Despite decreased housing values, tax bills, on average, should continue to rise again this year.
According to a McHenry County Clerk’s report, the total equalized assessed value in the county dropped from about $9.69 billion in 2010 to $8.82 billion in 2011, a drop of about 9 percent in one year. Since its peak of $10.49 billion in 2008, the county’s EAV has dropped about 15.9 percent.
While total home values have continued to drop throughout the county, that trend isn’t likely to lessen the average property tax bill. Instead of collecting fewer taxes, tax rates often rise to make up for falling home prices. Each public taxing body — such as a school district, municipality or a township — will request a tax levy, or a certain amount of money to operate. The county clerk’s office calculates tax rates to determine how much money is extended to the taxing body.
Shaughnessy Muldowney, tax extension supervisor for the McHenry County Clerk’s Office, said most taxing bodies levy more money than the previous year despite falling home prices. Unless a taxing district requests to levy less money, the county clerk is effectively forced to set a higher tax rate. If requested funding results in a calculated rate higher than the statutory limit, it is reduced to that limit.
Governments may receive 5 percent more than the previous year or the consumer price index, whichever is lower. This is known as the “tax cap.” Muldowney said the CPI, which estimates the rate of inflation, was certified at 3 percent for the 2012 tax cycle. It was 1.5 percent in 2011, 2.7 percent for 2010 and 0.1 percent for the 2009 tax cycle. Many of the taxing bodies have requested an increase higher than the CPI, meaning the tax cap is likely to come into play when taxes are extended by the county later this year.
Like many other local taxing bodies, the city of Woodstock has requested an increase to its tax rate. The council, however, has indicated it will meet to discuss a possible tax abatement in the spring, similar to what it did last year. The city actually collected less money in 2011 than the previous year after passing an abatement in 2012. The Woodstock Fire/Rescue District also held its tax extension steady, collecting the same amount in 2011 as it did in 2010. Most other local taxing bodies collected more.
“The City Council has been pretty clear … that we will do everything in our power to keep the tax extension [from increasing],” said Roscoe Stelford, deputy city manager.
The City Council is again planning to accept a property tax abatement ordinance to reduce the property taxes on Woodstock taxpayers once completed information about the levy and the city budget is available. Stelford said the City Council will be in a better position to determine what property tax reductions can be instituted at that time. Other taxing bodies would have the option to pass similar property tax abatements if they choose.
Stelford said the amount of change to one home’s EAV may be different from the next. He said people who see their homes’ EAV stay at or near the same level as the year prior will actually see an increase in property taxes since the homes would represent a larger piece of the pie, assuming the total EAV drops a higher percentage.
One or two taxing bodies holding tax extensions at or below the previous year’s extension doesn’t mean total tax bills will go down either. Stelford said the city accounts for only about 17 percent of the tax bill distribution. Other taxing bodies collect the remainder, meaning most or all taxing bodies would have to hold extensions close to previous years for tax bills to remain close to the current levels. As is the case with most tax bills in Illinois, Woodstock School District 200 accounts for the largest percentage of property tax collections.
In July 2012, the D-200 Board of Education approved an abatement of its 2006 school construction bonds, decreasing the amount the district needed to levy for the year.