Education Matters US

Last week I published the statements of Grant Towship Assessor, Walt Kubalanza explaining how the Assessor is not blame for the high taxes. This week, I have an excerpt from a letter to the editor claiming Mr. Kubalanza is not telling the truth.

Let’s explain this for Mr. Billis and everyone else to understand who the real culprit is in the high taxes.

Note: The following scenarios are based on a jurisdiction that has two identical homes each initially valued at $5,000.

Scenario 1 = The taxing body levies $500
    District EAV = $5,000 * 2 = $10,000
    Tax Rate = (500/10,000) * 100 = $5.00 per $100 EAV
    Tax Bill = (5000 * 5) / 100 = $250 for each home

Scenario 2 = The taxing body levies $550 (10% increase) while no change in assessment is made
    District EAV = $5,000 * 2 = $10,000
    Tax Rate = (550/10,000) * 100 = $5.50 per $100 EAV
    Tax Bill = (5000 * 5.5) / 100 = $275 for each home (10% levy increase resulted in a 10% tax bill increase)

Scenario 3 = The taxing body levies $550 (10% increase) while assessment increases by 10%
    District EAV = $5,500 * 2 = $11,000
    Tax Rate = (550/11,000) * 100 = $5.00 per $100 EAV
    Tax Bill = (5500 * 5) / 100 = $275 for each home (10% levy increase and a 10% assessment increase result in a 10% tax bill increase)

So which caused the increase, the levy increase of the assessment increase. See scenario 2 and scenario 4 for the answer that the levy is the real culprit not the assessment.

Scenario 4 = The taxing body levies $500 (0% increase) while assessment is increased 10%
    District EAV = $5,500 * 2 = $11,000
    Tax Rate = (500/11,000) * 100 = $4.55 per $100 EAV
    Tax Bill = (5500 * 4.55) / 100 = $250 for each home (0% levy increase and 10% in assessment leaves tax bill unchanged as scenario 1)

Why did this happen? Simple, the increase in the assessment lowered the tax rate which meant taxes remain the same. So, the levy increase causes the tax increase not the assessment.

Let’s look at one more example to again show everyone that the tax levies cause the increase, not the assessment.

Scenario 5 = The taxing body levies $517.50 (3.5% increase) while assessment is decreased 10%
    District EAV = $4,500 * 2 = $9,000
    Tax Rate = (517.5/9,000) * 100 = $5.75 per $100 EAV
    Tax Bill = (4500 * 5.75) / 100 = $258.75 for each home (3.5% levy increase and 10% assessment decrease still causes a tax increase)

This is a complex issue, but when you look at the numbers, it becomes very clear.

Source: The Township Assessors’ Guide by Steven W. Stanger, Deerfield, Illinois Assessor, pages 20-22, © 2007