Appendix I: Examples of Double Taxation by County Governments

This chapter includes a hypothetical example for City A to demonstrate the standard method of determining the extent of double taxation.

Step I - Identify Duplicated and Jointly Financed Services

Duplicated Services Jointly Financed
Fire Protection Recreation Center
Law Enforcement
Garbage Collection  

Note: Fire protection, law enforcement, and garbage collection are services provided by City A and County A. While City A residents are taxed by both local governments, they receive only fire protection, law enforcement, and garbage collection. These are duplicated services. The recreation center and library are jointly financed by County A and City A. An agreement was reached whereby the cost of construction of each facility would be split in half.

Step II - Identify County General Fund Revenues, Property Tax Revenues, Property Tax Ratio and County General Millage Rate

A. County General Fund Revenues
Property Taxes $4,000,000
Alcohol Excise Taxes $95,000
Real Estate Transfer Tax $36,000
Occupation Taxes $44,000
DOJ Grant $28,000
Building Permits
Interest Earnings $10,000
Contributions & Donations $26,000
Sale of Property $16,200
Other Taxes $268,000
Garbage Collection Fees $260,000
DNR Grant
Total $4,871,200

Note: The county audit reveals that County A had total general fund revenues of $4,871,200 in the previous fiscal year. Property taxes accounted for $4,000,000 of county revenues. Additional major revenue sources are Other Taxes and Garbage Collection Fees.

A.1. County Revenues
Occupation Taxes $44,000
DOJ Grant $28,000
Building Permits $68,000
Garbage Collection Fees $260,000
DNR Grant $20,000
Total $420,000

A. County General Fund Revenues - A.1. County Revenues
$4,871,200 - $420,000 = $4,451,200

Note: A total of $420,000 must be subtracted from $4,871,200 in order to obtain actual County General Fund Revenues. In this example, revenues from Occupation Taxes are deleted because they are only applied to unincorporated residents. Other sources of revenue legally restricted to one purpose or not collected from residents living within a municipality include Building Permits, DOJ Grant, Garbage Collection Fees, and the DNR Grant. Revenue derived from Building Permits is earmarked for Code Enforcement.

It is also possible that revenue gained from Building Permits goes into the general fund in your county. If that is the case, do not delete it in A.1. The Garbage Collection Fees are used to finance the garbage collection service, and all of the grants are restricted. Thus, County General Fund Revenues equal $4,451,200.

B. County Property Tax Revenues = $4,000,000

C. Property Tax Ratio


D. County General Millage Rate = 15 mills

Step III - Determine Total General Fund Expenditures for Each Duplicated and Jointly Financed Service

A. Duplicated Services
1 Fire Protection $242,631
2 Law Enforcement $335,975
(Less DOJ Grant - Police Communications Equipment) ($28,000)
3 Garbage Collection $645,828
(Less Collection Fees)
Total $936,434
B. Jointly Financed Services
1 Recreation Center $112,537
2 Library $29,064
Total $141,601

Note: The audit reveals that the total general expenditure for Fire Protection was $242,631. Law Enforcement was appropriated $335,975. The DOJ Grant, however, must be subtracted from that total. When County A received the grant, $28,000 was automatically earmarked for Police Communications equipment.

Step IV - Determine Property Tax Expenditures for Each Duplicated and Jointly Financed Service

Note: In order to determine property tax expenditures for each service, multiply each amount listed in Step III (e.g., Fire Protection, $242,631) by the Property Tax Ratio (0.8986).
x 0.8986 = $218,028.22
A.2. $307,975 x 0.8986 = $276,746.34
A.3. $385,828 x 0.8986 = $346,705.04
B.1. $112,537 x 0.8986 = $101,125.75
B.2. $29,064 x 0.8986 = $26,116.91
Total $1,078,035 x 0.8986 = $968,722.26

Total Property Tax Expenditures for all Duplicated and Jointly Financed Services = $968,722.26.

Step V - Potential County Property Tax Millage Reduction for City Residents

The reduced county tax would be 11.3685 mills or a potential reduction of 24.21%.

Back to Listing