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The following data are for the town of Paragon in the fiscal year starting January 1,...

The following data are for the town of Paragon in the fiscal year starting January 1, 2016. Budgeted town expenditures $20,000,000 Estimated revenue from grants, fees, and licenses $6,000,000 Assessed value of property $142,000,000

a. What is the town property tax rate in dollars per $100 of assessed value?

b. The Wooden family has property with a fair cash value of $90,000. The assessment ratio is one-third. The family is entitled to a mortgage exemption of $5,000. That is taken against assessed value. What is their property tax bill from Paragon?

c. Suppose that, for 2017, properties in Paragon are not reassessed, but that new construction increases total assessed values by 5 percent. The state institutes a levy control, allowing 2017 levies to increase by 6 percent over their 2016 level. Non-property tax revenue is estimated to be $6.5 million. What is the maximum 2017 property tax rate permitted, what is the maximum town expenditure, and what property tax bill would the Wooden family face?

d. Suppose that, for 2018, properties in Paragon are not reassessed, but that new construction increases total assessed value by 9 percent. The state enacts a new property tax control that allows the 2018 levies to increase only by $1.80 over the 2017 levies. Non-property tax revenue is estimated to be $6.75 million. What is the maximum 2018 property tax rate permitted, what is the maximum town expenditure, and what property tax bill would the Wooden family face?

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Answer #1

a. 20000000-6000000= 14000000/142000000=9.86%

b. Assessment value= 90000/3= 30000.

Tax= (30000-5000)*9.86%= 2465

c. Maximum property tax rate = 9.86% (tax rate in 2016)*1.06= 10.45%

Maximum town expenditure:--- X

(X-6500000)/(142000000*1.05)= 10.45% (this is the maximum property tax rate permitted

Maximum town expenditure= 2329619645

Property tax faced by Wooden family:---

Assessment value= 90000/3= 30000.

Tax= (30000-5000)*10.45%= 2465= 2612.5

d. New tax rate 10.45%+1.8%= 12.25%

Other questions can be answered in similar way as answered in part c.

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