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How Millage Works

Millage is the rate that property taxes are calculated with. A mil is 1/1000 or 0.1%. So one mil will cost a property owner $1.00 for every $1,000 of their assessed property value. Using the current proposed 5.7 mil levy here’s what that looks like for an appraised $100,000 property:


Step 1 is find the properties assessed value - $100,000 x .35 = $35,000


Step 2 calculate the millage for the levy - 5.7/1000 = .0057


Step 3 multiply the millage rate by the assessed value to find the total cost of the new tax - .0057 x $35,000 = $199.50


Now, there are two kinds of millage. They are typically called ‘inside’ and ‘outside’. 


Inside millage is the maximum amount of property tax allowed to be taken without a vote. The Ohio constitution’s limit is 10 mil. This means the state says every local government can take up to 10 mil in property taxes without needing to ask. BSS gets 4.5 of that 10.


Outside millage is the ‘having to ask’ taxes. Any additional property tax, beyond the 10 inside mils, needed to fund public services/works count as outside millage. The state also put a lock, House Bill 920, on all outside millage that is applied to reassessments to keep taxes nice and stable. It was done during the housing boom in 1976 to keep people’s taxes from going up as dramatically as their house prices were. So the only time a fixed rate levy can go up in value after it's been passed is when new houses are built and assessed for the very first time. 


This is hugely important. It is the reason levies cannot be one and done. Every few years, public services will ask for more money because their income from a levy is locked to the amount agreed upon when that levy was passed and there isn't nearly enough income from new construction to offset the increased overhead of inflation and, for schools, new students. So, as the cost of living rises, the fixed amount paid to the public service will eventually no longer cover the expenses required to perform the service. Much the same way a person on a fixed income finds that over time their social security check just doesn't buy as much as it did two or three years ago. 


For example, if the 5.7 mil levy is passed in March, the school will get close to the same amount of money from that levy in 2031 as it would in 2021. This is where the concept of effective millage comes in. As the value of a dollar goes up, how much you can buy with that dollar declines. Compare how many candy bars could be bought for a dollar 40 years ago to how many a dollar buys now. The same thing happens to levies. The 1981 levy that's currently in effect was voted in for 7.5 mils, but today the dollar value of that levy is only worth 1.67 mils. This is why levies become worth less over time, even though their official dollar amount hasn't changed. It's also why a public service can only renew a temporary levy for so long. Every year it's on the books, the dollar amount it represents loses a little more value.

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