What is a mill?
A mill levy is a property tax that is based on the assessed value of a property. The rate of this tax is expressed in mills and is determined by dividing the funds needed for the city budget by total property valuation.
Without the buydown applied, The City of Bismarck would have a mill rate of 81.9 in 2019. After applying the 25-mill property buydown, which is funding by sales tax revenue, the City of Bismarck will have a mill rate of 56.9. (See Figure A)
What is the Buydown:
Bismarck voters have approved utilizing sales tax revenue to subsidize, or buy down, the equivalent of 25 mills of property taxes. Bismarck voters last approved the use of sales tax revenue to buydown property taxes in 1992.
If the Buydown Continues:
The increasing amount of sales tax revenue dedicated to the property tax buydown leaves less available for
voter-mandated snowgates and discretionary uses, primarily special assessment subsidies on street
maintenance projects. (See Figure C on reverse.)
Why is a Cap Being Proposed?
The value of 25 mills has grown faster than overall sales tax revenue and now consumes more than 60% of all sales tax revenue generated in Bismarck. Of the $15,500,000 in sales tax revenue in 2019, $9,680,464 will be used to buy down 25 mills of property tax. The more sales tax revenue that is used to buydown mills of property
tax leaves less sales tax revenue for use on infrastructure and
special assessment subsidies.
If the 25 mill buydown is not capped at the 2019 levels, it is projected that 100% of sales tax revenue would be used towards the 25 mill buydown by 2029, eliminating the use of sales tax revenue to fund infrastructure and other uses. (See Figure D on reverse.)
What Will this Cost Me?
Figure B provides an example of the financial impact of the 25-mill property tax buydown to a home with a market value of $200,000 with an assessed value of $100,000.
The estimated value difference of the cap in 2020 vs 2019 on a
residential property valued at $200,000 is $7.25.
Capping the Buydown:
Capping the existing 25-mill property tax buydown at 2019 levels would stabilize the amount of sales tax revenue used to subsidize property tax each year and would in-turn allow the remaining sales
tax revenue to be used for road infrastructure, special assessment
subsidies and economic development.