proportion of the overall tax burden compared to the baseline scenario. Also the owner of parcel 1 is charged for the increased costs in the city. 2

The increase in apportioned levies for town residents immediately results in an increase in the tax bill (208.567 for parcel 1 and 152.949 for parcel 2). The tax bill for parcel 3 decreases. The reason is the increased value of parcel 2. Since the overall equalized value increased tremendously in the city TAD the percentage distribution of all values in the county increases for the city. Accordingly city residents have to carry a higher proportion of the countys tax burden compared to the initial scenario. The TAD tax receipt in the city increases, whereas the tax receipt for the town decreases. Overall the tax for parcel 1 increases by 156.749 (302.5%) and the one for parcel 2 by 149.495 (4327.5%)1. As explained, property 3 faces a decrease in taxes of 15.1%. The tax rate in the city increases by 5.225 percentage points; the one in the town decreases by 0.195 percentage points.

6. County Park The creation of a county park by purchasing parcel 2 has two effects. First, the countys spending increases such that an increased property tax levy is the result. Second, the equalized value in the city declines since parcel 2 no longer is a taxpayer. The increase in the tax bills for both parcel 1 (97.858) and parcel 3 (98.659) shows that property tax liabilities increase for parcel owners in the city and in the town. The reason is that the county includes both locations such that both parcels partly have to cover the higher costs. To finance an increase in costs while the equalized value shrinks, tax rates have to be increased. Parcel 1 has to face an increase in city taxes (0.01067), since after omission of parcel 2, parcel 1 fully has to cover the citys tax levy. Additionally parcel 1, but also parcel 3, has to face an increase in the county tax rate (0.02195 for parcel 1 and 0.02683 for parcel 3). The property tax rate of the town remains unchanged. Overall taxes increase by 88.8% for property 1 and by 139.2% for property 2. The tax rate for city residents increases by 1.535 percentage points, and the one for town residents by 1.794 percentage points.

7. Shopping Center The city needs to increase the user charges by 280.000 if the property tax rate of the city is to remain constant at 1%. Since (compared to case 5) the property tax levy only increases slightly, the property tax liabilities of parcel 1 (tax bill of 47.029) and of parcel 3 (tax bill 35.000) decrease. The reason is that the major proportion of additional spending is covered by an increase in other revenues. Additionally the value of parcel 2 increases such that parcel 2 carries a relatively higher amount of the countys property tax. Indicator for that is the change in percentage distribution (0.571 for the city).

Although this seems to be a tremendous change it should be considered that the change can also be explained by the great value change oft the property.
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The property tax rate of the city and the town remain constant. The town property tax rate is not affected by the changes and the city tax rate is kept artificially low by increasing the user charges. The countys tax rates decrease since the overall assessed and equalized values increase tremendously. Overall the taxes decrease by 9.2% for property 1 and by 15.1% for property 2. Both changes are a result of the smaller proportion of county property taxes they have to pay. An increased amount is carried by property 2 (increase of 31.033). Overall taxes decease by 0.16 percentage points for city residents and by 0.195 percentage points for town residents.

8. State equalization aids The construction of a shopping center leads to an increase in the equalized value. At the same time spending increases by 300.0002. According to the aid formula, the changes lead to an increase in state equalization aid by 79.602. The increased aid leads to a drop of the city property tax levy by the same amount. Accordingly the amount of property taxes that are needed to cover the tax levy decreases such that the property tax liabilities (and thereby tax rates) decline as well.

9. Drop in federal aid The drop in federal aid leads to an increase in the property tax levy of the county that has to be covered by the countys residents. The owners of property 1 and 2 are affected less than the owners in the town. Although the assessed value in both TAD is equal, the equalized value differs due to different assessment ratios. The result is that city owners have to carry a lower proportion (0.45) of the increase in the countys property tax levy. Town and City tax rates remain equal, county taxes rise for city residents to 0.0354 and for town residents to 0.04326. The increase is also reflected by the higher tax bills (136.193 for parcel 1, 9.080 for parcel 2 and 151.244 for parcel 3). Overall the taxes for property 1 and 2 increase by 162,8%. The amount of taxes property 3 hast to pay rise by 266.7%. The tax rate increases by 2.813 for city residents and by 3.438 percentage points for town residents.

10. Conclusion The property tax analysis has shown the relations between different figures that are relevant for property tax calculation. It became clear how increases in local government spending are directly related to the amount of property taxes the residents have to pay. Differences between city or town and county spending became obvious. The area that has to pay for services depends on the assignment to either of the local governments. Additionally the analysis helped to discover that apparently small differences (such as slight differences in the assessment ratio) could have huge impacts when it comes to the distribution of tax burdens. Moreover it could be learned that
The spreadsheat indicates an increase in spedning of 200.000; theses values are used to compute the state equalization aids.
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different value assessments of the properties have huge impacts on the distribution of taxes. An increase in the value of one parcel doesnt only increase the amount of property taxes that this parcel has to pay, but also decreases the tax burden for other parcels in the same city or town. Due to the increased value the proportion of the countys property tax covered by this parcel increases and decreases for the other parcel.