FROM THE MAYOR...
$342,866 Stays in O’Fallon
 The amount of property taxes our residents are asked to pay continues to
be a huge concern for myself and the O’Fallon City Council. Many years ago, we made a commitment to you to keep the amount of tax dollars you pay to the City as low as possible. We continue on that mission today. This column will explain how property is assessed in St. Clair County, how the township multiplier is calculated, how the county applies the township multiplier, how tax rates are determined, and most importantly, what actions the City can and will take.
As you know, the City receives just 11% of your total property tax bill to provide all of its services to you. This year the Assessor has applied a 6.5% multiplier to all property tax bills in the county. The City of O’Fallon has objected strongly that this multiplier is not being calculated correctly by the Assessor’s Office and is, therefore, unfairly taxing the citizens of O’Fallon. So far, we have not been successful in getting relief for you on this issue so we are taking an action of our own in behalf of our citizens. I am pleased to inform you that the City of O’Fallon is abating the 6.5% tax increase created by this year’s Township Multiplier. That means you will NOT have that 6.5% increase! The total savings to O’Fallon
taxpayers will be $342,866. To our knowledge, O’Fallon is the only city or taxing body in the whole county to do this. No one likes taxes and especially taxes that are disproportionately calculated which is why we took this unprecedented action.
How is Property Assessed?
According to the Illinois Property Tax Code, all real property must be assessed at a uniform percentage of market value, which is 33.33%. The Illinois Department of revenue manages the inter-county equalization of assessment program through the filing of the PTAX-203 Real Estate Transfer Declaration. This is one of the many forms you sign when closing on the purchase of property, and it contains the property’s sale price. The overall purpose is to ensure that all property is valued equally and to assure that every homeowner in the state is taxed at 33.33% of the Fair Market Value. State law requires that counties must assess all real estate every four years to make sure all property is assessed at the Fair Market Value.
How is the Township Multiplier Calculated?
Each piece of property that is sold must file a PTAX-203 form with the state. The state compares the sale price to the assessed value to see if it was more or less than the assessed Fair Market Value (FMV). If houses are selling for more than the FMV, then they are adjusted with a multiplier. The township multiplier was created by the state legislature to maintain assessment levels statewide and to provide a uniform basis to increase property assessments for school funding. The problem is that the multiplier imposes blanket assessment increases over an entire township rather than specific neighborhoods. Your property tax is calculated according to this formula: Taxable Value X Tax Rate = Tax Due.
How is St. Clair County Applying the Township Multiplier?
Since the county has not done the assessments for years, they are using the multiplier as the replacement to assessments rather than as a supplement. The County Board of Review takes all sales and lumps them together by township, and all property goes up by the multiplier supplied by the Department of Revenue. There are two problems with this method. First, by placing a blanket multiplier on an entire township, properties in a fast-selling area are under-assessed, and properties in a slow-selling area are over-assessed. While the overall number may be accurate, it is possible that none of the properties are valued fairly. Second, there is no provision in state law to adjust the multiplier when property values are declining. By law, the Department of Revenue only includes
property sales that are voluntary and not under pressure. As a result, the multiplier increases even in a bad housing market, and the multiplier’s assessment can be much higher than the actual market value of the property. If the multiplier continues at the current five-year average, the assessment on every piece of residential property will increase 390% over the next twenty years due to compounding!! Other Illinois counties assess properties regularly and do not seem to have problems with the multiplier. There may still be complaints about high taxes, but the tax bill is tied to an actual assessment of the property.
How are Tax Rates Determined?
Each year, the City looks at last year’s budget to determine the need for the following year’s revenue needs. The needed dollars are divided into the Equalized Assessed Value (EAV) of the City. For example, the City requested $224,991 for its 2006 General Fund and the EAV was $542,633,861, so the rate was 0.041827 or four cents per $100 of Fair Market Value (FMV). For a $100,000 home, your tax is calculated by 100,000 X 33.3-Homestead Exemption X 0.04 = $11.77 for the General Fund. The problem lies in both the dollar request and the EAV. The local taxing units request and control the budget request, but the state and county control the EAV.
While we do not currently have all the answers, we will continue to explore our property tax system in the hope that we can find more ways to ease your property tax burden. It is an honor to serve as your Mayor, and I appreciate being given the opportunity to work for the residents of O’Fallon. I am willing to meet one-on-one with anyone who has a concern about any issues related to our city. I welcome your suggestions and comments and encourage you to contact me at 624-4500. It is through your input and dialog on important issues that we will make O’Fallon an even better place to live and work.
Gary L. Graham
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