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A guide to understanding 2013 proposed tax levies in Lemont school districts

Published: Tuesday, Nov. 26, 2013 2:15 a.m. CDT

LEMONT – Lemont-Bromberek Combined School District 113A and Lemont High School District 210 will hold public hearings during December on their proposed 2013 property tax levies.

District 113A’s hearing will be held during its Dec. 18 Board of Education meeting for a proposed eight percent levy increase. District 210’s hearing is scheduled for the Dec. 16 Board of Education meeting for a proposed nine percent increase.

The public hearings are required by the state’s Truth in Taxation law whenever a levy is increased by five percent or more.

Key details about the tax levies include:

• The amount the school districts can increase their tax levies on existing properties is capped at 1.7 percent.

This is the amount by which the Consumer Price Index increased during 2013.

Under the Property Tax Extension Limitation Law (PTELL), taxing bodies cannot increase the 2013 tax levy from the previous year by more than the CPI or five percent, whichever is lower.

Because the CPI last year was three percent, the school districts expect their tax levies to increase less than the previous year.

• What the school districts ask for in their proposed levies are more than they expect to receive.

Taxing bodies always propose a levy that is higher than the limit, even though they know the county clerk will lower the levy amount.

This practice, known as a balloon levy, accounts for tax revenue from new properties, which are not covered under the PTELL laws their first year on the tax roll.

Taxing bodies are allowed to tax new properties at their full assessed values, which they do not learn until after they are required to turn in their proposed levy to the county clerk.

The amount the balloon levy goes over the tax cap is how much the districts think they need to request to safely capture all the tax revenue from the new properties.

District 210 spokesman Tony Hamilton said that if the levy is not high enough to capture all the new properties, the district will forever lose access to that revenue.

• The Equalized Assessed Value (EAV) of properties is expected to go down, which could increase tax rates. But an increased tax rate does not always mean an increased tax bill.

A decrease in the EAV also decreases the tax base from which to draw the tax levy.

Because the levy is a set amount that must be collected, the tax rate must go up to compensate for when the tax base goes down.

However, District 210 business manager Jeff Eagan said that whether property owners pay more taxes depends on how much their assessed value has decreased.

Eagan said he expects the EAV to drop for the entire district. The owners whose property values decreased the least will see the largest increase in taxes.

• It is in a taxing bodies’ best interest to capture as much tax money as it can for multiple reasons.

Eagan said some school boards have thought of levying less than the maximum, but there are several reasons it would be a bad practice.

Hamilton said the districts would be doing taxpayers a disservice if they did not capture the full amount of tax revenue from the new properties. The new properties would always be taxed at too low of a rate, which would shift the burden on other taxpayers.

Eagan also said credit rating agencies follow how much taxes districts collect.

If a district does not try to bring in a maximum amount of revenue, it could negatively affect its credit rating.

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