Property tax bills for summer 2020, issued July 1, arrived in the mail this week. These bills have a hodgepodge of listed information used to calculate the most important part of the bill: The amount due.
This summer's tax bill is a tiny bit lower than in 2019, with emphasis on "tiny." Voters turned down the Dearborn Public Schools' bond proposal last November. That reduced the school district's debt service, and thus lowered your millage required to pay this year's debt. You will pay 1.32 mills less on this summer's bill (about $100 for a house worth $150,000), but by the time you factor in a 1.9 percent increase (inflation) in your home's taxable value, the savings in that example from one year to the next is about 20 bucks.
This is one of two property tax bills issued each year. A winter tax bill, smaller than the summer bill, is issued in December and due in February. Payment on the summer tax bill is due no later than September 14. Because of the size of the summer bill, the city allows three installment payments, which must be paid by September 14, November 14 and January 14.
For those who want to have a better understanding of the details of their tax summer tax bill, I put together a point-by-point list of how much tax you're paying to whom. After this list, I explain the basics of property taxation, including what a "mill" is.
YOUR 2020 SUMMER TAX BILL, ITEM BY ITEM
Here are the details that add up to the bottom line of your tax bill. I explain what the abbreviations mean, the amount of mills levied for each, and extra background on some of the items. This is for a homestead property, meaning it's the home in which you live and declare as your homestead. Non-homestead houses, like rentals, pay an additional millage in school tax.
DBN SCHL SUPPL: These are "Hold harmless" mills approved by voters in the Dearborn Public Schools district. Proposal A of 1994 changed how schools are funded from local property taxes to a statewide property tax, but districts that would have lost ground in that formula were allowed to ask their voters for supplemental millage to hold them harmless from losing money under Proposal A. Dearborn voters approved this and renewed it a few times, most recently in 2014 for 10 years. (6.17 mills)
DBN SCHL DEBT 02: These mills are levied to repay bonds, money the school district borrowed for construction and renovation. Voters approved this $150 million "bond issue" proposal in 2002. (2.28 mills) - this is the only line item with a lower tax rate than last year, all other mills are identical to last year's bill.
DBN SCHL DEBT 13: These mills are levied to repay bonds, money the school district borrowed for construction and renovation. Voters approved this $76 million "bond issue" proposal in 2013. (1.22 mills)
HFCC: Henry Ford College millage, approved by voters. It will expire (and be up for renewal) in 2023. (4.0 mills)
SET: State Education Tax. Proposal A created this tax, which pays into the state School Aid Fund, which is distributed back to local districts on a per-pupil basis. (6.0 mills)
RESA OPER: Operating millage levied by the Wayne Regional Educational Service Agency (used to be called intermediate school districts, or ISD), which provide services to local school districts. (0.0965 mills)
RESA SPEC EDUC: Special education programs in local districts are funded through this RESA tax. (3.3678 mills)
WAYNE CO OPER: Wayne County government operating millage, an amount allowed under the Wayne County Home Rule Charter. (5.6483 mills)
CITY OPER: City of Dearborn millage for general operations as allowed in the city charter. (15.0 mills)
CITY VOTED OPER: Extra operating millage for the city beyond the charter-allowed limit, approved by voters when home values crashed nearly 10 years ago, to make up for some of the revenue lost by lower property values. Residents approved this extra tax money in 2011 for five years, and renewed it for another five years in 2016. (3.5 mills)
CITY RUBBISH: State law allows cities to collect mills for trash removal beyond the charter and voter-authorized taxes. (1.91 mills)
CITY LIBRARY: Dearborn voters approved a separate millage in 2011 for 10 years for the city's libraries, up to 1.8 mills. (1.69 mills)
RESA ENHANCED: Voters in November 2016 approved 2 mills for six years to be collected by the Regional Educational Service Agency, and distributed back to local districts. This was a way around Proposal A's restriction on individual districts collecting local millage for operations. (2.0 mills)
ADMINISTRATION FEE: Your tax is figured by multiplying the mills by taxable value. The city then is allowed under law to add a “service fee” of up to 1 percent to offset costs associated with collecting the taxes and distributing them to other taxing units. (1 percent of total.) The administration fee is listed near the bottom of the bill, under "total tax due."
Total mills levied by all taxing entities for your summer tax bill: 52.8826 mills (compared to 54.2026 mills in summer 2019).
To figure the taxes due: multiply the taxable value by 0.0528826 and then add 1 percent of that total (administration fee) to figure your total tax bill.
BASICS OF PROPERTY TAXATION
Your property taxes are based on two factors: Value of the property and the number of mills levied by the various taxing entities (city, schools, county, etc).
A mill is $1 of tax for every $1,000 of a home’s taxable value, which is roughly one-half the home’s market value. Each home’s taxable value is different, but in very general terms, a home worth $100,000 would have a taxable value of $50,000, so that house will pay $50 for each mill levied. If the bill includes 10 mills, that house would pay $500 ($50 x 10). The total mills on Dearborn's 2020 summer tax bill were 54.2026 (down from 54.2026 last year), so if your house is worth $100,000 and you pay $50 per mill, your summer tax bill will be $2,710 (plus 1 percent administration fee).
It gets more complicated than that. If you stay in your home from one year to the next, state law says your home’s taxable value can only go up by 5 percent or the rate of inflation, whichever is less. Your home’s actual value could, in a good year, go up by 8 or 10 percent, for example. But state Proposal A of 1994 limits your taxable value increases to prevent your tax bills from going up in leaps and bounds (until you sell your house).
This leaves you with two different values on your tax bill: Taxable value and SEV (state equalized value). SEV is supposed to be exactly half of your home’s assessed market value. But taxable value is most often lower than that. That can be confusing, but is also unimportant in this discussion, because the only value number you need to be concerned with related to your taxes is the taxable value.
If you've owned your home for more than a year, unless you've changed your property in a way to get a higher assessment, you will pay 1.9 percent more on each mill this year than in 2019. For most homes (unless you just purchased it), the taxable value went up by the rate of inflation, which, again, is 1.9 percent.