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Get ready for a shock – property tax bills arrive next week

Hope you have cashed in some of your gold or silver in the last few weeks at the current price, so that when you open your property tax bill next week, it will not be such a shock. Despite the declining value of your property, your taxes will most likely be increasing.

An unintended consequence of the Tax Cap law allows the taxing bodies to receive the taxes collected last year, plus the rate of inflation or 5% whichever is less. When property values decrease, the taxing bodies can increase the rates to make up for the property value’s loss plus the rate of inflation.

Inflation for this year’s tax bills is obtained from the previous 2009 December inflation rate, which was 2.7%. Property values declined in tax code (001) by 1.41%. The (001) tax code includes the Rockford school district, the city of Rockford and the township, Winnebago County, the Park district, the water reclamation district, Rock Valley College and some smaller municipalities.

There are over 280 tax code combinations in the Winnebago County area covering the Rockford area, incorporated and unincorporated, Roscoe, Pecatonica, and all other municipalities in combination with Harlem or Winnebago school districts and other taxing districts.

Therefore, the Tax Cap law allows for a rate increase to make up for the 1.41% decrease in property value in the (001) tax code area, plus the 2.7% inflation increase for a total of 4.11% for the extension in taxes collected by the taxing district, whether or not all of it is needed. But since it serves as the base for the following year under tax caps, plus inflation, it’s almost always needed!

The tax rate in the (001) tax code area rose 6.32% from $10.638 to $11.3108 per one hundred dollars evaluation. If your assessment remained the same as last year, then your taxes went up 6.32%. But most property decreased by 1.41%, unless the value of your property increased.

My taxes increased 4.53% from what was paid last year, even though the property decreased 1.41%. Therefore, the taxing bodies raised my taxes to make up for the 1.41% decrease in property value plus an additional 4.53% for a total of 5.94%, well above the 4.11% allowed by tax caps.

The caps are for the overall taxes extended by a taxing district and individual properties will receive different treatment depending on the value of your property as a ratio to the total assessed property value of the district.

A future post will show how many downtown commercial properties are underassessed, while residential properties make up the difference, since the total value of all assessed property in the taxing district determines the tax rate to meet the district’s needed tax extension.

Winnebago County only raised their rate to receive what they had received last year – they could have raised it more. RVC actually received less than they received the previous year, maintaining a rate of 45 cents per hundred as they have for years, but the city and the school district, which account for 74% of the (001) tax bill increased my taxes 4.85% and 7.46%, respectively. What the … ?

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9 Comments

  1. I really hate the perversion of our tax codes. This city is really doing everything it can to motivate people like me to make exit plans.

  2. Wonka, I’m with you. I am hoping for a bubble in the real estate market so I can dump my house without losing too much.

    Then….it’s goodbye Illinois, goodbye to highway robbery taxation, goodbye to crooked scumbag politicians.

    Hey Larry, Hey Pat, Hey Scott, what are you going to do when you preside over a post-industrial slum????

  3. And they can put your value at whatever they want, with no oversight. My value hasn’t dropped a dime thru the “great recession”. And who can we complain to? The people that set the value. What a scam.

  4. The property tax code is unfair and damaging. Property taxes only discourage a person from buying a nicer home. Do people that buy a more expensive home take more advantage of government services, schools, parks, etc? Right now, my family pays about $4500 in property taxes. We would love to eventually move up to a nicer home, but the extra amount in property taxes kills the deal.

    Ted, I do agree that the raising of the tax rate is crooked. However, fundamentally the taxes in-and-of themselves are unfair and punish hard work.

  5. Robert Swanson Sr.

    I just bought a 5 acre plot of land in Tennessee. The taxes on it are based on 25% of property value, and the tax rate is only 1.8%! The annual taxes on this plot are roughly $310/year. If I build a $150,000 house on the property, the taxes will go to between $800-$850 tops per year. Here in Rockford I paid $4200 last year in taxes for my property, which the city only valued (or in this market I should say OVERvalued) at $136,000! Oh yea, and no personal income tax (just a tax on interest and dividend income)

    That’s why we’re moving. Step 1, buy the land (done!). Step 2, sell the house. In this economy that will take a while, so I figure I have a few more years of dealing with these idiots before I find my freedom.

  6. Ted, on another subject: Remember when Obama forced out GM’s CEO? His administration is at it again……

    The Department of Health and Human Services this month notified Howard Solomon of Forest Laboratories Inc. that it intends to exclude him from doing business with the federal government. This, in turn, could prevent Forest from selling its drugs to Medicare, Medicaid and the Veterans Administration. If the government implements its ban, Forest would have to dump Mr. Solomon, now 83 years old, in order to protect its corporate revenue. No drug company, large or small, can afford to lose out on sales to the federal government, a major customer.

    Read the rest at: http://online.wsj.com/article_email/SB10001424052748704123204576283283851626952-lMyQjAxMTAxMDIwNjEyNDYyWj.html

  7. Ted Biondo

    SNuss – This is socialism by control rather than government ownership of private industry, they have some monetary control over a given company, they don’t need to own it but the results are the same.

  8. BTW, Ted, if you want to discuss the cause of high gas prices, this might be a good starting point.

    http://www.exxonmobilperspectives.com/2011/04/27/gas-prices-and-industry-earnings-a-few-things-to-think-about/

  9. Ted – can you do a similar blog for Boone County? People are starting to receive their tax bill this week, and it is an eye openner — the hugh increases. Many in Belvidere Township are seeing increases anywhere from 300 to 500plus. Check it out yourself at http://booneil.devnetwedge.com/wedge/ just enter a name or address within and compare prior tax year to current tax year. Bringing the tax increases to light may force those making the decisions to think twice. Thanks……

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