2017 Tax Levy Center Cass District 66 This is a public explanation of the levy process and was presented to the Board of Education on Nov. 14, 2017 Tim Arnold, Ph.D. Superintendent
SB 851 • SB 851 seeks to freeze property taxes beginning with the 2017 tax bill. If passed, it would reduce FY18 budgeted revenues by approximately $110,000 • SB 851 would result in a loss of approximately $225,000 in the first year, and then compound after that. • SB 815 was pushed through the General Assembly in a relatively short amount of time during the fall veto session • SB 851 is expected to be considered in the IL Senate in January/February 2018
Sources of Revenue FY 2017 Federal State $494,324 $582,941 4% 4% Local (Other) $1,106,419 8% Local (Taxes) $11,210,710 84%
Tax Levy Process 1. Determine projected expenditures for each fund 2. Board adopts a Tentative Levy (no less that 20 days prior to final adoption) 3. Levy Hearing (only if current year’s levy is 5% more than prior year’s extension 4. Board Approves Levy 5. Prior to the last Tuesday in December - Certificate of Levy filed 6. March – Final rates and allocations 7. June 1, Sept. 1, and Sept. 15 - Taxes received by district
Key Terms • Tax year – the calendar year in which property is assessed and the levy is made. Taxes are billed, collected, and distributed in the following year. • Equalized Assessed Valuation (EAV) – a property’s valuation after county and state equalization is applied
Key Terms • Consumer Price Index - Urban(CPI-U) program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. • Tax base – the total EAV of a school district • Tax rate – the amount of property taxes extended in the form of a % of EAV (e.g. A rate of 2.50% or .0250 computes to a tax bill of $2.50 per $100 of EAV
2016 Tax Year Actuals • Tax year – the calendar year in which property is assessed and the levy is made. 2016 • Tax base – the total EAV of a school district $493,742,272 • Tax rate – the amount of property taxes extended in the form of a % of EAV 2016 = 2.27%
District 66 Historical Equalized Assessed Value (EAV) $600,000,000 $569,419,951 $567,087,975 $539,685,094 $500,000,000 $535,563,230 $516,539,010 $495,243,849 $493,742,272 $481,611,894 $460,020,509 $459,800,623 $454,396,233 $451,167,824 $400,000,000 $425,911,669 $387,721,338 $364,236,592 $300,000,000 $200,000,000 $100,000,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
District 66 Historical Tax Rates Total Tax Rate vs. Operating Tax Rate $3.00 $2.55 $2.38 $2.37 $2.35 $2.27 $2.21 $2.50 $2.15 $2.12 $2.03 $2.02 $1.95 $1.94 $2.38 $2.37 $1.86 $2.33 $1.85 $1.84 $2.27 $2.00 $2.14 $2.08 $2.02 $1.93 $1.90 $1.83 $1.83 $1.76 $1.68 $1.68 $1.67 $1.50 $1.00 $0.50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: In 2014 bond series 2007 & 2010 were retired ($992,884)
$10,000,000 $12,000,000 $14,000,000 $2,000,000 $4,000,000 $6,000,000 $8,000,000 Note: In 2014 bond series 2007 & 2010 were retired ($992,884) $- 2002 $7,570,657 $8,061,648 Total Tax Extension vs. Operating Tax Extension 2003 $7,842,052 $8,348,804 2004 $8,088,915 $8,614,064 District 66 Total Tax Dollars 2005 $8,416,995 $8,968,100 2006 $8,739,073 $9,586,435 2007 $9,077,503 $9,986,872 2008 $9,489,954 $10,455,690 2009 $9,525,377 $10,546,135 2010 $9,815,267 $10,848,904 2011 $9,985,215 $10,967,156 2012 $10,298,307 $11,301,505 2013 $10,499,578 $11,523,729 2014 $10,775,552 $10,775,552 2015 $10,948,313 $10,948,313 2016 $11,207,456 $11,207,456 2017
Determining an Individual Property Owner’s EAV A property’s EAV is determined by taking the market value and dividing by 3. Example: If a home has a market value of $330,000, then the EAV would be $110,000 ($330,000/3 = $110,000).
Property Tax Formula (Individual Property Owner’s EAV divided by 100) X (Total Tax Rate) = Total Property Tax Bill Example - A home has an EAV of $110,000 (Market value of $330,000) and the total rate of all taxing bodies is $6.00 Step 1: Divide the EAV by 100 ($110,000/100 = $1,100) Step 2: Multiply the result by the tax rate ($1,100 X $6.00 = $6,600) Total Tax Bill = $6,600
Property Tax Extension Limitation Law (PTELL) • 1991 -PTELL (a.k.a. tax caps) implemented in collar counties • 2010 - Just over ½ of all school districts are currently under tax caps – enrolling ¾ of all Illinois students • Limits the increase in total extensions (excluding bond & interest) to the lesser of 5% or CPI.
Historical CPI-U 10 yr. ave. = 1.8% 5 yr. ave. = 1.4% 4.5% 4.1% 4.0% 3.4% 3.5% 3.0% 3.0% 2.7% 2.5% 2.5% 2.1% 1.7% 2.0% 1.5% 1.5% 1.5% 1.0% 0.8% 0.7% 0.5% 0.1% 0.0%
New Growth • Property added to the tax base ( new growth ) is above and beyond the CPI limitation • New growth can be from annexations, expired TIFs, home additions, new residential and commercial construction, and expirations of 4 year exemptions. • Important – based on their needs, school districts must levy for new growth in year one or forever lose that revenue
New Growth $9,000,000 $8,000,000 $8,033,070 $7,000,000 $6,000,000 $5,000,000 $4,995,880 $4,000,000 $3,627,710 $3,000,000 $2,000,000 $1,155,900 $1,107,368 $1,000,000 $620,850 $- 2011 2012 2013 2014 2015 2016 2017*
New Growth Residential • Timbers Edge Completed • Farmingdale Village/Smoter subdivision (107 homes)- moving forward (just east of the Vicente Subdivision along I55 in Woodridge) • Rolling Knolls “Manning Rd.” subdivision (26 homes) – located behind Wal Mart (off of Manning Rd. in Darien) is in the process of being developed • Fox Wood Estates subdivision (Dunham Rd.) (17 homes) – in development Commercial • Additional commercial development along Lemont Rd.
Calculating New Growth Tax Extension = $10,000,000 CPI the following year is 2.1% Max. extension for the coming year = $10,210,000 However, if new growth comes from a newly built hotel that generates an additional $200,000 in additional property taxes, then that amount is added to the max. extension for a total of $10,410,000.
Sample Extension with New Growth 2015 Tax Extension $10,000,000 2014 CPI (0.8%) X 1.008 Maximum Collectible Taxes $10,080,000 Hotel Property Tax Revenue + $200,000 New Extension Base $10,280,000
Big Ideas for New Growth • If revenue from new growth isn’t captured in the first year it comes onto the tax roles, it is lost forever. • This is why districts need to levy based on all projected needs, in order to fully fund those needs, even if the amount is greater than CPI. • Levying beyond the CPI doesn’t provide any additional funds other than what is owed by the new property owners and ensures all pay their fair share. • Due to timing of the cycle, new growth is a “guess” when the levy is filed each December.
PTELL Clarifications • PTELL does not “cap” individual property owners’ tax bills • PTELL does “cap” the extension for the taxing body. • PTELL does slow the rate of growth The next slide provides some examples of how different homeowners could be impacted.
Sample Proportion of EAV Calculation Total District EAV $500,000,000 Homeowner’s EAV $100,000 Homeowner’s EAV Portion of Total EAV 0.0002 Total School District Property Tax Revenue $10,000,000 Homeowner’s Property Tax Bill $2,000 Tax Calculation $10,000,000 X 0.0002 = $2,000
Sample Proportion of EAV with Homeowner Addition Total District EAV $500,000,000 Homeowner’s EAV $115,000 Homeowner’s EAV Portion of Total EAV 0.00023 Total School District Property Tax Revenue $10,000,000 Homeowner’s Property Tax Bill $2,300 Tax Calculation $10,000,000 X 0.00023 = $2,300
Effect of Lower Overall EAV Total District EAV $480,000,000 Homeowner’s EAV $100,000 Homeowner’s EAV Portion of Total EAV 0.0002083 Total School District Property Tax Revenue $10,000,000 Homeowner’s Property Tax Bill $2,083 Tax Calculation $10,000,000 X 0.0002083 = $2,083
Effect of Higher Overall EAV Total District EAV $520,000,000 Homeowner’s EAV $100,000 Homeowner’s EAV Portion of Total EAV 0.0001923 Total School District Property Tax Revenue $10,000,000 Homeowner’s Property Tax Bill $1,923 Tax Calculation $10,000,000 X 0.0001923 = $1,923
Assumptions for the 2015 Levy • The Downers Grove tax assessor predicts a 4.78% increase in overall EAV. The actual amount will not be known until the spring. • Three DuPage Co. tax assessors have expressed concerns over the rapid rebound of home prices and the subsequent potential for another drop. • District 66 is projecting $8,800,000 in new growth. • New growth is typically difficult to project due to the timing of when the assessor begins taxing new construction at a higher rate.
2017 Tentative Levy • The Superintendent recommends the Board of Education include a 4.91% increase to the base of the 2016 levy to ensure all new construction is captured in order to fully fund the district needs. • A 4.91% increase to the base will protect the district in the event of unforeseen variables in an increase/decrease in EAV and new growth.
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