Email Subscription Explanation of Expected Tax Increase
2009 Property Tax Levy
This explanation pertains to the 2009 property tax levy, billed and collected in 2010.
The Champaign City Council has tentatively decided to keep the City’s tax rate the same as 2008 (payable this year), which was 1.2942 per $100 of taxable property. Finance staff estimates that the taxable value of property in Champaign will increase by 3.48% over last year. Therefore, the taxes collected by the City would increase by 3.48% over last year. Staff also expects that 2.9% of this increase will come from annexations, new construction, and additions to existing buildings, so only 0.58% will come from increases in the value of existing properties.
For a single-family home of average value ($150,000) the increase of 0.58% means that property taxes paid to the City would go up by $3.75. This reflects taxes paid to the City alone, which represents about 18% of the property tax bill. The other 82% of the tax bill is paid to the Unit 4 School District, Champaign County, Champaign Park District, and other units of local government.
Many people ask why the notice in the News-Gazette states that the City’s total property taxes will go up by 7.31%. The reason is that in Illinois, local governments do not know the value of taxable property when the property tax levy is adopted. While staff believes that the value of taxable property will increase by 3.48%, it could be more or less. If it is greater, most of the increase would likely come from annexations, new construction, and additions to existing buildings, not from increases in the value of existing properties. Additional taxable property adds to the demand for City services, resulting in higher costs. Therefore, the City wants to obtain the full extent of property taxes from those new properties so that we don’t diminish funding to serve existing properties.
Since the City does not know the taxable value of property when it levies taxes, the City levies an amount greater than the expected 3.48%. In any event, the City makes sure that the 2009 property tax rate will not increase from the 2008 rate of 1.2942 per $100 of taxable property. (In the tax levy ordinance, Council authorizes and directs staff to “abate” (reduce) the tax levy if it would result in a rate above 1.2942. Staff can do this in the spring of 2010, when the actual taxable value of property is available.)
Finally, people have asked why the News-Gazette notice states that total City property tax levy for 2009 will be $25,602,982.55, an increase of much more than 7.31%. The reason is that state law requires the City to include amounts that the City could levy for debt service, but did not levy last year and does not plan to levy this year. (In fact, the City has not adopted a debt service levy for many years.) Therefore, the debt service amount is not included when calculating the 7.31%.
The City understands this information can be confusing. Unfortunately, State law requires the City to publish the notice exactly as written without adding any explanation of the figures.