An increasing tax rate doesn’t always increase taxes

Richard Thomas’ “Harlem heritage worth fighting for,” reveals a common lack of understanding regarding the effects of property tax rates on the actual property tax being levied.

Mr. Thomas erroneously equates an increase in the tax rate in the Harlem School District with a directly proportional increase in taxes.


From 2012 to 2013, the Harlem School District had a 10-percent increase in its tax rate. And that 2013 tax rate is about 7 percent higher than Rockford’s school rate. That 10-percent Harlem increase translates into a $190 increase on a $100,000 home. Where’d that money go?

First, it takes two components to change the property tax levy and those two are the tax rate multiplied by the property’s assessed value.

Since the values of our property have been decreasing during the last four years, a portion of the tax rate increase is needed to simply retain the taxing district’s previous year’s levy.

For example, if property values drop 5.1% as they did in the Harlem district for the 2013 taxable year, the tax rate must be increased by approximately 5.4% just to restore the district’s tax levy to the previous year’s amount.

Under the PTELL Tax Cap law, taxing districts are also allowed to include any Consumer Price Index increase from the previous year without voter approval.

However, this year RSD205 increased its tax rate by about 13 cents, did not include CPI and the district’s tax levy decreased by over $13M dollars. The savings remained with the taxpayers, honoring the sunset clause in the Kids Win referendum approved five years ago.

Also, when comparing Harlem SD122 with RSD205, the taxes collected by the school districts are based on their respective size. According to the 2012 ISBE Report Cards, RSD205 is approximately four times the size of Harlem in Equalized Assessed Valuation – $2.93B compared to $812.4M, student population of 27,000 compared to 7200 and property taxes collected – $184M to $45M.

Harlem’s SD’s current tax rate was $7.1627 compared to last year’s $6.4578, an increase of 70.5 cents or 10.91%. RSD205’s tax rate increased from 6.5595 to 6.6884, but the tax levy decreased.

Therefore, what relevance does the fact that Harlem’s tax rate is 7% higher than Rockford’s school district have to do with the taxes paid, Mr. Thomas? Any comparison of the tax rates between the Harlem and Rockford school districts provides no meaningful data.

Mr. Thomas then calculated that the property taxes on a $100,000 home would have increased $190 and then demanded to know, “Where’d that money go?”

Since the tax levy is based on the Equalized Assessed Value, which in Harlem decreased 5.1% this past year, a $100,000 property in 2012 was assessed and taxed at $94,900 in 2013.

That’s where 5.4% of the money went – into thin air – because at this point in the process there has been no tax levy increase for the Harlem district. Harlem, unlike the Rockford school district, then added the 3% CPI to their tax cap calculation.

Calculating the taxes paid per hundred dollars of assessed valuation, which has decreased by 5.1%, with the typical homeowner’s exemption of $6000, results in a tax increase of around $70 dollars, not $190.

Some lower priced properties on Renrose Avenue in Loves Park actually paid a few dollars less in taxes than they did the previous year, even though the tax rate increased by over 10.9%, further proving that a tax rate increase does not always result in an increase in taxes.

Now, here’s where the rest of the money went, Mr. Thomas.

Considering the new property added within the district boundaries during the year, plus the addition of last year’s 3% CPI increase, Harlem did collect $1.6M more than 2012 – $45.8M versus $44.2M.

Of the corresponding 70.5 cent increase in tax rate, 11.5 cents went into bonds to pay off debt, 7.5 cents into operation, maintenance and tort funds, 1 cent into transportation, with the remaining 50 cents or 71% of the total, going into the education and special education funds, which primarily pays for salaries, pensions, medical and other benefits for the district’s employees.

I also have a dream, Mr. Thomas, that people would check their facts before they mislead others who need correct information to make informed decisions concerning their property taxes.