Tax Levy Abatement Explained

District 6 McHenry County Board candidate Orville Brettman sent out a message on a hard to comprehend portion of the property tax process.

He targeted the concept of abatement.

When tax districts like McHenry County say they are cutting next year’s tax bill, they don’t tell people whether it is a one-time affair or a permanent tax cut.

If it is a one-time tax cut, it’s called an abatement.

That means the year after the cut, the tax levy (amount we are asked to pay) can jump right back up to where it was before.

The McHenry County Board did that for the tax bills we paid last year.

The year before, led by Mike Walkup, the Valley Hi Nursing Home tax was abated.

The next year, however, fourteen of the all-Republican County Board made sure every dime possible was collected.

[See article with who voted how and lots of background links here.]

Here is Brettman’s take:

Orv Brettman’s explanation of why tax abatements are not permanent property tax cuts.


Tax Levy Abatement Explained — 14 Comments

  1. “Slight of Hand” business model. 19% error rate on assessments is outrageous. 5-10% reduction in assessments is a slap in the face of every homeowner and business in McHenry County. This has got to stop.

  2. Much a do about nothing. Abatement is a win for property owners and protects taxing entity in the future. Our laws penalize a taxing entity that cuts their levy (what they are asking from property owners) and they can never make up that loss should something arise in the future (Cite Avon Township and Yingling Tax Cut having devasting affects on the budget and ability to offer services).
    As citizens we have to engage taxing entities to ensure they are budgeting appropriately. Because so many are dis=engaged, taxing entities know no one is watching and tax to the max. Finally an entity sees what the cost of business is and decides to give back excess without impacting the future.

  3. The real problem is that the property tax is over used instead of other taxing options which are more keyed to an individual’s income and/or spending habits.

    The current Senior tax deduction is a pitiful token.

    If seniors were given a much greater, say 50%, property tax reduction, and governments were forced to rely on other taxes, then at least the taxes would fall harder on those with more income and/or who are spending more, especially on cigarettes and liquor, or driving gas guzzlers.

    School districts, which are responsible for about 70% of the tax bill, would need some other sources of revenue to keep afloat.

    All of this requires action in Springfield, not Woodstock.

    Since Chairman Franks has recently demonstrated that he can get something done in the General Assembly if he really wants to, (HR 171), maybe he could work on this.

  4. As Cal identified, the problem with the abatement strategy is that once a taxing body commits to that strategy, your taxpayers take a hit once you decide to come off that strategy. The County taxpayers ate a tax increase of over 4% during 2017.

    D155 just decided to implement the abatement strategy for this upcoming levy by abating $1.2 million of the debt service levy. Since the BLS just released December 2017 CPI results of 2.1%, we now know what next year’s PTELL cap will be.
    Given that the district just justified taking the max increase on their operating levy in their November meeting based on a continuing escalation of their operating costs (particulary their labor costs), and the need to fund $48.8 million in capital expenditures, I don’t see how the district can continue to burn off fund balance to sustain the abatement strategy.
    Based on the new CPI numbers just published, if D155 discontinues the abatement strategy next year, we are looking at roughly a 3.7% tax increase for the subsequent year.

    As to their escalating labor costs mentioned above, I would like to note that D155 just passed on their second raise of the year to teachers on the salary table about 2 weeks ago. With double raises, depending on the Step and Lane, some teachers will see a double digit salary increase this year.

  5. DMAC57, I would suggest that permanent property tax cuts do not hobble governments. First, I know of no government that couldn’t cut costs by 10% without anyone noticing the difference in outcomes. Second, governments that really feel the loss can always make their case to the voters. In other words, the ability to raise taxes hasn’t been lost, merely put back in the voters’ hands.

  6. Scott – you’ve got to be kidding me… double digit increases? When are we going to throw in the towel and just go broke? This is insane. I can’t wait to convince my wife to move out of this State. It would be amazing to get this house sold before the crash.

  7. Gary, I’m sorry but its true.

    The relevant language from the union contract states:

    “For the 2017-18 school year those teachers eligible for step movement shall advance one vertical step and shall be granted lane movement. For the second semester of the 2017-2018 school year, those teachers eligible for step movement shall advance one vertical step. Teachers not eligible to move a step and lane are eligible for a one-time, $1,500 longevity bonus.”

    The D155 payroll group spent the holiday break updating payroll records to implement the second round of increases.

  8. Many of the taxing districts in Illinois, and most in McHenry County, have accumulated unlawful reserves, more than 1 year expenses. The best example is Valley Hi nursing home with $40M in reserves. These amounts are attacked by those that pay their taxes under protest resulting in large refunds. It is very beneficial to commercial tax payers.

  9. Steve Wilson. I agree with you! Voters are the key but remember 90% sit home on these type of election. A local government I was closely associated with zeroed out all line on the budget and then re-built dollar by dollar. What an eye opener and way to realize to the real cost of ding business. Much saving were had.

  10. If people really want to do something about local property taxes, they need to organize to get taxpayers who don’t have kids in school st the moment to come out and vote in the Consolidated elections in April of odd numbered years. If you aim at the wrong target you won’t hit anything.

  11. Shouldn’t he have used the Admin Building, instead of the courthouse on his photo shopped cockroach pic?

  12. Swampbug is right. That’s why I’m quitting this state asap.

  13. DMAC 57, I’m impressed. Are you interested in running again?

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