Thousands of 2016 property tax bills will increase significantly (Part II)

To summarize Friday’s column, Rockford Township has significantly increased many township property assessments by resetting the overrides of successful complaints to the Winnebago County Board of Review, which have occurred since the last quadrennial assessment in 2011. Consequently, thousands of parcels have been assessed considerably higher than they were last year, and coupled with another increase in the township tax rate, will result in significant property tax increases in 2016. The tax rate is usually not determined until March of the year following property assessments, after municipalities have determine their tax levy requirements and after assessment complaints have been evaluated – the tax cycle. The overall Rockford Township Equalized Assessed Valuation – EAV – decreased this year by an average of 3.5% based on a three year sales ratio– almost 10 times larger than the overall county EAV decrease of 0.39%. A total of 50,502 township parcel assessments were lower, 12,972 parcel assessment didn’t change from the previous year and 9356 parcel assessments were raised, many significantly If the Rockford township municipalities maintain their tax levy at the current levels, the 2016 tax rate will increase about 3.5% to offset the decrease in EAV. Therefore, the new rate is calculated to be last year’s rate of 14.9820 times 1.035 = $15.5064. So, the 2015 property assessments are not only being reset to a much higher value but also within a tax rate environment that has increased from $11.3239 per hundred dollars of assessed valuation in 2010 to a $15.5064 calculated tax rate for 2016 – an increase of 37%. My parcel assessment increased 24% this year – almost $30,000. My tax bill will increase from $4408.60 in 2015 to $6075.72 – an increase of 37.8% in a single year, even after subtracting exemptions! A friend of mine’s assessment increased from $87734 to $109491, an increase of 24.8%, and using the 2016 tax rate, his taxes will increase $3802 to $16,047.73 next year from $12,245.40 this year. The Fair Market Value of his property increased $65,271 dollars in one year! My friend’s annual property taxes are now 4.89% of his Fair Market Value and mine is 4.03%, some of the highest, if not the highest in the U.S. – try finding a higher one. Some property owners who live on National Avenue will see their assessment values increase by more than $100,000 this year. It’s the law, but a mill rate of 15.51% and taxes more than 4% of a property’s value in Rockford Township? The annual 4% tax on your property means that you will pay the full value of your property in taxes every 25 years. Property taxes in our area are excessive due to increases in the tax rate allowed each year by tax caps permitting Illinois municipalities to raise rates, without voter approval, to maintain, or even raise, their respective tax levies up to the rate of inflation. Fortunately, the 2015 assessments were not reset to their 2010 values, but the taxes are much higher than before this recession actually began, and the value of our homes were much higher in 2010 than they are today. For example, the property tax on my residence was $5688.34 in 2010 when the parcel was valued at $180,700. The parcel is now assessed at $150,562, but the taxes have...

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Thousands of 2015 property assessments have increased significantly (Part I)

If you filed a successful Real Estate Assessment Complaint Form in the last 4 years, and live in Rockford Township, chances are you will be shocked by your increased property assessment this year and the resultant increase in your property taxes next year. Quadrennial property assessments are calculated every four years on all properties in a county to determine the ad valorem taxes to be paid the following year, and township assessors are required, by law, to revalue all property within their jurisdiction. The overall Rockford Township Equalized Assessed Valuation – EAV – decreased this year by an average of 3.5% based on a three year average sales ratio. A total of 50,502 parcel assessments were lower, 12,972 parcel assessment didn’t change from the previous year and 9356 parcel assessments were raised, many significantly. It is not well known, but according to Illinois statute 35 ILCS 200/16-80, property owners who filed a property assessment complaint form and received a reduction from the Board of Review – BOR – on a particular parcel of property, that “override” of the calculated assessment must remain in effect until the next quadrennial assessment year, unless substantial cause is presented for reversal. Therefore, the Rockford Township assessor had the opportunity to “reset” BOR overrides in a single quadrennial assessment year, if the parcel values were found to be significantly less than the assessor’s 2015 calculated values. Many of the 9356 parcels that had substantial reductions in assessed values during the last four years will see a significant increase in their assessed value due to this “reset.” Reductions may also have been due to distress sales at foreclosure values, short sales, or the aforementioned BOR overrides since the last quadrennial assessment in 2011. The Rockford Township assessor, Ken Crowley and I both fall into the 9356 property assessment group, where assessments have increased by 15%, 25% or even more! This year my parcel’s assessment was reset an additional 24% from its current Fair Market Value of $121,277 to $150,522, almost $30,000 dollars in a single year. The Rockford Township assessor’s property Fair Market Value – FMV – assessment was reset from $165,168 to $194,893, another increase of almost $30,000 dollars! Assessments are usually based on a three year average sales ratio of FMV. However, real property assessments may also be valued uniformly or equitably as the General Assembly provided by law (Art.9, Sec 2, Illinois Constitution of 1970). An inequitable assessment is one that values one property at a higher level of assessment than the assessment of comparable properties, regardless of whether that comparable was sold or not, and/or had BOR overrides. There are currently a number of equitable complaint appeals pending before the Illinois Property Tax Review Board – PTAB, since the local BOR had rejected the complaints. For comparison, the equalization factor in Rockford Township has been reduced by a total of 21.68% over the past four years, without BOR overrides. If my parcel’s original assessment of $180,699, prior to the BOR override in 2011, was reduced by the four year 21.68% reduction in the equalization factor, my resulting 2015 FMV would be $141,525 not the $150,562 calculated with the “reset.” Comparable parcels that were used in my successful 2011 complaint are currently thousands less than my 2015 assessment, except the two that...

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Is it time to get rid of Tax Caps?

Property tax bills have arrived and it is obvious that the Property Tax Extension Limitation Law – PTELL – commonly known as the Property Tax Cap Law, is not working as intended. PTELL was supposed to protect property owners in non-home rule districts from huge tax increases when home values were increasing very rapidly by limiting taxing districts to the taxes levied the previous year plus inflation up to 5% and an additional amount for new construction. The law was not intended to hurt taxpayers by increasing property taxes, even as home values plummeted, by allowing the districts to raise their tax rates without referendum. Examination of this year’s property tax bills shows the tax rate increased almost one dollar per hundred of assessed valuation to $14.982 compared to last year’s rate of $14.0023, an increase of almost 7% in tax code 001. Tax code 001 includes the Rockford School District, the City of Rockford, Winnebago County, the Park District, RVC, the Rockford Library, Rockford Township, the airport, and numerous smaller municipalities. Therefore, unless the assessed value of your home minus exemptions, decreased by at least 7% last year, you will pay more in property taxes this year despite a decrease of 5.87% in the average home value in the Rockford area. Slightly more than 56% of area properties will pay higher taxes, with approximately 70% of the total properties changing plus or minus $100 dollars from last year’s tax bill. PTELL caps neither individual property tax bills nor individual property tax assessments. The amended law essentially establishes an aggregate tax levy, which allows taxes from one fund to be shifted and spent by other funds, creating a loophole most taxing districts are taking full advantage of – bypassing state statutory caps in limited funds, by collecting the total aggregate tax rate allowed by law through a fund that is not capped. School districts are using their Transportation Funds and other taxing districts have a General Fund that currently have no statutory limits. With the aggregate levy, it doesn’t matter whether the taxes collected in the Transportation Fund are used for school buses, drivers and fuel, or for district salaries and benefits, operation and maintenance or even placed in reserve funds! The Durand School District Transportation Fund increased this year to $0.7298 from $0.5254 last year and from $0.2670 the previous year, an increase of 273% in 3 years to maintain their tax levy with inflation as allowed by tax caps. The Rockford School District this year increased its Transportation Fund to $0.7732 from $0.4551 last year, an increase of 70% to raise the RSD205 property tax rate from $7.2301 to $7.7810, an increase of 7.6% to maintain their previous aggregate tax levy. This PTELL loophole has allowed taxing districts to raise our property taxes to almost 4% of the property’s Fair Market Value – one of the highest in the country! It begs the question – is it time to get rid of Tax Caps? Public Act 89-718, effective March 7, 1997 allows county boards of counties that are subject to the PTELL by referendum to give voters the opportunity to rescind PTELL using the same referendum process. If the voters reject PTELL at this referendum, taxing districts located entirely within the county will no longer be subject...

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Boone County Board destroys future credibility

If there was ever an action taken by an elected body that eliminated any lingering trust in elected official’s credibility, look no further than the Boone County Board majority. In order to aid the passage of a 1999 referendum for construction bonds to fund a $9.3 million dollar jail expansion, members of the Boone County Board and bond proponents promised voters, and added a clause in a 2011 ordinance, that pledged when the bonds were retired in 2018, the one-half cent sales tax would be repealed – a sunset clause. In March, 2015, the Boone County Board rescinded the 2018 sunset clause without any input from the taxpayers, allowing the board to continue to use the sales tax to pay off other public safety operations and capital expenditures after the bonds are retired. This action by the Boone County Board will place the credibility of all taxing bodies in jeopardy for future tax referendums with board guaranteed end dates. Many taxpayers will simply point their collective fingers toward the Boone County Board as the typical example that regardless of promises made, all taxes will be collected for an indeterminate period because elected officials can’t be trusted. The lame excuse given by the current board majority for rescinding the sunset clause was that “no one can promise and obligate a future board 20 years down the road.” If that’s the case, why not let the 2018 board make its own decision on the sales tax sunset clause with voter input? It seems obvious that the current county board is the one tying the hands of future boards. Current boards are obligated by previous board’s decisions all the time, whether the decisions are 20 year bonds, increases in staff salaries, benefits and other long term expenditures, which future boards must by law continue to implement. The contracts signed and payments made for the construction bond, which was passed almost two decades ago, obligated all the Boone County boards elected during that period, including the current board to 20 years of debt service. It is how the system works. Bob Walberg, Chairman of the Boone County Board recently wrote in a column stating that he believed, “the real reasons most people supported the referendum is because they saw the need for public safety as the ballot stated.” That’s conjecture, Bob, since your board just denied the Boone County taxpayers an opportunity to voice their preference to continue or eliminate the sales tax as other districts in the area have done for their constituents. Also, your comments concerning lower revenues and cuts by state government have affected all taxing districts in the area, not just Boone County. Thankfully other area boards, regardless of budget constraints, have honored their sunset clauses by asking for voter input, unlike the Boone County Board rescinding their sunset clause with little or no public awareness of their intentions, using a deft sleight of hand with the published meeting agenda. The Rockford School District and the City of Rockford have enhanced their trust and credibility, by asking their voters multiple times over the past decade to continue or rescind the various taxes for capital improvement or for operation and expenses with resoundingly successful outcomes each time after informing their voters what was to be done with the money. The...

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Governor, pass budget reforms before shifting funds or transferring local fund reserves

Chuck Sweeny writes in the Rockford Register Star, “With Illinois on the verge of running out of money to pay day care centers, court reporters and prison guards, Gov. Bruce Rauner said Thursday a solution can be found easily, by shifting money from the state’s hundreds of special funds into the General Fund.” Governor, isn’t skimming off special fund monies to support day care, court reporters, prison guards and other “essential” General Fund services the same excuse your predecessors, Rod Blagojevich and Pat Quinn used? Wasn’t this practice roundly criticized by Republicans? Also, it was this kind of inter-fund borrowing mentality that resulted in a severely underfunded pension program that has placed the state in such a precarious financial situation in the first place. If these special funds are so non-essential, as Illinois governors seem to believe, were these special funds set aside for such General Fund emergencies, and if so, why did the state begin the special funds in the first place? Besides, this technique of robbing Peter to pay Paul is at best a temporary solution. Without substantial cuts in the state’s General Fund or increasing state revenues, what will the strategy be for next year’s expenditures in these essential state areas when the special funds run out of money? Another strategy being considered by the governor is to increase the state’s revenue side of the equation by sharing only half the income tax previously shared with the cities and counties. Is this a new unfunded state mandate on the cities and counties; unfunded mandates, which the governor promised were to be reduced or eliminated? According to the article, our new governor’s view is that the local governments “have among them $18 billion in reserve … $18 billion is a lot of money” – a new source of state revenue apparently. The reason the locals have those reserves, governor, which you now view as a revenue source to be transferred to the state, is that many local government bodies have remained frugal, cutting expenditures to stay within their budgets, while your predecessors and the General Assembly were unwilling to do the same to balance their budget. The state kicked the can down the road by borrowing billions of dollars each year to cover their deficits. Local governments were forced to take on more and more of the state’s liabilities, yet still managed to balance their budgets and even managed to save some money for a rainy day. Also, you met with the Rockford mayor and discussed your reforms, which are intended to reduce local costs and may increase the chances of balancing local budgets with the state reforms you are considering. First, pass the reforms governor. Demonstrate that the General Assembly is willing to vote for your reforms, intended to make our local elected jobs easier and less costly, before transferring our local budget reserves to the state in the form of reduced state income tax...

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