Effects of Declining EAVs and Levy Abatements Grayslake ESD 46 September 21, 2011

1. Willard Rooks Helander Lake County Clerk Effects of Declining EAVs and Levy AbatementsGrayslake ESD 46September 21, 2011

2. Willard Rooks Helander Lake County Clerk County Clerk’s Role • County Clerk’s office does not determine tax rates, only calculates them. • What determines tax rates: • Property values (from Assessors) • District levies (from taxing districts) • Statutory limits (from state legislature & governor)

3. Willard Rooks Helander Lake County Clerk Declining Property Values • 6.7% decline since 2008 • Trend to continue for foreseeable future

4. Willard Rooks Helander Lake County Clerk Values and Rates • Declining property values (EAV) do not create declines in taxes • As “values go down, rates go up” • Districts receive levy, unless any of three limits are triggered.

5. Willard Rooks Helander Lake County Clerk Three Levy Limits • Truth in Taxation • Fund Limits • Property Tax Extension Limitation Law (PTELL) How do declining EAVs affect these limits?

6. Willard Rooks Helander Lake County Clerk Declining Property Values Is Truth-in-Taxation affected? NO

7. Willard Rooks Helander Lake County Clerk Truth-in-Taxation Truth-in-Taxation requires additional legal notice and public meeting if current levy > 105% of prior year’s extension Definitions • “Levy” = amount requested • “Extension” = amount billed (after limits imposed)

8. Willard Rooks Helander Lake County Clerk Truth-in-Taxation • 2010 levy > 5% over 2009 extension • District required to hold Truth-in-Taxation hearing in 2010 • Note: EAVs not part of calculation

9. Willard Rooks Helander Lake County Clerk Declining Property Values Individual fund limits affected? POSSIBLY

10. Willard Rooks Helander Lake County Clerk Fund Limits • Certain funds have fixed levy rate limits: • Education 3.500 • Operations 0.550 • Special Education 0.400 • Working Cash 0.050 Definition • “Levy Rate” = Levy / EAV

11. Willard Rooks Helander Lake County Clerk Fund Limits • As EAVs decrease, levy rates increase. • For ESD 46, Operations Fund is near rate limit. 2010 levy rate • Education 3.500% 2.276% • Operations 0.550% 0.496% • Special Education 0.400% 0.019% • Working Cash 0.050% 0.009%

12. Willard Rooks Helander Lake County Clerk Declining Property Values PTELL limit affected? PARTIALLY

13. Willard Rooks Helander Lake County Clerk PTELL PTELL addresses two types of property: • “Established” property (property taxed by district in prior year) • “New” property (new construction, annexations, etc.)

14. Willard Rooks Helander Lake County Clerk PTELL LIMITS Limited to inflationary increase (1.5% for 2011) over the highest of the prior three years’ extensions • Revenue from established property 1.5% over 2010 extension 2008 2009 2010 2011

15. Willard Rooks Helander Lake County Clerk PTELL LIMITS • Sets aggregate “limiting rate”: Increased ExtensionEstablished Property EAV • Declining EAV means limiting rate increases (“values go down, rates go up”) • Declining EAV has no effect on actual revenues • Revenue from established property

16. Willard Rooks Helander Lake County Clerk PTELL • New property taxed at rate set by established property calculation (max = limiting rate) • Creates revenues over the inflationary increase • Revenue from new property Above 1.5% limit 2008 2009 2010 2011

17. Willard Rooks Helander Lake County Clerk PTELL Declining new property EAV x increasing limiting rate = ?? • Revenue from new property

18. Willard Rooks Helander Lake County Clerk PTELL DOES NOT APPLY • Debt service & SEDOL IMRF not PTELL-capped • Final rate = levy rate • Raises district’s tax rate above PTELL limiting rate • Revenue from non-PTELL funds Uncapped 2008 2009 2010 2011

19. Willard Rooks Helander Lake County Clerk But…this assumes a levy at or above limits.What happens when levy is reduced one year?

20. Willard Rooks Helander Lake County Clerk Levy Abatements • Effect on Truth in Taxation • Lowers bar for hearing in following year • Not a limit, so no other effect • Effect on individual fund limits • Lowers likelihood of hitting rate limits

21. Willard Rooks Helander Lake County Clerk Levy Abatements Effect on PTELL • Cuts to non-PTELL funds reduce current taxes alone • PTELL limited funds based on prior years’ extensions, so abatement one year can impact.

22. Willard Rooks Helander Lake County Clerk Levy Abatements PTELL limit Abated extension 2009201020112012

23. Willard Rooks Helander Lake County Clerk Levy Abatements Limit without 2011 abatementActual limit Limit if PTELL were based on prior year only 2009201020112012

24. Willard Rooks Helander Lake County Clerk Levy Abatements This gap exists in all subsequent years 2009201020112012

25. Willard Rooks Helander Lake County Clerk Levy Abatements Levy abatement has different effect depending on size Full, unabated levy No effect in current or subsequent years Maximum allowed current year extension

26. Willard Rooks Helander Lake County Clerk Levy Abatements Levy abatement has different effect depending on size Full, unabated levy No effect in current or subsequent years Maximum allowed current year extension Affects current and subsequent years Highest of prior two years’ extensions

27. Willard Rooks Helander Lake County Clerk Levy Abatements Levy abatement has different effect depending on size Full, unabated levy No effect in current or subsequent years Maximum allowed current year extension Affects current and subsequent years Highest of prior two years’ extensions Affects current year, but not subsequent years Zero levy

28. Willard Rooks Helander Lake County Clerk Levy Abatements (same, to scale based on 2010 data) $925,000 $1,266,000 $29,245,000

29. Willard Rooks Helander Lake County Clerk Frequently Asked Questions • What happens to taxes when a home is foreclosed on? • Whenever property changes ownership, any outstanding taxes are responsibility of new owner • Foreclosure sales not included in assessment calculations (but short sales are)

30. Willard Rooks Helander Lake County Clerk Frequently Asked Questions • What is the typical tax collection rate? Is anything done to offset losses in collection? • Lake County collection rate over 99% • Levy for debt service increased by 1% to accommodate

31. Willard Rooks Helander Lake County Clerk Frequently Asked Questions • What is the timeline for taxing districts? • Budget & Appropriation Ordinance: filed 30 days after passage • Levy Ordinance: filed by last Tuesday in December • New Bond Ordinances: filed by March 1st of following year • Abatement Ordinances: filed by March 15th of following year

32. Willard Rooks Helander Lake County Clerk Challenge for Every District • Meet charge to provide acceptable services to taxpayers. • Meet legislative mandates. • Balance fiduciary responsibility to property owners with falling values,“upside-down” loans or reduced personal income. • Restrain spending and tighten government belts just as individual property owners must.

33. Willard Rooks Helander Lake County Clerk For more information contact:Lake County Clerk’s OfficeTax Extension Department18 N County Street, Rm 101Waukegan, IL 60085(847) 377-2404taxextension@lakecountyil.gov You’re always welcome at the Lake County Clerk’s Office!