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News
Homes values down, but tax bills still rise : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, IllinoisHomes values down, but tax bills still rise
| Tax rate increases offset declining assessments
| by Matt Schury
| 5/10/2012
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Take a deep breath when you open your property tax bill this year.
Most tax bills in Kendall County are going to go up while the values of homes continue to fall, county and township officials say.
The tax bill for 2011, that is due in two increments this June and September, will reflect the continued downturn in the housing market while the tax rate-the amount districts will get per $100 of assessed valuation went up, Andy Nicoletti, Kendall County's supervisor of assessments said.
"Overall, the assessment base went down, which of course means the rates went up," Nicoletti said.
As property values decrease, so does the total equalized assessed valuation (EAV) of the county, which can actually cause tax rates to increase. When EAV goes down, the tax base falls, Nicoletti explains, and that means a higher tax bill in most cases.
"We try to explain it as easily as possible I know it can be a very difficult formula to understand. I can see their point, my home was worth X amount of dollars less than what it was but my taxes are the same or maybe they went up a couple hundred dollars," he said.
State statute dictates that home sales data used for assessments be based on three-year averages. In the case of this year's tax bill, those years include 2008, 2009 and 2010, three years when property values were at an all time low.
Nicoletti explains that the three-year average is taken to avoid large dramatic swings in home values each year.
"Even if this year-say '12 started to climb back up, when you are looking at your 2013 year you've still got '10 and '11 which were bad years, Nicoletti said "You're going to need probably three good strong years before you're going to really see stuff starting to go the other way," he said.
"I wish they would change that because, if they did it based on one year, then at least when the people look at the assessment they'll realize this is closer to what it truly is today," Dave Maher, Oswego Township Assessor, says.
He adds that home assessments will continue to decline for at least the next two years.
"Assessments will continue to decline, there is no question about that. They are going to decline this year and I can already tell you I know that they are going to decline in 2013 too," he said. "Assessments will continue to drop yearly until we reach the bottom, whatever that is."
When asked about 2014, Maher said it's still too early to tell but "probably" they will continue to decline.
If you live in Oswego Township and are part of the Oswego School District, Maher says the news is even worse for you.
The school district sold bonds a few years ago to pay for infrastructure work, Maher said, and they are now due.
"The tax bills I've looked up are all going up and most of them are going to be up until the bond money that has to be paid back levels off but I don't know when that is going to be," he said.
The Property Tax Extension Limitation Law (PTELL) limits the amount taxing districts receive. Each year taxing districts can get the same amount of money they received the previous year, plus the rate of inflation or five percent, whichever is lower, Nicoletti explained. The rate of inflation last year was 1.5 percent.
However even if those taxing districts ask for the same amount of money they received last year, the tax rate would go up because the EAVs are dropping.
Even if the districts are asking for the same amount of money, the value of homes is shrinking causing the amount of money coming into these districts to shrink. In order to counteract that, the tax rate increases, Maher says.
"The tax rates will continue to increase to offset the assessment drop. Assessment going down will not lower taxes," Maher says. "Taxes will not go down. They just won't because if the taxing bodies still need the same money to run their government, the rate is going to adjust to accommodate that."
The main reason for a decrease in home values has been the large number of foreclosures and short sales on the market. While both Nicoletti and Maher say they don't consider foreclosures when doing their sales ratio studies, there is still an indirect effect on transactions which in the end affects sales and, in turn, assessments.
"Until the foreclosures and short sales are out of the market-and there are still more coming-that's going to drag down everything else," Maher said.
Seniors who choose to freeze their home's assessment will continue to be hit hard by the decline in assessment.
The senior assessment freeze program offered by the state is meant to keep senior's home values level to stabilize their tax bills. However, Maher says the program doesn't work so well in a depreciating market when tax rates are increasing.
"It only helps people in an appreciating market. So a lot of people are loosing any freeze they have and they end up paying the same as anybody else," he said. "That whole law needs to be changed. In an appreciating market, it was good."
Nicoletti added that there is some confusion about how the home value freeze program affects seniors' taxes.
"We get a lot of calls from seniors because if they are on a senior freeze they think it means that it freezes their taxes. But it's freezing the assessment so of course they are the ones who are going to get hit pretty hard again this year because of the increase in the rates," he said.
Nicoletti agrees with Maher that there is little seniors can do about this other than to push their state representatives to change the program.
Maher says he expects the phone in his office to ring as well in the next few weeks with people who are perplexed and upset with their tax bills. Maher tries to explain the process to people as best he can and how the tax bill is calculated.
"As far as the tone of people, yeah they can be pretty upset when all of a sudden you're an individual who's got to come up with $600 a month and you don't have it," he said.
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