Budget season is underway, and taxing entities, such as school districts, municipalities and counties, spent many hours over the summer formulating their expected revenue, expenses and tax rate projections.
One term that figures prominently in discussion of budget items is the idea of an effective tax rate. The effective tax rate is the tax rate that will generate the same amount of tax revenue as the previous year. Because taxable property values have been trending upward in Montgomery County, a tax rate lower than the one previously in place is often just as effective in generating revenue.
We break down some of the most important details in each of these budgets in our government coverage this month (see Page 21).
Despite decreases expected in several local tax rates, residents may still find themselves with higher tax bills. If property values increase, tax bills can increase even if the tax rate is below the effective rate.