Tax rates fall as values increase

Friday, June 23, 2017

Marshall County should lose an unwanted claim to fame this year.

With the recent reappraisal year complete, the county’s tax rate should fall out of the top five among the 95 counties in the state of Tennessee.

For the past five years, the tax rate of $3.22 per $100 of assessed value has placed Marshall County at the fourth highest rate in the state, trailing only Davidson, Shelby, and Coffee Counties.

After the reassessment, the county rate will fall to $2.76 per $100.

The tax rate is the amount paid in property taxes per $100 of assessed value. For residential property, the assessed value is 25 percent of the home’s valuation determined during reappraisal years.

In reappraisal years, state law requires that revenue from property taxes must be equal to the prior year, excluding new development.

In order to balance revenue despite increasing values, the State Board of Equalization resets the county’s tax rate in order to balance the revenue.

Last year, county revenue from property taxes was just under $18 million and the new rate should bring in roughly the same amount.

Increases in home values, determined by the state from trends during the period in the local real estate markets, mean that the rate can decrease and still return the same revenue.

The decrease in the rate is indicative of a strong housing market and increased demand in the county.

Five years ago, the state board raised the county rate from 3.09 to 3.22 to bring in the same funds because the value of county real estate had actually fallen over the previous five year period.

The improving market and higher values are reflected in the separate city rates as well.

Lewisburg’s property tax rate, which was increased last year from 1.45 to 1.90, drops this year down to 1.69

In Chapel Hill, the rate will drop to 1.497 from 1.75.

Another positive indicator of the county’s improving economic health is seen in the increasing revenue brought in by each penny in the tax rate.

In 2016, each penny in the county property tax rate generated $56,081 in revenue. That number has jumped this year to $64,994

In Lewisburg, revenue per penny increased from $23,776 to $28,482 from last year’s budget to this year.

The increase represents both the stronger housing market as well as new construction adding additional properties to the tax rolls.

The numbers show that county-wide the tax base is expanding, generating more revenue.

Revenue per penny varies widely from county to county. Davidson County collects more than $2 million per penny of property tax while Lake County in west Tennessee collects slightly less than $9,000 per penny.