Property taxes are a major and essential source of funding for school districts, cities and townships, counties and special taxing districts. These taxes fund public schools, fire stations, police protection, streets, libraries and many more programs and services.
Property taxes are levy-based. This means that government spending and revenues affect your taxes the most. If spending increases or revenues decrease, your property taxes may increase. Conversely, if spending decreases or revenues increase, your property tax may decrease.
Your share of the property tax levy is determined by the market value and classification of your property. This means taxable market value and classification determine how the levy is distributed amongst all property tax payers. However, since property taxes are levy-based, it is possible for your property tax to increase while your market value decreases and vice versa.
For example: your township levies $50,000.00 for its budget. The $50,000.00 levy will be spread amongst all of the township property owners. Each property owner's taxable market value and classification will determine their share of the tax due. The following year, the township levies $50,000.00 again for its budget. Lets say market values have been falling for a few years and taxable market values are now "catching" up to reflect the changes. Does that mean your property taxes will decrease? Not necessarily, because the township still needs, and has levied for, $50,000.00 in its budget. If all of the townships taxable market values have decreased, the tax rate will increase to compensate for the difference.
There are many factors that are used to calculate your property tax. Every county in the state follows the same basic set of rules for determing what portion of property tax each owner owes. Some counties have special programs and circumstances relating to environmental factors, mining operations, industrial and agricultural factors that may make comparing every county in the state to each other very impractical.