RSD205 keeps promise to reduce property taxes this year
This year’s property tax rates and levies, which are to be paid in June and September, have just been deemed official by the Winnebago County Clerk’s office and the Rockford School District has kept their promise to reduce the district’s portion of the property taxes.
Under the existing Property Tax Extension Limitation Law (PTELL) or Tax Caps, the district was not legally bound to reduce their levy, could have simply extended its current levy of $170 million without voter approval, and could have further raised the levy to $175.1M by adding in last year’s Consumer Price Index of 3%.
However, members of the Board of Education voted unanimously to reduce the levy last November, and Chief Financial Officer Cedric Lewis and interim Superintendent Robert Willis were quoted last year in the Rockford Register Star promising to end the 58-cent levy that had been used to fund the desegregation lawsuit.
The levy was twice extended by the voters beyond the 2002 Unitary Status ruling in the U.S. 7th Circuit Court of Appeals, with the last approval in the 2006 Kids Win campaign.
Officials made the promise five years ago to go back to the taxpayers to ask their opinion before imposing the tax for the coming years.
“But we’re going to do it for them, without having to spend money to take it to the taxpayers,” Willis said. “We want to honor that commitment that was made five years ago, and we will live within our means.”
Finance and Operations Committee Chairman, Tim Rollins is quoted in the same article saying, “We want people to know that we’re serious and we’re actually going to do this.”
It’s all about trust and interim Superintendent Willis summed that up very well in his statement to the Rockford Register Star last year emphasizing that, “This board will keep its word.”
The board did keep its word.
The Equalized Assessed Valuation (EAV) of the district continued to decline during the last tax cycle by over 5%, so the district calculated the tax rate to maintain last year’s $170M levy, then waived the 3% CPI to which it was entitled under tax caps.
The 58-cent equivalent levy to be refunded to taxpayers was then subtracted, which reduced this year’s tax levy to $157.4M from $170M on last year’s tax bills, and $17.7M or 10.1% less than the $175.1M maximum the district could have levied under state law using the 3% CPI.
When taxpayers receive their property tax bills around the middle of May this year, they should compare the “Prior and Current Taxes” paid on their property for the “Rockford School Dist 205,” not the “Prior or Current Rate,” because the tax rates are a function of both decreasing property assessments and a very complicated PTELL formula.
Remember, the “taxes paid” are what comes out of your pocket, not the tax rate.
The RSD205 taxes on my property, now valued at $136,600, will be $168 less than last year. The property was valued at more than $183,000 in 2008.
Even though this year’s tax rate is 12.9 cents more ($6.6884) than last year’s rate ($6.5595) due to the lower EAV across the district, the property taxes levied by the district have been reduced by 10.1% from the amount the levy legally could have been under tax caps.
The new tax rate proportionally would have been almost 75 cents more per hundred dollars of assessed valuation if the board had not cut the levy and ignored the CPI.
Taxpayers must remain vigilant, however, to a quirk in the PTELL law that allows the school district in the year immediately following a reduction in the Aggregate Extension base to revert to the highest level in the prior three years, which would be the previous $170M tax levy, and the taxpayers would have had only a one year reprieve from the 58-cent tax rate.
This provision of the PTELL law may be used only the first year after the Aggregate Extension is reduced and applies to any reductions in extensions, including tax abatements.
So, the board must continue with 2012′s reduced $157.4M tax extension in 2013, even allowing for the current 1.7% CPI, to ensure that the 58-cent tax rate is permanently returned to the taxpayers in 2014 and thereafter.
RSD205′s Board of Education and the administration have kept the promises they made last year to district taxpayers and should be commended. I trust that they will leave the Aggregate Extension base at $157.4M, including bonds and interest, adding only this year’s CPI and not revert to the 2011 Aggregate Extension base of $170M for 2013.