Revenue Neutral Rate FAQ

What is Revenue Neutral?

Revenue neutral is when a taxing jurisdiction budgets the exact same amount of property tax revenue, in dollars, for the upcoming budget year as they did for the current year.

For example: If a taxing entity uses $1 million of property tax revenue in 2022, being revenue neutral means they plan to only use $1 million in 2023 as well.

If a taxing jurisdiction plans to use more property tax revenue in the next budget year comparted to the current year, even $1 more, they would exceed revenue neutral and need to hold a public hearing.

                                       Example Source:

Why am I receiving a taxpayer notification form?

Due to a new law in place (Senate Bill 13) to promote transparency, notification is sent to each property owner explaining each jurisdiction's intent (or non-intent) to exceed revenue neutral (use more property revenues than the year before).

What is the Revenue Neutral Rate?

The revenue neutral rate is the mill levy rate that would generate the exact same amount of property tax revenue as the year before, using the current tax year's total assessed valuation.

Why would taxing entities/jurisdictions want to increase revenue?

A jurisdiction does not only increase revenue to provide new services; they often need to increase property tax revenue to provide the same level of service as the year before.

While this new revenue neutral law (Senate Bill 13) is an important step for budget transparency, it does not take inflation into account. As property values are rising, so are the costs of goods and services.

To provide residents with the same (or better) level of service, it costs more. Taxing entities often "exceed revenue neutral" and use a modest increase in revenue to help pay for things like the increased cost of goods and/or services - like asphalt for streets, mowing services, and other community priorities.

If an entity were to stay revenue neutral every year, they would have to provide this year's services, with this year's prices, on last year's budget.

Will my property taxes increase as much as my appraised value increased?

Property values significantly increased this past year due to the market, but your taxes would not increase by that same amount, as most entities lower the mill levy to help re-balance the "appraised value to collected property revenue" scale.

If an entity does need to increase the property revenues for the upcoming year, it should be by a modest amount compared to the increase in appraised property values.

What are taxing entities doing to offset the increase in Appraised Property Values?

The mill levy rate is the only influence that each taxing jurisdiction has on your tax bill; to help offset the increase in property values, these entities work to lower the mill levy rate. This way, there is not a 1:1 increase in your tax bill when property values experience an increase.

What exactly is on the taxpayer notification form?

  1. The revenue neutral rate of each taxing subdivision relevant to the taxpayer's property.
  2. The proposed property tax revenue needed to fund the proposed budget of the taxing subdivision - if the taxing subdivision notified the County Clerk of its proposed intent to exceed its revenue neutral rate.
  3. The proposed tax rate is based upon the proposed budget and the current year's total assessed valuation of the taxing subdivision - if the taxing subdivision notified the County Clerk of its proposed intent to exceed its revenue neutral rate.
  4. The tax rate and property tax of each taxing subdivision on the taxpayer's property from the previous year's tax statement.
  5. The appraised value and assessed value of the taxpayer's property for the current year.
  6. The estimates of the tax for the current tax year on the taxpayer's property based on the revenue neutral rate of each taxing subdivision and any proposed tax rates that exceed the revenue neutral rates.
  7. The difference between the estimates of tax based on the proposed tax rate and the revenue neutral rate on the taxpayer's property described in subparagraph
  8. For any taxing subdivision that has a proposed tax rate that exceeds its revenue neutral rate; and
  9. The date, time, and location of the public hearing of the taxing subdivision, if the taxing subdivision notified the County Clerk of its proposed intent to exceed its revenue neutral rate.