Center Cass District 66 This is a public explanation of the levy - - PowerPoint PPT Presentation

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

Local (Taxes) $11,210,710 84% Local (Other) $1,106,419 8% State $582,941 4% Federal $494,324 4%

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%

$364,236,592 $387,721,338 $425,911,669 $460,020,509 $495,243,849 $539,685,094 $569,419,951 $567,087,975 $535,563,230 $516,539,010 $481,611,894 $451,167,824 $454,396,233 $459,800,623 $493,742,272

$0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

District 66 Historical Equalized Assessed Value (EAV)

District 66 Historical Tax Rates

Total Tax Rate vs. Operating Tax Rate

Note: In 2014 bond series 2007 & 2010 were retired ($992,884)

$2.21 $2.15 $2.02 $1.95 $1.94 $1.85 $1.84 $1.86 $2.03 $2.12 $2.35 $2.55 $2.37 $2.38 $2.27 $2.08 $2.02 $1.90 $1.83 $1.76 $1.68 $1.67 $1.68 $1.83 $1.93 $2.14 $2.33 $2.37 $2.38 $2.27 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

District 66 Total Tax Dollars

Total Tax Extension vs. Operating Tax Extension

Note: In 2014 bond series 2007 & 2010 were retired ($992,884)

$8,061,648 $8,348,804 $8,614,064 $8,968,100 $9,586,435 $9,986,872 $10,455,690 $10,546,135 $10,848,904 $10,967,156 $11,301,505 $11,523,729 $10,775,552 $10,948,313 $11,207,456 $7,570,657 $7,842,052 $8,088,915 $8,416,995 $8,739,073 $9,077,503 $9,489,954 $9,525,377 $9,815,267 $9,985,215 $10,298,307 $10,499,578 $10,775,552 $10,948,313 $11,207,456 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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.

3.4% 2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 1.5% 0.8% 0.7% 2.1%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

Historical CPI-U

10 yr. ave. = 1.8% 5 yr. ave. = 1.4%

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

$1,155,900 $620,850 $1,107,368 $4,995,880 $3,627,710 $8,033,070 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 2011 2012 2013 2014 2015 2016 2017*

New Growth

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

• wners 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
• verall 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.

Next Steps

• Board approval of a Tentative Levy at the November

14, 2017 Board meeting.

• Board approval of a Final Levy at the November 14,

2017 Board meeting.

Additional Resources

• DuPage County Supervisor of Assessments: www.dupageco.org/soa/
• FAQ about tax levies and assessments:

www.willcountysoa.com/Content/Forms/Decoding_Your_Tax_Bill.pdf

• Taking the Mystery Out of Illinois School Finance:

http://cnx.org/content/m19004/latest/?collection=col10606/1.10

Credits

Many of the examples and explanations in this presentation were taken from the following sources:

• Taking the Mystery Out of Illinois School Finance, by

Thomas Kersten, Roosevelt Univeristy, 4th Edition

• Essentials of Illinois School Finance: A Guide to Techniques,

Issues, and Resources, by James B. Fritts. 5th Edition.

Questions