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 … ?