How to compute your property taxes

I had a story in the paper today about the City Council's plan to cut the property tax rate by up to seven mills. Previously the school district said it would cut six mills.

What does this mean to you, the homeowner? Follow these steps and I'll explain.

1) Take the assessed value of your home and multiply it by 0.045 (That's 4.5 percent). For commercial properties, multiply by 0.05. This is the taxable value.

2) Multiply the taxable value by the mill, which is worth a tenth of a cent. In this case, you multiply by 0.013. That's how much you would save if the city and school district cut 13 mills.

You'll notice that the amount of taxes you pay is not directly related to the actual value of your home. The actual value of the home, as determined by the market, is usually higher than the assessed value. That's because the city assessor's office follows the market and there's usually a one year lag. This assessed value is further modified because 95.5 percent of it is not subject to taxes, only the 4.5 percent.

As for the mill, if you're like me, it sure sounds like a weird way to measure money. Mill is derived from the Latin millesimus, which means 1/1000. A mill is simply 1/1000 of a dollar or a tenth of a cent. According to Wikipedia Congress invented the term in 1786 but never minted any coins.

Oddly enough, prior to the 1960s, when a mill was still worth something, some states and local governments minted mill tokens for use in paying sales taxes. Today, besides sales taxes, property taxes and gas prices are also expressed in mills. A gallon of regular unleaded at $2.899? That's two dollars, 89 cents and nine mills!