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Democracy on the Front Lines
City Administrator’s Blog
Walter Denton
January 2, 2007
There will be a Township Multiplier again this year. You may recall my previous blog where I explained the origin of the Multiplier and how it affects your property tax bill. When the City Council approved the property tax levy last month, we did not know whether the county would implement the Multiplier again. The county has since informed us of the Multiplier, so we have further reduced our property tax rate to compensate.
The Multiplier is not imposed by the City Council. When property tax bills were mailed to property owners last June, we received numerous calls from residents who were confused why their taxes had increased when the City’s tax rate had been reduced. The confusing part was Line 6 on the left side of the form that was the “Township Multiplier” (1.068). The Multiplier raised the Fair Property Value of every piece of property in O’Fallon by 6.8% ($13,600 on a $200,000 home). The 6.8% was added by the County Assessor and is based on the increased
sales prices of existing homes in O’Fallon over the past three years.
We received calls about how the City is “overtaxing” residents, but it has nothing to do with rates. This year’s annual budget reduced the City’s tax rate so residents should have seen a reduction in their City taxes. Each year, we send a report to the county estimating the Equal Assessed Value (EAV) of all properties in O’Fallon, including the new homes built in a given year. And over the years, the property tax revenue from the county has been remarkably close to the estimates we give them. So while the county has placed multipliers on the property assessments, we have not received any revenue windfall as a result.
We met with the county several times last fall and most of the homes in O’Fallon have been reassessed. However, while the county agrees that housing has slowed this year and sale prices have stabilized, they believe they must follow state requirements to use a three-year average of residential sale prices to determine the multiplier. The Illinois Department of Revenue says the three-year average is a guideline (not a requirement), and the county can take the option not to use the multiplier under extenuating circumstances (such as a downturn in the market). The county chose not to use the option.
At this point, the City cannot determine what is new property and what it multiplier, so all we can do is estimate the total number for our EAV. The City Council approved $4,801,339 in property tax revenue for this year, so to compensate for the Multiplier we feel the property tax rate can be reduced from 0.8946 to 0.8908. This is a rate reduction of 0.0599 ($0.06 per $1,000) from last year. On a house with a fair market value of $175,000, that should be an actual dollar reduction of $31.94. This amount will vary based on what percentage of the total EAV is produced by the multiplier.
We want our property tax rate to be an accurate reflection of the City’s needs in revenue. Because of our adjustments, O’Fallon property owners should see an actual decrease in their City property tax bill. If our calculations are incorrect and your City property tax bill goes up again next spring, then it will be because the Township Multiplier was set higher than we estimated.
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