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Understanding property tax cycle in Illinois

Schools districts, village setting 2019 levies that will determine 2020 property tax bills

 

December 5, 2019 | View PDF



The property tax is largest single tax in Illinois and is the major source of revenue for Community Consolidated Elementary District 181 and Hinsdale High School District 86. It also is a significant source of funding for the Village of Hinsdale, along with the Hinsdale Public Library, although the village has several other sources of revenue to support operations.

Taxing bodies are required each year to file a levy, or request for property tax revenue. Setting the levy actually is the fourth of six steps in the property tax cycle, which spans two years.

As the cycle begins, property is assigned a value that reflects its value as of Jan. 1 of that year. During the second year, tax bills are calculated and mailed and payments are distributed to local taxing districts.

Most of the information listed below is taken from The Illinois Property Tax System: A General Guide to the Local Property Tax Cycle, published by the Illinois Department of Revenue. An accompanying glossary provides definitions for several terms associated with the levy process.

Village of Hinsdale

2019 proposed tax levy*: $7.07 million

2018 tax extension*: $6.88 million

Percent increase: 2.86

New growth assumed for 2019: $18 million

2018 total EAV: $1.92 billion

2018 tax rate capped funds: .352 DuPage, .414 Cook

2018 tax rate all funds: .368 DuPage, .432 Cook

Hinsdale Public Library

2019 proposed tax levy**: $3.17 million

2018 tax extension**: $3.08 million

Percent increase: 2.86

New growth assumed for 2019: $18 million

2018 total EAV: $1.92 billion

2018 tax rate: .158 DuPage, .186 Cook

District 181

2019 proposed tax levy*: $64.4 million

2018 tax extension*: $62.6 million

Percent increase: 2.98

New growth assumed for 2019: $30 million

2018 total EAV: $2.74 billion

2018 tax rate capped funds: 2.2748

2018 tax rate all funds: 2.5833

District 86

2019 proposed tax levy*: $85.3 million

2018 tax extension*: $83 million

Percent increase: 2.8 percent

New growth assumed for 2019: $55 million

2018 total EAV: $5.85 billion

2018 tax rate capped funds: 1.42 (blended rate)

2018 tax rate all funds: 1.45 (blended rate)

Steps are part of taxing cycle in Illinois

1 Assessment

All property is appraised so values for property tax purposes can be determined. The chief county assessment officer (county assessor in Cook, township assessor in DuPage) ensures assessment levels are uniform and at the legal assessment level by applying a uniform percentage increase or decrease to all assessments in the jurisdiction, otherwise known as “equalizing” assessments.

By law, most property is assessed at 33 1/3 percent of market value. Cook County is the exception; it has 13 classes of property that are assessed at anywhere from 16 percent (residential) to 33 percent (commercial) of market value. Property is reassessed every four years in DuPage and every three years in Cook.

2 Review of assessment decisions

County boards of review determine whether local assessing officials have calculated assessed values correctly, equalize assessments within the county, assess any property that was omitted, decide if homestead exemptions should be granted and review non-homestead exemption applications.

Property owners and local taxing districts may appeal unfair assessments to their local county boards of review and, if dissatisfied with that decision, the State Property Tax Appeal Board or circuit court.

3 State equalization

The Illinois Department of Revenue equalizes assessments among counties and issues a state equalization factor for each county to bring the level of assessment to 33 1/3 percent of market value.

4 Levy

Taxing districts determine the amount of revenue they need to raise from property taxes, hold hearings if the levy increase is 5 percent or more and certify levies to the county clerk. Each taxing district must show a separate amount for each fund for which it levies. All levies must be filed with the county clerk by the last Tuesday in December, which is Dec. 30 this year.

5 Extension

The county clerk applies the state equalization factor, calculates the tax rate needed to produce the amount of revenues each taxing district may levy legally, apportions the levy among the properties in a taxing district according to their EAV so tax bills can be computed, abates taxes as directed by taxing districts and prepares books for the county collector. The term “extension” also refers to the amount of taxes actually billed.

6. Collection and distribution

The county collector prepares tax bills, receives payments from property owners, distributes taxes to the local government taxing districts that levied them and administers sales of liens on real estate parcels due to nonpayment of taxes.

Glossary

abatement: a local taxing district may instruct the county clerk to abate, or not collect, any portion of its taxes

assessed value: the value placed on a property by the county assessor for tax purposes and used as a basis for distribution of the tax burden

capped funds: generally speaking, a taxing district’s operating funds. The debt service fund is not included in the tax cap.

consumer price index: the CPI used for tax cap purposes is the national CPI for all urban consumers for all items as published by the U.S. Department of Labor Bureau of Labor Statistics. The CPI number that will be used in 2019 is 1.9 percent. The CPI increase since 2009 has ranged from a high of 3 percent to a low of .7 percent.

equalized assessed value (EAV): the assessed value multiplied by the state-certified equalization factor. The result is the value from which the tax rate is calculated after deducting homestead exemptions, if applicable. Tax bills are calculated by multiplying a home’s EAV by the tax rate.

extension: the actual dollar amount billed to property owners in a taxing district

levy: a taxing body’s annual request for a specific amount of property tax revenue to support operations and debt payments

net equalized assessed value: the equalized assessed valuation of any property minus any legal exemptions, such as the Homestead Exemption

new growth: new construction or annexed property in a taxing district. The tax cap law provides an allowance for new growth in addition to the CPI increase.

property tax: the single largest tax in Illinois. It is sometimes called an “ad valorem” tax, which means “according to value.”

tax base: the total equalized assessed valuation of the taxing district

tax cap: officially known as the Property Tax Extension Limitation Law, it is designed to limit increases in the property tax extensions for operating funds to 5 percent or the percentage increase in the previous year’s consumer price index, whichever is lower, plus an amount for new growth

tax rate: the county clerk calculates a rate by dividing the tax levy by the total net equalized assessed valuation for the district

 
 

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