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Journal of Property Tax Assessment & Administration

Abstract

Two forms of equalization tend to rely on the weighted mean: indirect equalization designed primarily to ensure that state funds being distributed to local governments on the basis of underlying taxable property value are equitably distributed and direct equalization of centrally assessed properties, such as railroads. To do this, oversight agencies attempt to estimate total taxable property value within the jurisdiction to which the distribution is to be made or the percentage by which total taxable value in a comparison class of property differs from market value (or another statutorily provided goal). Estimation procedures rely on ratio studies and, often, on the weighted mean ratio, which is considered conceptually preferred. However, the weighted mean can be distorted by the presence of high-value properties that occur in a sample disproportionately to their occurrence in the underlying population. There are various ways of identifying such outliers, and this paper explores a particular approach using observed and expected frequencies.

First Page

45

Last Page

58

Keywords

Assessment sales ratio studies, Assessment ratios

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