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levycompFYE2009.xls
Here is the form provided by the Local Government Services Division for calculating a city or town mill levy under 15-10-420, MCA, for the coming fiscal year.
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The Department of Revenue has calculated the inflation factor to be used in the mill levy calculation as prescribed by 15-10-420, MCA for FY2009. Under that statute the Department of Revenue is required to:
"calculate one-half of the average rate of inflation for the prior 3 years by using the consumer price index, U.S. city average, all urban consumers, using the 1982-84 base of 100, as published by the bureau of labor statistics of the United States department of labor".
The rate of inflation for the three years prior to 2008 can be measured from December 2004 to December 2007. The U.S. City average CPI-U, not seasonally adjusted, was 190.3 for December 2004 and 210.036 for December 2007. These values can be found at http://data.bls.gov.
The average annual inflation rate over this period is 3.344%. That is, if you grow the value of 190.3 three times at 3.344% each time, the result will be 210.036.
1 190.3 x 1.03344 = 196.7
2 196.7 x 1.03344 = 203.2
3 203.2 x 1.03344 = 210.036
One-half of 3.344% is 1.672%. The value to use in the mill levy calculation for fiscal year 2009 is 1.672%. This is an increase from the 1.535% value used in the mill levy calculation for fiscal year 2008. If you have any other questions please contact Vern Fogle at 444-1821. (Posted 04/04/08)
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The Montana Board of Investments INTERCAP Revolving Loan Program's new variable rate, valid from February 16, 2008 through February 15, 2009, is 4.25% (Posted 3/07/08)
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The Department of Revenue has released the inflation adjustment and entitlement program growth factor calculations for the coming fiscal year. The final entitlement share payments were released July 25, 2007 and are shown in the table above.
Under 15-10-420 MCA, cities and counties are allowed to increase property tax collections by one-half the average rate of inflation for the previous three years. The averaged increase for the period was 3.070%. The allowable levy adjustment is 50% of this amount, which comes to 1.535%.
The arithmetic to calculate the growth factor for entitlement payments is more complicated. For cities, the formula goes like this: the base payment is multiplied by 70% of the average increase in Montana personal income and gross state product over the last four years. For fiscal year 2008, the growth factor will be 4.230%. In FY-09, the magic number will be 4.280%.
Cities can estimate their quarterly payments for the next two years by applying these growth factors to the amounts received in the current fiscal year.
The Department of Revenue is planning to circulate a spreadsheet that will show the entitlement payments for all local governments. These sheets will provide the official numbers. They should be posted on the League web page some time next week.
The Montana economy is flourishing. Gross state product increased an average of 7.358% over the past four years, while per capita income was up 4.873% annually during the same period. These positive results are showing up in the growth rates for the entitlement program. The "Big Bill" was intended to connect transfers to local governments to the performance of the state economy, and the adjustments for the next two years will increase municipal revenues by $4.196 million.
