Tax Caps do not require an increase in property taxes

With tax caps, a municipality may increase the tax rate to recover the current taxes paid by property owners, plus the rate of inflation or 5% whichever is less. Tax Caps allow but do not require a taxing body to levy the full amount, especially in a declining property value market.

Winnebago County’s property taxes will remain the same in 2012. The property tax levied this year for the county was $38,361,414. For 2012, the amount requested is $38,360,842 – $572 less than this year.

The county tax rate will increase by a few cents in 2012 since property values decreased by almost 5%. In order to collect the same amount of property taxes, the tax rates were increased. However, next year’s tax rate of 88 cents will still be less than it was 20 years ago.

The county could have requested an additional $600,000 in property taxes by adding the 1.5% due to inflation allowed under tax caps, but unlike most other taxing districts, chose not to do so in this economy.

Winnebago County property taxes on my home in 1995 were $419.63. In 2011, 16 years later, my county property taxes were $416.89, a decrease of $2.74! Winnebago County taxes represent only 7.5% of the total property tax bill.

Most remaining taxing bodies have raised their tax rates to the maximum allowed under tax caps! The taxes paid on my property tax bill this year to the City of Rockford and the Rockford School District increased by 4.85% and 7.46% respectively, despite my property value dropping 1.4%.

The City of Rockford represents aproximately 22% of the total property tax bill and the Rockford School District represents over 52% – a combined total of 74% of the total property tax bill.

The actual tax rates will not be determined until all property assessment complaints, some 7600, have been processed through the Board of Review, probably sometime in March 2012.

Regardless of the tax rate determined by the BOR, the county will receive no more in property taxes next year, than it received this year, because the county requested no new taxes!

Some property tax bills in the county could be increased if the property’s assessment was increased or the total taxes requested by the other taxing bodies are increased to the maximum and those taxes are weighted more than ten times the county’s taxes.

If taxes are increased this year, the tax base for subsequent years will be higher. Taxes calculated for those subsequent years will compound on this higher tax base resulting in even higher taxes in spite of declining property values in future years.

The county chose not to raise taxes – other taxing bodies could have done the same!