The term “mill,” “mill rate” or “value of a mill” is bandied about during budget season, to the dismay of even those who use the term. The faces of Missoula County officials, who regularly discuss mill values and levies, contort in pain when asked to define why mills need to be part of what’s already a complicated discussion.
“We talk about mills, and citizens don’t want to talk that way,” said Anne Hughes, the county’s communication director. “It’s confusing and difficult to understand, but when we’re working on the budget we can see overall [how] the impact of an increase of 7 mills will be compared to years past. We try to talk with citizens about dollars, but in the budget we talk of mills.”
So what is a mill? It’s a tax rate that is applied to the assessed value of a property. One mill equals 1/1,000th of the taxable value of all the property in a community, so one mill will generate $1 for each $1,000 in taxable value. If your property has a taxable value of $10,000, and you’re assessed a one mill tax rate, you’ll pay $10 in taxes.
Mills are used to equitably spread the tax burden among property taxpayers.
A mill rate is the amount needed to create the budgets for taxing jurisdictions, and for projects approved by voters. Each taxing jurisdiction establishes how many mills it will need for its annual budget. The value of a mill, however, is set by the Montana Department of Revenue.
Some budgeted items have had a mill levy attached to them. For example, voters are being asked to approve a 10-year 6-mill levy to help fund universities in Montana. In that case, while the value of the mill may fluctuate, each year 6 mills across the state will be earmarked for the universities.
The drop in the value of a mill in the city of Missoula, despite the ongoing construction boom, shocked city officials this year. The decrease mainly occurred because the centrally assessed properties — mainly industries that cross county and sometimes state borders — successfully argued that the value of their properties had gone down. In addition, much of Missoula’s growth occurred in Tax Increment Financing districts, so they couldn’t be used in the Department of Revenue’s calculations.
Because the value of the mill decreased in the city, Missoula’s council had to increase the number of mills collected in order to pay its bills. In the county, while the value of the mill didn’t drop, it didn’t increase as much as what county officials expected, so they also raised the number of mills in order to collect more property taxes.
Taxable values, which are used in conjunction with mill values, are used to calculate property taxes. The taxable value is different than a market value; the market value is what a house could be sold for.
The taxable value is a lower dollar amount that takes the assessed or market value and multiplies it by one of about 15 property tax classification tax rates, which are set by the Montana Legislature.
As for bonds and levies, a bond is a debt that must be repaid with interest. A levy is an ongoing tax that cities and counties impose on property owners to raise money for services.