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<br />-6- <br />Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s <br />property classification system to each property’s market value . Each property classification, such as <br />commercial or residential, has a different calculation and uses different rates . Consequently, a city’s total <br />tax capacity will change at a different rate than its total market value, as tax capacity is affected by the <br />proportion of its tax base that is in each property classification from year-to-year, as well as legislative <br />changes to tax rates. The City’s tax capacity increased 1.5 percent and 9.8 percent for taxes payable in 2019 <br />and 2020, respectively. <br /> <br />The following graph shows the City’s change in tax capacities over the past five years: <br />$– <br /> $200,000 <br /> $400,000 <br /> $600,000 <br /> $800,000 <br /> $1,000,000 <br /> $1,200,000 <br /> $1,400,000 <br />2016 2017 2018 2019 2020 <br />Local Tax Capacity <br /> <br />The following table presents the average tax rates applied to city residents for each of the last two levy <br />years: <br /> <br />2019 2020 <br />Average tax rate <br />City 40.4 41.3 <br />County 52.9 52.3 <br />School 26.1 36.8 <br />Special taxing entities 6.6 6.6 <br />Total 126.0 137.0 <br />Rates Expressed as a Percentage of Net Tax Capacity <br />City of Gem Lake <br /> <br />The City’s average tax rate was consistent with the prior year, except for the school taxing authority, which <br />increased as presented in the table above.