Arkansas Property Tax: Revenue, Assessments & Rates ...
Arkansas Property Tax:
Revenue, Assessments & Rates
Clay County .
January 2006
TABLE OF CONTENTS
I.
Introduction
II.
Local Use of Property Tax Revenue A.
School Districts
B.
County Governments
C.
City Governments
III.
Property Assessments
IV.
Property Tax Rates
V.
Property Tax Burden
VI.
Glossary
1
I.
Introduction
Property tax revenue has long been an important source of revenue for state and local governments. In Arkansas the property tax generates revenue for school districts, county and city governments, community colleges and special districts. In this publication we provide information about the source and distribution of property tax revenue to provide a better understanding of the importance of the property tax for local governments. We also compare the property tax base and rates among counties and over time, which provides information on the property tax capacity and effort of local governments.
Figure 1 – Sources and Uses of Property Tax Revenue
Figure 1 shows the sources and uses of property tax revenue with the width of the arrows depicting the share of property tax revenue flows for the state of Arkansas. These shares will vary among counties depending on the local tax structure, property tax base and rates.
In this publication we first show the distribution of the property tax revenue among local governmental units and then compare the importance of the property tax revenue for Arkansas, school districts and county governments. The next section depicts the property tax base of the county, how it has changed over time and a comparison among counties. Third, property tax rates are presented and compared among counties. Finally, the property tax burden is compared among counties and states.
2
II.
Local Use of Property Tax Revenue
Property taxes provide substantial revenue for local services. In 2003, Arkansas property taxes generated $1.37 billion. Differing property assessments and local tax rates led to variation in the amount and share of property tax revenue received by local governments and school districts. In Arkansas, school districts receive a large share of the property tax revenue (77%) with county and city governments receiving about 15 percent and eight percent respectively. Community colleges and special districts also receive a small share of property tax revenue in some counties. Property Tax Revenue by Taxing Unit Clay County, 2003 School Districts $4,938,299 71%
Of the $6.9 million generated from the property tax in Clay County in 2003, $4.9 million (71%) went to school districts, $1.6 million (23%) went to county
Cities $387,170 6%
government, and $0.4 million (6%) went to city governments.
Counties $1,589,507 23%
Figure 2 – Property Tax Revenue by Taxing Unit, Clay County, 2003 Source: Arkansas Assessment Coordination Department
Property Tax Revenue as Percent of State & Local Tax Revenue, 2002
Nationwide, property taxes 30%
generate a significant share
40% 35%
of state and local tax
38%
25%
Arkansas’ state and local tax
26%
30%
30%
15%
30% 32% 29%
35% 38% 35% 29%
24%
revenue, about half the
the property tax than
35%
36% 33%
taxes accounted for 16% of
Only five states rely less on
28%
29%
revenue. In 2002, property
national average of 31%.
60% 42% 42%
31%
32% 17%
26%
19%
18% 27%
16%
30%
42%
40%
40% 40% 46% 15% 27%
24% 32%
25% 15% 28%
15%
36%
16%
35%
14% - 21% 21% - 28% 28% - 35% 35% - 42% 42% - 49% 49% - 61%
Source: U.S. Census Bureau, Governments Division
Arkansas. Figure 3 - Property Tax Revenue as Percent of State & Local Tax Revenue, 2002
3
A.
School Districts
Property tax revenue generated approximately 28% of Arkansas school district funding in the 2003-04 school year. Of the $3.2 billion received by the 309 Arkansas school districts, nearly $900 million came from the property tax. Due to differences in tax capacity, effort, and state and federal aid, school districts vary in their reliance on property tax revenue to support their schools. In 2003-2004, school districts received between 11% and
Property Tax as Percent of Total School District Revenue, 2003
41% of their total revenue from
20%
37% 28% 22% 41%
41%
18%
35%
property tax. With oversight from
26%
20%
24%
24% 21% 21% 15%
16%
18%
28% 29%
locally elected school boards, school
19%
districts use property tax revenue for
33%
23%
26% 21%
24%
16%
20%
including teacher salaries, school
24% 22% 25%
15%
11% 20%
30%
building construction and maintenance.
31%
26%
18%
20%
17% 37%
24%
28%
16%
30%
19% 26% 20% 24%
12% 13%
27%
19%
20%
18%
15% 39% 19% 30%
25%
supplies and equipment, and
20%
38% 24%
23%
17%
18% 20%
24%
28%
15%
13%
many vital operating expenses,
36%
35%
18%
24%
22%
10% - 15% 15% - 20% 20% - 25% 25% - 30% 30% - 35% 35% - 41%
Source: 2003-2004 Arkansas Department of Education Annual Statistical Report
Figure 4 – Property Tax as Percent of Total School District Revenue, 2003
School District Revenue by Source, Clay County, 2003-2004
Local Tax $4,350,847 26%
State Equalization $9,041,734 55%
Other Tax $516,088 3%
Property taxes generated approximately $4.4 million for schools in Clay County in 2003-2004, and Federal Aid $1,878,538 11%
Other State Aid $907,009 5%
In Kind
$63,356
0%
accounted for 26% of their total revenue.
Figure 5 – School District Revenue by Source, Clay County, 2003-2004 Source: Arkansas Department of Education Annual Statistical Report
4
B.
County Governments
Like schools, county governments in
Property Tax as Percent of County Government Revenue, 2002
Arkansas use the property tax to raise a substantial portion of their revenue.
27%
23%
6%
17%
3% and 39% of their total revenue from
10%
10%
13%
7%
8%
9%
for 16% of its total revenue.
17%
20% 19% 19%
14%
30% 19% 12%
33%
21%
9%
12%
15%
20%
9%
3%
9%
32%
22% 12%
22%
9%
21% 13%
10% 17% 19%
16% 23% 39%
18%
government relied on the property tax
14%
18%
7%
8%
16%
17%
20%
tax revenue composed 21% of total
average. The median county
12%
17%
18%
31%
only 17 counties were above the state
25% 23%
16%
county government revenue in 2002, but
12%
19%
8%
10%
23%
8% 12%
17%
14%
30%
County governments received between
the property tax. Statewide, property
12%
10% 18% 13%
12% 19%
9% 13% 28%
23%
3% - 10% 10% - 15% 15% - 20% 20% - 25% 25% - 40%
Source: Arkansas Bureau of Legislative Audit
Figure 6 – Property Tax as Percent of Total County Government Revenue, 2002
While the property tax revenue for some county governments has been increasing, many counties receive a smaller percentage of their revenue from the property tax than they have in the past. This is because most Arkansas counties also use the sales tax to generate revenue, thus reducing their reliance on the property tax.
C.
City Governments
City governments depend less on the property tax as a source of revenue than school districts and county governments. In the late 1980s, Arkansas cities obtained a larger share of their local tax revenue from the property tax than they do currently. More recently cities are relying on the sales tax to generate a larger share of local revenue for city governments.
5
III.
Property Assessments
Property tax revenue is collected from commercial and industrial establishments, utilities, and farms as well as from owners of residential establishments. Real estate property (land and buildings), the largest source of property tax revenue, accounts for 68% of the property in Arkansas, compared to 24% from personal property, and 7.5% from utilities and carriers.
Total Property Assessments Clay County, 2003
Personal $37,478,679 24%
Most of the property assessments
Utility & Carrier $14,843,444 9%
in Clay County were assessments on real estate. In 2003, assessments on real estate were $107 million as compared to $37 million in assessments on personal property. Utility and carrier assessments were $15 million. Real Estate $106,628,631 67%
Figure 7 – Total Property Assessments, Clay County, 2003 Source: Arkansas Assessment Coordination Department
Property assessments and the rate of increase in property assessments vary greatly among counties. On average property assessments in Arkansas increased 95% between 1990 and 2003. However, if these assessments are adjusted for inflation using the Consumer Price Index (CPI), assessments increased only 38% percent during this period.
6
Total Property Assessments, Clay County (1990-2003) 250 Million $
200 150
108
104
102
100
98
114
119
122
130
127
138
156
147
159
100 50
Current Dollars
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
0
1990 Dollars
Figure 8 – Total Property Assessments, Clay County, 1990-2003 Source: Arkansas Assessment Coordination Department & the consumer price index.
Property assessments in Clay County increased by approximately 63 percent from 1990-2003. There was a decrease in property assessments in years 1994 and 200. After adjusting for inflation using the Consumer Price Index, property assessments increased by 16 percent during this same period, indicating
an increasing tax base in Clay County.
Property Assessments per Capita, 2003 11.2
13.9
10.4
6.8
7.1
7.0 18.0
8.8 8.1
7.9 7.5
8.4
8.7
7.8
13.9 10.9
8.3 8.0 12.0
9.3
average 2003 property assessment per person was $10,717, with a range between $6,200
6.6
and $18,000. Only 17 of the 75 counties were
6.2 11.6
indicates the capacity of counties to raise revenue from the property tax. Arkansas’
9.0
11.8
6.8 10.1
8.6
8.7 10.3
8.9
9.3
10.7
9.2
7.3
8.8
8.8
8.0
7.2
10.7
11.0
8.5
9.7
6.6 13.9
7.6
9.7
9.6
6.6 6.4 8.6
11.9
8.2
9.4
Dividing assessments by population
9.3
8.5
12.8
13.0
9.4
7.8 8.0
11.0
7.5
8.7
8.9
7.5
11.9
7.9
11.8
7.7
7.9
11.0
8.0
8.5 10.1
$6,000 - $7,000 $7,000 - $8,000 $8,000 - $9,000 $9,000 - $10,000 $10,000 - $12,000 $12,000 - $18,000
* numbers in map are in thousands Source: Arkansas Assessment Coordination Department & U.S Census Bureau
above the average. Rural areas are more likely to have low assessments per capita and, therefore, less capacity to raise revenue from the property tax.
Figure 9 – Property Assessments per Capita, 2003
7
Using the normalized dollar values, it
Change in Property Assessments per Capita 1990 to 2003
becomes clear how the real assessed value of 3.4
27.1
property has changed between 1990 and 2003.
26.1
The changes may be the result of rising
-8.6
property values and/or changes in the
17.0
28.7
54.7
7.8
9.6
property tax revenue is growing or declining.
18.2
12.6
-1.5
43.2
Statewide, assessments per person have risen
10.0
0.6
18.9 2.0
7.9
13.2 -8.7
13.7
35.9 14.8 -7.6
8.3
0.4 6.9
18.1 37.7
-2.1
whether the ability of a county to raise
36.1
35.6
-0.9
property assessments per person indicates
27.6
6.5
-0.5
-0.1
16.0
method of assessment. A change in the
-1.2
23.4 18.8
38.8
30.6
13.3
-8.8 20.2
23.5
15.0
23.0 12.0
22.8
36.3
1.4
18.7 6.0
-1.7
1.6
-14.8
2.3 -0.9
2.2
-0.5
-15% to -5% -5% to 5% 5% to 15% 15% to 25% 25% to 40% 40% to 55%
23.7 3.7
-5.5 22.2
18.4
13.1
by $1,200 in this period, an increase of 19%.
-3.4 -1.1
-3.7 -0.2
-10.5 -2.9
1.6
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
However, 21 counties have seen a decrease in
Figure 10 – Change in Property Assessments per Capita
per capita assessments over the same period. Dividing assessments by total personal Property Assessments per $1,000 Personal Income, 2003 597
502
458
426
480
455
453
407
423
420 466
407
423
448
404
449 535
392
464
466
500
359 484
820
426
390
433
449
355
376
427
every $1,000 of personal income, with a range between $301 and $820 in the 75 counties.
336
445
397
341
365 552
398 323
319
averaged $431 in property assessments for
369
440 510
419
413
430
406
386
301 414
449
459
392
326
351
389 445
386
412
342
409
391 437
555
582
382
421
property tax base. In 2003, Arkansas
442
434
income is another way of measuring the
677 384
381 391 523
$300 - $375 $375 - $450 $450 - $525 $525 - $600 $600 - $820
Change in Property Assessments per $1,000 Personal Income, 1990-2003
475
10% 10% -2%
8%
16%
Source: Bureau of Economic Analysis & Arkansas Assessment Coordination Dept
Figure 11 – Property Assessments per $1,000 Personal Income, 2003
-1%
or 0.2%. However, individual counties have seen considerable change, ranging from a 32% decrease to a 36% increase.
10%
-14%
3%
3%
6%
-13%
16%
-7%
-23% -17%
-5% -29% -32% -23% -23% -21% -18% -16%
-24%
-26%
-19% -20%
-17%
-2%
-14%
8%
-2% -1%
-18% -26% 37%
-15%
-16%
-7%
-19%
-12%
16% 22%
-6%
11% -15%
-2%
11%
-18%
0%
11%
-10%
-11% -11%
Between 1990 and 2003, average property
remained nearly constant, decreasing by only $1,
-4%
-2% 13%
-19%
-2%
assessments per $1,000 of personal income have
-4%
26%
-22% -3% -11% -6% 6%
8%
-6%
-27% -8% -20%
-8% -1%
-6%
-35% to -20% -20% to -10% -10% to 0% 0% to 10% 10% to 20% 20% to 40%
Source: Bureau of Economic Analysis & Arkansas Assessment Coordination Dept
Figure 12 – Change in Property Assessments per $1,000 Personal Income, 1990-2003
8
IV.
Property Tax Rates
Property tax rates (millage) are an indicator of the local tax effort used to support local services. Counties, cities, and school districts have different boundaries and tax rates, which means that citizens in the same county have different tax rates depending on whether they live in a town or rural area and in which school district they live. To facilitate comparison among counties, property tax rates within a county are weighted and averaged.
Average Total Millage by County, 2003 44
49
43
37
42
41
52
36
46 39
39
43
35
43
millage was 47.8, or a tax rate of $47.81 for
42 42
47
44
46
43
40
41
44 63
48 42
39
40
53
43
44 45
34
40
44
44
47
40
41
47
50
42 45
46 38
42
41
44
43
44
38
45
42
45
46 46
40
41
41
36
every $1,000 of assessed property. School
39
51
39
Statewide, the average 2003 total property tax
44
35
37
districts had an average millage of 36.8, while
35
county governments averaged 7.2 mills and
46
city governments averaged 6.1 mills.
44 42 46 45
49 46
$34 - $39 $39 - $42 $42 - $45 $45 - $48 $48 - $64
49
Source: Arkansas Assessment Coordination Dept
Figure 13 – Average Total Millage by County, 2003
Change in Average Millage, 1995 - 2003 14%
9%
In 1995, the average total property tax millage
11%
13%
18%
the average property tax millage increased by 3
33%
-3%
22%
5%
2%
4%
-10%
9%
5%
31% 10%
0%
2%
in four counties the millage increased over
17%
9%
0%
23%
7%
14%
5%
4% 11%
27%
11%
22% 13%
6% 5%
5%
9% 6%
14%
counties the average millage decreased, while
1%
16%
5%
24%
13%
1% 21%
6% 2%
6%
14%
-5%
57%
0%
11% 14%
17%
23% 2%
millage varied widely from -10% to 57% in
5%
12% 12%
-8%
25%.
1%
15% 17%
individual counties during this period. In five
8%
2% 4%
6%
17%
7%
in Arkansas was 44.8. Between 1995 and 2003,
mills, a growth of 6.7%. The average total
0%
-5%
-4%
1%
12%
15%
-10% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 25% 25% to 60%
Source: Arkansas Assessment Coordination Dept
Figure 14 – Change in Average Millage, 1995 – 2003
9
V.
Property Tax Burden
Based on property tax revenue estimates*
Property Tax Revenue per Capita, 2003
by the Assessment Coordination
677
Department, the property taxes generated
566
492
429
289
353
291
354
327 267
303
410
275
437
359
367
265
459 497
an estimated $502 in revenue per person in
373
2003. Counties received property tax
611
451
384
405
464
289
389 406
372
274 414
median county averaged an estimated
725
315
410
401
443
519 $230 - $300
364
356
259
$300 - $350
530
376
$350 - $400 $400 - $450
523
369 347
233 340
366
320
$401 in property tax revenue per person.
378
502
434
372
293
288
424
were above the state average, and the
423
411 879
351
408
339
426
284
per person. Only 16 percent of counties
345 321
511
349 301
revenue as high as $879 or as low as $233
400
460
375
$450 - $600 $600 - $880
389 545
452
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
Figure 15 – Property Tax Revenue per Capita, 2003
Property Tax Revenue as Percent of Personal Income, 2003 2.6
2.5
2.0
1.6
1.9
1.7
1.9
1.7
2.3
1.6
1.8
2.0
1.5
1.8
1.9
1.4
2.1
2.1
2.2
1.8
2.1
3.3
2.0
1.6
1.9
1.5 1.7
1.9 1.8
2.0
1.6
2.5
1.9 1.5
1.6
income in 2003. Property tax revenue as a share of personal income ranged from
1.2
1.1% to 3.4% in the 75 counties, with
1.7
only one-fourth of Arkansas counties
2.0 1.5 2.5
1.8 1.5
1.7
1.6
1.9
1.7
1.7
1.6
1.3 2.6
1.8
2.0
1.7
1.5
1.4
1.6 2.0
1.6
1.9 1.5
1.5
1.8
2.0
1.6
2.3 1.8
2.2
to two percent of Arkansas’ personal
1.9 2.2
1.8
Property taxes generated revenue equal
1.7
1.7 1.9 2.4
2.3
1.1% - 1.5% 1.5% - 2.0% 2.0% - 2.5% 2.5% - 3.0% 3.0% - 3.4%
receiving higher than two percent.
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
Figure 16 – Property Tax Revenue as Percent of Personal Income, 2003
*It should be noted that these are estimates; the Arkansas Assessment Coordination Department estimates revenue based on rates and assessments, assuming 100% payment of property taxes.
10
When compared with other
Property Tax Revenue per Capita, 2002
states and measured on a per capita basis and share of personal income, the property tax burden in Arkansas is low. In 2002, $325 - $500 $500 - $700 $700 - $900 $900 - $1,100 $1,100 - $1,500 $1,500 - $1,900
Source: U.S. Census Bureau Governments Division & Population Estimates
Arkansas had a property tax of $371 compared to $969 for the United States. Only Alabama had less property tax per person.
Figure 17 – Property Tax Revenue per Capita, 2002
Arkansas’ 2002 property
Property Tax Revenue as Percent of $1,000 of Personal Income, 2002
tax revenue was 1.58% of total personal income, half the national average of 3.15%. Only two states, Alabama and Delaware, had lower property tax
1.0% - 2.0% 2.0% - 2.5% 2.5% - 3.0% 3.0% - 3.5% 3.5% - 4.0% 4.0% - 5.5%
revenue as a percent of personal income.
Source: U.S. Census Bureau - Governments Division, & Bureau of Economic Analysis
Figure 18 – Property Tax Revenue as Percent of Personal Income, 2002
11
GLOSSARY
ASSESSMENTS All real estate (land & buildings) and some personal property is assessed a value which is 20 percent of market value. AVERAGE TOTAL MILLAGE The average millage in a particular geographic area. The average is computed by weighting the millage in different political and administrative districts by the assessments in the districts. CONSUMER PRICE INDEX An index showing the change in the cost of a fixed basket of goods and services over time. The index is used to measure inflation in the cost of goods and services. FEDERAL AID IN KIND
Revenue and the value of goods received from the federal government.
The value of in-kind goods and services received by local school districts or other entities.
LOCAL TAX Taxes of local governmental entities including counties, cities, school districts and other special districts. MILLAGE The tax rate on real and personal property. Millage is usually reported in rates per $1,000 of assessed value. PERSONAL PROPERTY TAX This is a tax on some movable property including such items as cars, boats, motorcycles, recreational vehicles, etc. PROPERTY TAX A tax on real estate (land & buildings) and personal property of households, businesses, utilities and carriers. STATE & LOCAL TAX REVENUE The sum of all tax revenue collected by state and local governments, including the state, county, city, school and special districts. STATE EQUALIZATION REVENUE Revenue received by school districts from the state to attempt to equalize base funding among school districts in Arkansas. TOTAL PERSONAL INCOME The total income received by residents of an area, including earnings, transfer payments, and interest, dividends and rent. UTILITY & CARRIER PROPERTY TAX
Taxes on real and personal property of utility and carrier
companies. Carriers include businesses like pipeline, railroad, transportation, bus and airline companies.
12
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Project Director Dr. Wayne P. Miller, University of Arkansas Division of Agriculture, Cooperative Extension Service
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University of Arkansas, United States Department of Agriculture, and County Governments Cooperating The Arkansas Cooperative Extension Service offers its programs to all eligible persons regardless of race, color, national origin, religion, gender, age, disability, marital or veteran status, or any other legally protected status, and is an Equal Opportunity Employer. 13
Revenue, Assessments & Rates
Clay County .
January 2006
TABLE OF CONTENTS
I.
Introduction
II.
Local Use of Property Tax Revenue A.
School Districts
B.
County Governments
C.
City Governments
III.
Property Assessments
IV.
Property Tax Rates
V.
Property Tax Burden
VI.
Glossary
1
I.
Introduction
Property tax revenue has long been an important source of revenue for state and local governments. In Arkansas the property tax generates revenue for school districts, county and city governments, community colleges and special districts. In this publication we provide information about the source and distribution of property tax revenue to provide a better understanding of the importance of the property tax for local governments. We also compare the property tax base and rates among counties and over time, which provides information on the property tax capacity and effort of local governments.
Figure 1 – Sources and Uses of Property Tax Revenue
Figure 1 shows the sources and uses of property tax revenue with the width of the arrows depicting the share of property tax revenue flows for the state of Arkansas. These shares will vary among counties depending on the local tax structure, property tax base and rates.
In this publication we first show the distribution of the property tax revenue among local governmental units and then compare the importance of the property tax revenue for Arkansas, school districts and county governments. The next section depicts the property tax base of the county, how it has changed over time and a comparison among counties. Third, property tax rates are presented and compared among counties. Finally, the property tax burden is compared among counties and states.
2
II.
Local Use of Property Tax Revenue
Property taxes provide substantial revenue for local services. In 2003, Arkansas property taxes generated $1.37 billion. Differing property assessments and local tax rates led to variation in the amount and share of property tax revenue received by local governments and school districts. In Arkansas, school districts receive a large share of the property tax revenue (77%) with county and city governments receiving about 15 percent and eight percent respectively. Community colleges and special districts also receive a small share of property tax revenue in some counties. Property Tax Revenue by Taxing Unit Clay County, 2003 School Districts $4,938,299 71%
Of the $6.9 million generated from the property tax in Clay County in 2003, $4.9 million (71%) went to school districts, $1.6 million (23%) went to county
Cities $387,170 6%
government, and $0.4 million (6%) went to city governments.
Counties $1,589,507 23%
Figure 2 – Property Tax Revenue by Taxing Unit, Clay County, 2003 Source: Arkansas Assessment Coordination Department
Property Tax Revenue as Percent of State & Local Tax Revenue, 2002
Nationwide, property taxes 30%
generate a significant share
40% 35%
of state and local tax
38%
25%
Arkansas’ state and local tax
26%
30%
30%
15%
30% 32% 29%
35% 38% 35% 29%
24%
revenue, about half the
the property tax than
35%
36% 33%
taxes accounted for 16% of
Only five states rely less on
28%
29%
revenue. In 2002, property
national average of 31%.
60% 42% 42%
31%
32% 17%
26%
19%
18% 27%
16%
30%
42%
40%
40% 40% 46% 15% 27%
24% 32%
25% 15% 28%
15%
36%
16%
35%
14% - 21% 21% - 28% 28% - 35% 35% - 42% 42% - 49% 49% - 61%
Source: U.S. Census Bureau, Governments Division
Arkansas. Figure 3 - Property Tax Revenue as Percent of State & Local Tax Revenue, 2002
3
A.
School Districts
Property tax revenue generated approximately 28% of Arkansas school district funding in the 2003-04 school year. Of the $3.2 billion received by the 309 Arkansas school districts, nearly $900 million came from the property tax. Due to differences in tax capacity, effort, and state and federal aid, school districts vary in their reliance on property tax revenue to support their schools. In 2003-2004, school districts received between 11% and
Property Tax as Percent of Total School District Revenue, 2003
41% of their total revenue from
20%
37% 28% 22% 41%
41%
18%
35%
property tax. With oversight from
26%
20%
24%
24% 21% 21% 15%
16%
18%
28% 29%
locally elected school boards, school
19%
districts use property tax revenue for
33%
23%
26% 21%
24%
16%
20%
including teacher salaries, school
24% 22% 25%
15%
11% 20%
30%
building construction and maintenance.
31%
26%
18%
20%
17% 37%
24%
28%
16%
30%
19% 26% 20% 24%
12% 13%
27%
19%
20%
18%
15% 39% 19% 30%
25%
supplies and equipment, and
20%
38% 24%
23%
17%
18% 20%
24%
28%
15%
13%
many vital operating expenses,
36%
35%
18%
24%
22%
10% - 15% 15% - 20% 20% - 25% 25% - 30% 30% - 35% 35% - 41%
Source: 2003-2004 Arkansas Department of Education Annual Statistical Report
Figure 4 – Property Tax as Percent of Total School District Revenue, 2003
School District Revenue by Source, Clay County, 2003-2004
Local Tax $4,350,847 26%
State Equalization $9,041,734 55%
Other Tax $516,088 3%
Property taxes generated approximately $4.4 million for schools in Clay County in 2003-2004, and Federal Aid $1,878,538 11%
Other State Aid $907,009 5%
In Kind
$63,356
0%
accounted for 26% of their total revenue.
Figure 5 – School District Revenue by Source, Clay County, 2003-2004 Source: Arkansas Department of Education Annual Statistical Report
4
B.
County Governments
Like schools, county governments in
Property Tax as Percent of County Government Revenue, 2002
Arkansas use the property tax to raise a substantial portion of their revenue.
27%
23%
6%
17%
3% and 39% of their total revenue from
10%
10%
13%
7%
8%
9%
for 16% of its total revenue.
17%
20% 19% 19%
14%
30% 19% 12%
33%
21%
9%
12%
15%
20%
9%
3%
9%
32%
22% 12%
22%
9%
21% 13%
10% 17% 19%
16% 23% 39%
18%
government relied on the property tax
14%
18%
7%
8%
16%
17%
20%
tax revenue composed 21% of total
average. The median county
12%
17%
18%
31%
only 17 counties were above the state
25% 23%
16%
county government revenue in 2002, but
12%
19%
8%
10%
23%
8% 12%
17%
14%
30%
County governments received between
the property tax. Statewide, property
12%
10% 18% 13%
12% 19%
9% 13% 28%
23%
3% - 10% 10% - 15% 15% - 20% 20% - 25% 25% - 40%
Source: Arkansas Bureau of Legislative Audit
Figure 6 – Property Tax as Percent of Total County Government Revenue, 2002
While the property tax revenue for some county governments has been increasing, many counties receive a smaller percentage of their revenue from the property tax than they have in the past. This is because most Arkansas counties also use the sales tax to generate revenue, thus reducing their reliance on the property tax.
C.
City Governments
City governments depend less on the property tax as a source of revenue than school districts and county governments. In the late 1980s, Arkansas cities obtained a larger share of their local tax revenue from the property tax than they do currently. More recently cities are relying on the sales tax to generate a larger share of local revenue for city governments.
5
III.
Property Assessments
Property tax revenue is collected from commercial and industrial establishments, utilities, and farms as well as from owners of residential establishments. Real estate property (land and buildings), the largest source of property tax revenue, accounts for 68% of the property in Arkansas, compared to 24% from personal property, and 7.5% from utilities and carriers.
Total Property Assessments Clay County, 2003
Personal $37,478,679 24%
Most of the property assessments
Utility & Carrier $14,843,444 9%
in Clay County were assessments on real estate. In 2003, assessments on real estate were $107 million as compared to $37 million in assessments on personal property. Utility and carrier assessments were $15 million. Real Estate $106,628,631 67%
Figure 7 – Total Property Assessments, Clay County, 2003 Source: Arkansas Assessment Coordination Department
Property assessments and the rate of increase in property assessments vary greatly among counties. On average property assessments in Arkansas increased 95% between 1990 and 2003. However, if these assessments are adjusted for inflation using the Consumer Price Index (CPI), assessments increased only 38% percent during this period.
6
Total Property Assessments, Clay County (1990-2003) 250 Million $
200 150
108
104
102
100
98
114
119
122
130
127
138
156
147
159
100 50
Current Dollars
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
0
1990 Dollars
Figure 8 – Total Property Assessments, Clay County, 1990-2003 Source: Arkansas Assessment Coordination Department & the consumer price index.
Property assessments in Clay County increased by approximately 63 percent from 1990-2003. There was a decrease in property assessments in years 1994 and 200. After adjusting for inflation using the Consumer Price Index, property assessments increased by 16 percent during this same period, indicating
an increasing tax base in Clay County.
Property Assessments per Capita, 2003 11.2
13.9
10.4
6.8
7.1
7.0 18.0
8.8 8.1
7.9 7.5
8.4
8.7
7.8
13.9 10.9
8.3 8.0 12.0
9.3
average 2003 property assessment per person was $10,717, with a range between $6,200
6.6
and $18,000. Only 17 of the 75 counties were
6.2 11.6
indicates the capacity of counties to raise revenue from the property tax. Arkansas’
9.0
11.8
6.8 10.1
8.6
8.7 10.3
8.9
9.3
10.7
9.2
7.3
8.8
8.8
8.0
7.2
10.7
11.0
8.5
9.7
6.6 13.9
7.6
9.7
9.6
6.6 6.4 8.6
11.9
8.2
9.4
Dividing assessments by population
9.3
8.5
12.8
13.0
9.4
7.8 8.0
11.0
7.5
8.7
8.9
7.5
11.9
7.9
11.8
7.7
7.9
11.0
8.0
8.5 10.1
$6,000 - $7,000 $7,000 - $8,000 $8,000 - $9,000 $9,000 - $10,000 $10,000 - $12,000 $12,000 - $18,000
* numbers in map are in thousands Source: Arkansas Assessment Coordination Department & U.S Census Bureau
above the average. Rural areas are more likely to have low assessments per capita and, therefore, less capacity to raise revenue from the property tax.
Figure 9 – Property Assessments per Capita, 2003
7
Using the normalized dollar values, it
Change in Property Assessments per Capita 1990 to 2003
becomes clear how the real assessed value of 3.4
27.1
property has changed between 1990 and 2003.
26.1
The changes may be the result of rising
-8.6
property values and/or changes in the
17.0
28.7
54.7
7.8
9.6
property tax revenue is growing or declining.
18.2
12.6
-1.5
43.2
Statewide, assessments per person have risen
10.0
0.6
18.9 2.0
7.9
13.2 -8.7
13.7
35.9 14.8 -7.6
8.3
0.4 6.9
18.1 37.7
-2.1
whether the ability of a county to raise
36.1
35.6
-0.9
property assessments per person indicates
27.6
6.5
-0.5
-0.1
16.0
method of assessment. A change in the
-1.2
23.4 18.8
38.8
30.6
13.3
-8.8 20.2
23.5
15.0
23.0 12.0
22.8
36.3
1.4
18.7 6.0
-1.7
1.6
-14.8
2.3 -0.9
2.2
-0.5
-15% to -5% -5% to 5% 5% to 15% 15% to 25% 25% to 40% 40% to 55%
23.7 3.7
-5.5 22.2
18.4
13.1
by $1,200 in this period, an increase of 19%.
-3.4 -1.1
-3.7 -0.2
-10.5 -2.9
1.6
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
However, 21 counties have seen a decrease in
Figure 10 – Change in Property Assessments per Capita
per capita assessments over the same period. Dividing assessments by total personal Property Assessments per $1,000 Personal Income, 2003 597
502
458
426
480
455
453
407
423
420 466
407
423
448
404
449 535
392
464
466
500
359 484
820
426
390
433
449
355
376
427
every $1,000 of personal income, with a range between $301 and $820 in the 75 counties.
336
445
397
341
365 552
398 323
319
averaged $431 in property assessments for
369
440 510
419
413
430
406
386
301 414
449
459
392
326
351
389 445
386
412
342
409
391 437
555
582
382
421
property tax base. In 2003, Arkansas
442
434
income is another way of measuring the
677 384
381 391 523
$300 - $375 $375 - $450 $450 - $525 $525 - $600 $600 - $820
Change in Property Assessments per $1,000 Personal Income, 1990-2003
475
10% 10% -2%
8%
16%
Source: Bureau of Economic Analysis & Arkansas Assessment Coordination Dept
Figure 11 – Property Assessments per $1,000 Personal Income, 2003
-1%
or 0.2%. However, individual counties have seen considerable change, ranging from a 32% decrease to a 36% increase.
10%
-14%
3%
3%
6%
-13%
16%
-7%
-23% -17%
-5% -29% -32% -23% -23% -21% -18% -16%
-24%
-26%
-19% -20%
-17%
-2%
-14%
8%
-2% -1%
-18% -26% 37%
-15%
-16%
-7%
-19%
-12%
16% 22%
-6%
11% -15%
-2%
11%
-18%
0%
11%
-10%
-11% -11%
Between 1990 and 2003, average property
remained nearly constant, decreasing by only $1,
-4%
-2% 13%
-19%
-2%
assessments per $1,000 of personal income have
-4%
26%
-22% -3% -11% -6% 6%
8%
-6%
-27% -8% -20%
-8% -1%
-6%
-35% to -20% -20% to -10% -10% to 0% 0% to 10% 10% to 20% 20% to 40%
Source: Bureau of Economic Analysis & Arkansas Assessment Coordination Dept
Figure 12 – Change in Property Assessments per $1,000 Personal Income, 1990-2003
8
IV.
Property Tax Rates
Property tax rates (millage) are an indicator of the local tax effort used to support local services. Counties, cities, and school districts have different boundaries and tax rates, which means that citizens in the same county have different tax rates depending on whether they live in a town or rural area and in which school district they live. To facilitate comparison among counties, property tax rates within a county are weighted and averaged.
Average Total Millage by County, 2003 44
49
43
37
42
41
52
36
46 39
39
43
35
43
millage was 47.8, or a tax rate of $47.81 for
42 42
47
44
46
43
40
41
44 63
48 42
39
40
53
43
44 45
34
40
44
44
47
40
41
47
50
42 45
46 38
42
41
44
43
44
38
45
42
45
46 46
40
41
41
36
every $1,000 of assessed property. School
39
51
39
Statewide, the average 2003 total property tax
44
35
37
districts had an average millage of 36.8, while
35
county governments averaged 7.2 mills and
46
city governments averaged 6.1 mills.
44 42 46 45
49 46
$34 - $39 $39 - $42 $42 - $45 $45 - $48 $48 - $64
49
Source: Arkansas Assessment Coordination Dept
Figure 13 – Average Total Millage by County, 2003
Change in Average Millage, 1995 - 2003 14%
9%
In 1995, the average total property tax millage
11%
13%
18%
the average property tax millage increased by 3
33%
-3%
22%
5%
2%
4%
-10%
9%
5%
31% 10%
0%
2%
in four counties the millage increased over
17%
9%
0%
23%
7%
14%
5%
4% 11%
27%
11%
22% 13%
6% 5%
5%
9% 6%
14%
counties the average millage decreased, while
1%
16%
5%
24%
13%
1% 21%
6% 2%
6%
14%
-5%
57%
0%
11% 14%
17%
23% 2%
millage varied widely from -10% to 57% in
5%
12% 12%
-8%
25%.
1%
15% 17%
individual counties during this period. In five
8%
2% 4%
6%
17%
7%
in Arkansas was 44.8. Between 1995 and 2003,
mills, a growth of 6.7%. The average total
0%
-5%
-4%
1%
12%
15%
-10% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 25% 25% to 60%
Source: Arkansas Assessment Coordination Dept
Figure 14 – Change in Average Millage, 1995 – 2003
9
V.
Property Tax Burden
Based on property tax revenue estimates*
Property Tax Revenue per Capita, 2003
by the Assessment Coordination
677
Department, the property taxes generated
566
492
429
289
353
291
354
327 267
303
410
275
437
359
367
265
459 497
an estimated $502 in revenue per person in
373
2003. Counties received property tax
611
451
384
405
464
289
389 406
372
274 414
median county averaged an estimated
725
315
410
401
443
519 $230 - $300
364
356
259
$300 - $350
530
376
$350 - $400 $400 - $450
523
369 347
233 340
366
320
$401 in property tax revenue per person.
378
502
434
372
293
288
424
were above the state average, and the
423
411 879
351
408
339
426
284
per person. Only 16 percent of counties
345 321
511
349 301
revenue as high as $879 or as low as $233
400
460
375
$450 - $600 $600 - $880
389 545
452
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
Figure 15 – Property Tax Revenue per Capita, 2003
Property Tax Revenue as Percent of Personal Income, 2003 2.6
2.5
2.0
1.6
1.9
1.7
1.9
1.7
2.3
1.6
1.8
2.0
1.5
1.8
1.9
1.4
2.1
2.1
2.2
1.8
2.1
3.3
2.0
1.6
1.9
1.5 1.7
1.9 1.8
2.0
1.6
2.5
1.9 1.5
1.6
income in 2003. Property tax revenue as a share of personal income ranged from
1.2
1.1% to 3.4% in the 75 counties, with
1.7
only one-fourth of Arkansas counties
2.0 1.5 2.5
1.8 1.5
1.7
1.6
1.9
1.7
1.7
1.6
1.3 2.6
1.8
2.0
1.7
1.5
1.4
1.6 2.0
1.6
1.9 1.5
1.5
1.8
2.0
1.6
2.3 1.8
2.2
to two percent of Arkansas’ personal
1.9 2.2
1.8
Property taxes generated revenue equal
1.7
1.7 1.9 2.4
2.3
1.1% - 1.5% 1.5% - 2.0% 2.0% - 2.5% 2.5% - 3.0% 3.0% - 3.4%
receiving higher than two percent.
Source: Arkansas Assessment Coordination Department & U.S. Census Bureau
Figure 16 – Property Tax Revenue as Percent of Personal Income, 2003
*It should be noted that these are estimates; the Arkansas Assessment Coordination Department estimates revenue based on rates and assessments, assuming 100% payment of property taxes.
10
When compared with other
Property Tax Revenue per Capita, 2002
states and measured on a per capita basis and share of personal income, the property tax burden in Arkansas is low. In 2002, $325 - $500 $500 - $700 $700 - $900 $900 - $1,100 $1,100 - $1,500 $1,500 - $1,900
Source: U.S. Census Bureau Governments Division & Population Estimates
Arkansas had a property tax of $371 compared to $969 for the United States. Only Alabama had less property tax per person.
Figure 17 – Property Tax Revenue per Capita, 2002
Arkansas’ 2002 property
Property Tax Revenue as Percent of $1,000 of Personal Income, 2002
tax revenue was 1.58% of total personal income, half the national average of 3.15%. Only two states, Alabama and Delaware, had lower property tax
1.0% - 2.0% 2.0% - 2.5% 2.5% - 3.0% 3.0% - 3.5% 3.5% - 4.0% 4.0% - 5.5%
revenue as a percent of personal income.
Source: U.S. Census Bureau - Governments Division, & Bureau of Economic Analysis
Figure 18 – Property Tax Revenue as Percent of Personal Income, 2002
11
GLOSSARY
ASSESSMENTS All real estate (land & buildings) and some personal property is assessed a value which is 20 percent of market value. AVERAGE TOTAL MILLAGE The average millage in a particular geographic area. The average is computed by weighting the millage in different political and administrative districts by the assessments in the districts. CONSUMER PRICE INDEX An index showing the change in the cost of a fixed basket of goods and services over time. The index is used to measure inflation in the cost of goods and services. FEDERAL AID IN KIND
Revenue and the value of goods received from the federal government.
The value of in-kind goods and services received by local school districts or other entities.
LOCAL TAX Taxes of local governmental entities including counties, cities, school districts and other special districts. MILLAGE The tax rate on real and personal property. Millage is usually reported in rates per $1,000 of assessed value. PERSONAL PROPERTY TAX This is a tax on some movable property including such items as cars, boats, motorcycles, recreational vehicles, etc. PROPERTY TAX A tax on real estate (land & buildings) and personal property of households, businesses, utilities and carriers. STATE & LOCAL TAX REVENUE The sum of all tax revenue collected by state and local governments, including the state, county, city, school and special districts. STATE EQUALIZATION REVENUE Revenue received by school districts from the state to attempt to equalize base funding among school districts in Arkansas. TOTAL PERSONAL INCOME The total income received by residents of an area, including earnings, transfer payments, and interest, dividends and rent. UTILITY & CARRIER PROPERTY TAX
Taxes on real and personal property of utility and carrier
companies. Carriers include businesses like pipeline, railroad, transportation, bus and airline companies.
12
Arkansas Is Our Campus Visit our web site at http://www.uaex.edu Carroll
Benton
Boone
Fulton Marion
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Madison
Washington
Newton
Independence Crawford
Franklin
Van Buren
Johnson
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Mississippi
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Lafayette
Project Director Dr. Wayne P. Miller, University of Arkansas Division of Agriculture, Cooperative Extension Service
Design/Data Analysis Ben F. Olson, University of Wisconsin Student, Political Science Department
University of Arkansas, United States Department of Agriculture, and County Governments Cooperating The Arkansas Cooperative Extension Service offers its programs to all eligible persons regardless of race, color, national origin, religion, gender, age, disability, marital or veteran status, or any other legally protected status, and is an Equal Opportunity Employer. 13
