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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 cty'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 8.7 percent and increased 11.8 percent for taxes <br />payable in 2024 and 2023, respectively. <br />The following graph shows the City's change in tax capacities over the past nine years: <br />Local Tax Capacity <br />$2,000,000 <br />$1,800.000 - <br />$1,600,000 <br />$1,400,000 <br />$1,200,000 <br />$1,000,000 <br />$800,000 <br />$600,000 — <br />$400,000 <br />$200,000 <br />2016 2017 2018 2019 2020 2021 2022 2023 2024 <br />The following table presents the average tax rates applied to city residents for each of the last three levy <br />years: <br />Rates Expressed as a <br />Percentage of Net Tax Capacity <br />City of Gem Lake <br />2022 <br />2023 <br />2024 <br />Average tax rate <br />City <br />38.1 <br />40.8 <br />39.0 <br />County <br />48.1 <br />44.9 <br />45.5 <br />School <br />34.8 <br />32.4 <br />34.0 <br />Special taxing entities <br />8.1 <br />7.1 <br />7.4 <br />Total <br />129.1 <br />125.1 <br />125.9 <br />The average tax rates for the City decreased in the current year, while the total average tax rate increased_ <br />mainly the result of an increase in the school rate. <br />-5- <br />