Your rates, your city: how are your rates calculated?
Council rates are an important part of every homeowner’s household budget, and the City of Onkaparinga is on a mission to increase transparency with its ratepayers.
“Calculating rates can be complex to understand, but we want to try and explain it as simply as possible” says City of Onkaparinga Mayor Erin Thompson in a new video released by council this week, which explains how residential council rates are calculated.
The video is part of a new campaign to help demystify its finances following feedback received by the community during engagement on council’s Long Term Financial Plan.
Information and videos about rates (how they’re calculated and used), how council uses debt, council’s Long Term Financial Plan, and how people can get involved in the annual business plan and budget process, will be added regularly to a new web page called Your rates, your city.
“As part of our annual budgeting process, we determine the total revenue that needs to be collected from ratepayers in addition to federal and state government funding and other income streams,” the mayor continues.
The total amount of money to be raised in general rates is divided by the total value of all rateable properties in the city.
The resulting figure is called the ‘rate in the dollar’. This value may change each year depending on the total amount of rate revenue to be raised, and the relative value and number of properties in the residential category.
There are a number of factors that determine council rates which include:
- the property valuation—which is set by the state government, through the Office of the Valuer General
- the residential ‘rate in the dollar’
- a fixed charge that is applied to all properties in the council area. This means each property owner makes an equal contribution to the base cost of council services and projects, across the entire Onkaparinga area
- the regional landscape levy, which councils are required to collect from ratepayers and pass onto the state government.
“When we talk about a percentage increase in rates, we are referring to an increase in the overall rates revenue that are collected to deliver services and infrastructure for our community,” says Mayor Thompson.
In the example below, the property value is $360,000 – which is close to the average house price in Onkaparinga. In 2020-21, the residential ‘rate in the dollar’ is 0.00294158, the fixed charge is $515, and the state government levy is $38.50
First, the property value is multiplied by the rate in the dollar
e.g. $360,000 x 0.00294158 = $1059
Next, the fixed charge is added.
e.g. $1059 + $515 = $1574
Lastly, the state government levy is added.
e.g. 1574 + $38.50 = $1612.50
This means that the total rates for this property will be $1612.50 for the 2020-21 financial year.