President's Perspective - October 2022

Holding the line on taxes

Chamber board urges local taxing bodies to hold levies flat

At its September 27 meeting, the Rockford Chamber of Commerce Board passed a resolution strongly encouraging local taxing bodies in Winnebago County to work together to reduce or hold their levies flat to help reduce the overall property tax rate.

The resolution came before the board as a recommendation from the Chamber’s Government Affairs Council, after hearing from City of Rockford Mayor Tom McNamara at the council’s September meeting. The full resolution is available at www.rockfordchamber.com.

The Rockford Chamber of Commerce’s mission is to lead business growth, and we believe keeping tax levies flat will benefit our community in the following ways:

■ Protect our talent pipeline. Higher taxes chase away potential employees considering relocation.

■ Increase disposable income. Lower taxes let taxpayers keep more of their money to spend in our local economy.

■ Give business owners—who have endured supply chain disruptions, COVID lockdowns and labor shortages— some much-needed relief.

What to know

Illinois has 9,000 units of local government (the most in the nation), which contribute to property tax rates that are among the highest in the U.S. As recently as 2019, Illinois had the second highest real estate tax rate in the country. Winnebago County has one of the highest average property taxes in the country, ranking 151 out of 3,143 counties, according to Tax-Rates.org.

While the bottom line is lower taxes are good for business, there are some technicalities that deserve explanation.

The tax levy is the total amount of money a local body of government can request from its taxpayers. Think of it as the big, final number (in dollars). For example, a taxing body could request a total of $1 million from its taxpayers. It’s the amount of dollars sought that determines the tax rate, not the other way around, which is a common misconception.

The tax base is the total equalized assessed value (EAV), minus certain homestead exemptions and tax incentive programs, plus the value of any stateassessed property. Each property has an assessed value, as determined by the township assessor and certified to the supervisor of assessments. That assessed value then has a multiplier, or an equalization factor, applied to it. This ensures that assessment levels are similar among townships and counties. The total tax base within a taxing body’s taxable area is the additional factor to determine the necessary tax rate to generate the desired tax dollars sought.

By dividing the tax levy by the tax base, you get the tax rate.

The tax rate is the number that, when multiplied by the tax base, will produce the levy amount.

To reduce the amount of money each homeowner/property owner pays in taxes, one of two things has to happen: hold or decrease the tax levy (the amount of money asked for by taxing bodies) or increase the tax base. But, remember, the countywide EAV plays a role in the tax base.

What it means for taxpayers

This year marks the quadrennial reassessment that may lead to higher individual property values. Even if taxing bodies hold the levy flat, you may still see an increase in your taxes if your property value rises.

Taxing bodies asking for more money (levy) combined with an increase in property values (EAV), will result in the highest possible tax on property owners. Holding the levy will help ease the tax burden, a relief the Chamber Board of Directors firmly supports.

The board understands keeping the levy flat will not be feasible forever and may require difficult decisions. While not unsympathetic to the taxing bodies, for the greater good, the business community is strongly urging all taxing bodies to hold levies flat this year.