Budgets and Mill Levies

1. Budgets and Mill Levies How they work together…

2. Make this YOUR session! • Stop me and ask specific questions at any time during the presentation. • Help me meet your expectations on what topics need to be addressed here today.

3. Budgets and Mill Levies • Budgets and Mill Levies are two separate calculations. • An honest and accurate budget should be presented prior to establishing a mill rate. • You need to estimate what a mill can produce to help prepare a budget. • Your budget should NOT be set simply by using the maximum number of mills allowed.

4. Gross dollar budgeting • A budget request should include all costs associated with a department or subdivision. • If your entity must pay 100% of a project to receive 80% grant reimbursement upon completion, the entire cost of the project must be included in the budget request. • The reimbursement should be included in the estimated revenues for that budget.

5. A levy is a calculated need for funding • Approved budget 100,000 • Reserve ( up to 75%) 75,000 • Total appropriation 175,000 • Less: • Estimated cash balance 45,000 • Estimated revenue 20,000 65,000 Amount required from mill levy 115,000

6. Ad valorem tax (according to value) • A mill is an amount of tax per thousand currency units of property value. • To determine the mills required for this request: $115,000 divided by 21,502,211 total taxable for the entity = .00534 as a per thousand becomes spoken as 5.34 mills

7. …Ad valorem tax • The calculation may be reversed to determine tax costs for a property. • Taxable value = true & full value x 50% x 10% (or 9% for residential property) • Mill rate stated as 217.34 (shift decimal three spaces to the left for calculation) • .21734 x 3675 taxable value • = $798.72 tax due

8. Maximum mill levies • http://www.nd.gov/tax/property/pubs/levy-limitations.pdf • The publication provides: • A list of levies available • NDCC references • Remarks regarding acceptable uses for the levy • General Fund may be used to support special revenue funds • How the maximum levy may be reached • by resolution or • by vote of electors

9. North Dakota Century Code • Use resources available to understand law that governs the levy being used. • http://www.legis.nd.gov/information/statutes/cent-code.html

10. Maximum mill levy worksheet • 2012 value increase due to equalization, detailed soils, capitalization rate change • taxpayers’ response to notices • increase to tax levy in hands of local governing bodies

11. …Maximum Mill Levy Worksheet • Begins with base year tax, which is the largest amount of dollars levied in the last three years. • Loss of property value • may allow levies to become higher than NDCC maximum • allows entities to continue to levy amount required to provide services as valuation is lost

12. …Maximum Mill Levy Worksheet • New property valuation • new taxable value added to the base year may generate more levy dollars • new taxable value added to the base year may reduce the calculated mill levy

13. …Maximum Mill Levy Worksheet • County Of ____________________ • Maximum Levy Worksheet - For Tax Years Beginning With 2010 • Taxing District __________ Fund _____________________ Tax Year _________ • 1. Taxes levied in the last three years (Final levy from Maximum Levy Worksheets): • a. last year $ _______, b. two years ago $ ________, c. three years ago $ _________ • 2. Base year taxes levied (item 1a, 1b, or 1c, whichever is greatest) .......$ _________ • 3. Temporary increased or excess levies in effect for the base year but now expired .....................................................................................................................$ ________ • 4. Base year taxes excluding expired levies (line 2 minus line 3) ……........$ ________ • 5. Base year taxable value of taxable and exempt property ............ $ ________ • 6. Calculated mill rate for taxes levied in the base year (line 4 divided • by line 5) ..............................................................................................________ • 7. Taxable value of taxable and exempt property which was in the taxing • district in the base year and is not in the current year ....................... $ ________

14. …Maximum Mill Levy Worksheet • 8. Adjustment for property no longer in the taxing district (line 6 times line 7) ..$ ________ • 9. Taxable value of taxable and exempt property which was not in the taxing district in the base year ................................................................................. $________ • 10. Adjustment for property added to the taxing district since the base year (line 6 times line 9) ........................................................................................................................$ ________ • 11. Adjusted base year levy (line 4 minus line 8 plus line 10) …………………..$ ________ • 12. Current year taxable value of taxable property .................. $ __________ • 13. New, increased, or excess levies in mills authorized by the legislature • or the electors ....................................................__________ • 14. New, increased or excess levies (line 12 times line 13) ..... $__________ • 15. Base year levy plus increased levies (line 11 plus line 14) …………………..$________

15. …Maximum Mill Levy Worksheet • 16. Maximum mills otherwise provided by law including increased or excess levies approved by the voters ........................................................................._________ • 17. Maximum levy otherwise provided by law (line 12 times line 16) ....$ ________ • 18. Allowable total maximum levy (line 15 or line 17, whichever is greater) ………………………………………………………....................................$ ________ • 19. Levy certified by the taxing district for the current year ...................$ ________ • 20. Final levy (line 18 or line 19, whichever is less) ...............................$ ________ • 21. Final mill rate (line 20 divided by line 12) ..................._______ mills

16. …Maximum Mill Levy Worksheet • Budgets/tax levy must be set on or before the October meeting (NDCC 11-23-05) • Final levy calculated cannot be larger than levy certified by taxing district • Forms and instructions available at http://www.nd.gov/tax/property/forms

17. Budget management • Expenditures beyond the approved budget must be handled by an amendment • amendments made after end of fiscal year • not required for each line item of fund • determined by bottom line of fund, budget to expense percentage • include amount of January expenses that were incurred prior to end of previous year • must be approved and recorded in minutes

18. Budget management • Once expended, revenue returned to fund does not return to the balance of the budget • Revenue was estimated in determining initial budget • Unexpected revenue may be used to support special requests and budget amendment documentation • Unused appropriations become part of a fund balance used to determine budget and levy needs for future years

19. Budget management & levies • Proper preparation and management of budgets • allows clear explanation of use of taxpayer funds • helps to provide fund managers accurate information regarding fiscal responsibilities • can reduce concerns expressed about misuse of mill levy maximums

20. Budgets and Mill Levies • Be prepared to change • ND Legislature meets biannually • Online resources are available to everyone • Be familiar with your budget and levy requirements • Ask questions. There is a wealth of information in the North Dakota county network. We all continue to learn together.