What is assessed value used for in municipal governance?

Assessed value plays a crucial role in municipal governance primarily as a basis for calculating municipal taxation. This assessed value represents the official valuation of a property, which is used by local governments to determine how much tax a property owner will owe.

When municipalities set their budgets and need to raise funds for services such as road maintenance, schools, and emergency services, they rely on the property tax revenue generated from the assessed values of properties within their jurisdiction. Each property owner pays a tax that is a percentage of their property's assessed value, which means that accurate assessments are essential for fair and effective tax collection.

In contrast, assessing value is not typically involved in determining rental rates, setting interest rates for loans, or establishing insurance guidelines. Rental rates are generally influenced more by market demand, while interest rates are set by financial institutions based on various economic factors. Similarly, property insurance is based on different criteria, primarily the cost of rebuilding the property and associated risks, rather than assessed values used for tax purposes.