The Examiner U-46 News Feed
U-46 tax levy proposal presented to board
By Seth Hancock
The School District U-46 administration is seeking a 1.89 percent total increase in its property tax levy but a 1.39 percent increase is the expectation as the proposal was presented to the Board of Education on Monday, Nov. 2.
The district also plans to use an abatement process which officials have said would keep rates flat if all things were equal. Although an intention to abate would be voted on with the levy, the actual abatement would not occur until early next year.
The breakdown would be a 0.8 percent increase on current property owners which is subject to a tax cap (tied to Consumer Price Index), and 0.59 percent on new construction, which the district estimates being worth $25 million, for total projected revenues of $262.1 million. The 1.89 percent defensive levy would be $263.4 million, and last year’s property tax revenues were $258.6 million on both pieces. The $25 million on new construction is an assumption on construction numbers and developer donation dollars.
Including taxes levied for debt services and public building commission leases, which is expected at $42.2 million, the total would be $305.7 million or a 1.63 percent increase from $300.8 million last year.
Jeff King, chief operations officer, said likely this levy would cause an increase in DuPage County rates, a decrease in Kane and little effect in Cook.
“Kane should see a decrease, and DuPage should see an increase because of the rebate that happened because of the mistakes that happened in Kane County in the previous years,” King said.
Dale Burnidge, director of Financial Operations, said property values have been on the decline but the district is assuming a 6 percent increase in Equalized Assessed Valuation (EAV) based on estimated 6.8 percent increase given by Kane County. He said DuPage and Cook estimates usually do not come out until after the levy.
Board members Phil Costello and Sue Kerr said they were surprised by that estimate. Costello was also surprised by the estimated $25 million increase in new construction.
Costello stated: “The sensitivity is that our tax rates will go up. If the EAV or the new construction goes down, our tax rates go up which is going to hurt people. Was there a reason why it was so aggressive, or was it basically just on the Kane estimate of 6.8 percent increase?”
Burnidge said that “we’ve seen sharp 10 percent declines year over year,” but last year the decline was only about 3 percent.
“It looks like the values are kind of leveling out and now the values are starting to head back up,” Burnidge said.
Kerr asked if the increases in DuPage’s and Cook’s EAV were smaller than Kane’s what would the effect be to which Burnidge said “(Kane) would have a higher proportion than the prior year.”
King added: “Typically in past years there hasn’t been a wide variation between the counties.”
Burnidge said that since 2010 the “EAV’s have been declining and the tax rates have increased” while the opposite occurred from 1991-2009.
The district sought a 20.01 percent increase in 2010, 13.01 in 2011 and 9.1 in 2012 before dropping to below 3 percent. During the five-year history in the proposal, the district saw slight declines in property tax revenue twice but the total increase during that period went from $246.7 million to $258.6 million.
“It wasn’t unusual to ask for a 20 percent increase in tax levy, and that was due to there was so much new valuation coming onto tax rolls each year, new construction,” before the economy started declining said Burnidge.
The district also claims it loses $3 to 4 million a year to corporate tax appeals, which officials say shifts the burden on homeowners.
On the abatement, King said “it would be a new process for us” but some surrounding districts have done it. The district would transfer money from the education fund to the bond and interest fund under the abatement.
Board member Jeanette Ward appreciated the work put into the proposal but is uncomfortable with the plan since the abatement could possibly not occur if things changed within the timeframe between votes.
“I’m uncomfortable with the levy and then abate because the time that passes between the levy and abate,” Ward said. “Now, I understand that from this timeline that we are going to vote to levy and abate on the same night, but the actual abatement doesn’t happen until a couple of months after the levy.”
At the Nov. 16 meeting the board will vote on the proposed levy and determination of tax levy resolution as well as be presented with the intent to abate resolution, and on Dec. 14 final adoption of the tax levy will be voted on as well as the intent to abate. The resolution to abate would be presented on Jan. 25 with a vote on Feb. 1 according to the timeline.
When the Fiscal Year 2016 budget was first presented in June, the administration did not expect to ask for an increase in the levy but presented the abatement option. The district in previous years has defended increasing the levy by saying it would lose out on funds it feels it is entitled to in future years based on a compounding effect if they did not increase it.
“Also, the point in doing the levy (and) abate is to hold a place marker so that you can continue to increase in upcoming years, and that makes me uncomfortable too,” Ward said.