There is widespread misunderstanding about the tax process. Today, we won’t look at the assessment part.
Instead we will examine what tax districts do to pry more money out of our pockets.
News stories talk about levies this time of year.
They are important, but not nearly as important as they are made out to be.
What tax districts almost uniformly do is levy, that is request in an ordinance, not what they expect to get, but an amount that is high enough to get the maximum amount of money allowed under the Property Tax Cap law (called PTELL by those who consider themselves in the know).
So, how does a local government figure out how to maximize its tax take from you.
Let’s use McHenry County government as an example.
The levy being proposed for next year is $78,809,995.
Last year the levy was $77,807,910.
So the levy, that is the request for money is up 1.3%.
Sounds modest, doesn’t it?
It’s even less than the increase in the CPI, which you can see in the Illinois Revenue Department table above.
The increase in the Consumer Price Index was 1.5%.
The amount the County Clerk requests the County Treasurer to collect is called the “extension.”
This requested amount takes into account the Tax Cap’s limits, which are applied to the amount collected the year before.
If deflation continues, eventually statutory tax rate limits will prevent tax districts from increasing their extension without a tax hike referendum
For McHenry County government, the extension this year was $76,847,205.11. Almost all of it will be collected.
Do the division and you will find that the levy being considered by the County Board this year is 2.55% higher than last year’s extension.
That means county government will be able to collect the maximum amount allowed by law.
So, one can expect one’s county tax bill to increase the maximum allowed by the Tax Cap, 1.5%.
Don’t let any of the County Board members get away with telling you that they are lowering taxes.
It’s worth mentioned that if State Rep. Jack Franks’ Tax Cap amendment bill is passed, the county would receive the same amount it got (not 100% is paid, so the word “got” is a tiny bit of an exaggeration) this year.
The County Board could, of course, take the lead and cut its budgeted levy by $1,963,000–about 2.5%–and local property owners would see about the same tax bill than last year.
Someone could make a motion by substitution to the motion to approve the levy as presented to make the levy the same as last year–$76,847,205, rounding to the nearest dollar.
Let the County Board vote on that and see who votes “Yes” and who votes “No.”
Then, make the budget fit the levy.
When I was a baby budget examiner in the U.S. Bureau of the Budget, one of my hardest lessons involved making the Small Business Administration Budget fit the bottom line dictated by Sam Lawrence, the Section Chief.
He was a bright guy who, upon considering hiring me off the Management Intern list, asked by to-be Senior Budget Examiner Roger Adkins, if he could work with a Goldwater Republican. No matter that my mother and I had supported Scranton in 1964. It was my father who supported AU H20. (That was his bumper sticker.) Roger said he could work with anyone.
The SBA budget didn’t have a lot of lines. I tried to figure out what was needed in each of them and for at least two times I exceeded the bottom line laid out by Mr. Lawrence.
The third time he said, “You don’t understand. I don’t care what those numbers are, but they must add up to this bottom line.”
All of a sudden I got it.
And so can the Finance Committee, if the County Board dictates a lower bottom line.
= = = = =
I have noted previously, that the two County Board Democrats have voted against raising the salaries of McHenry County officials. If they added a second financial issue to their bag of arrows, they would be able to make the case that local Republicans are the “big spenders.”
That, of course, would fight with the Democrats’ state and national images, but it might make for an interesting campaign.