Two homes worth about the same in two different cities — one home with a 17 percent overall property tax rate, the other an 8 percent rate.
Which city has the higher tax rate: the home in an affluent town with plenty of growth, or the one in a declining community where business is scarce?
Popular opinion might suggest residents of a relatively affluent city like O’Fallon would pay the higher rate, but O’Fallon Mayor Herb Roach says he believes that’s “more a perception.”
In the metro-east, it’s not residents in O’Fallon, Shiloh or Mascoutah who see the highest tax rates, tax records show, but residents in East St. Louis and surrounding communities, where rates can soar above 20 percent compared to less than 10 percent in most metro-east towns.
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Derrick Maxwell, a business owner and homeowner in East St. Louis, says residents pay taxes like they live in a wealthy St. Louis suburb.
“We don’t have the tax base, so it gets passed on to the homeowners,” Maxwell said. “We have the (housing) projects. In the projects, you don’t pay (property) taxes, so that’s upon the homeowners and business owners as well.”
The owner of a $35,000 home in East St. Louis paid $1,996 in property taxes in 2016 on a 17 percent aggregate tax rate, while the owner of a $36,000 home in O’Fallon paid $1,034 on an 8 percent rate, according to St. Clair County property records.
The county clerk takes two factors into consideration when setting tax rates — how much a taxing district asks for to pay their bills and how much property is worth in that district. When there’s more people with more valuable homes, the tax burden is spread out. In cities like East St. Louis or Cahokia, the tax burden is relatively high because there are fewer residents in lower-value homes paying for city services, schools and libraries, among other districts.
“The cities have to make up the money somehow,” said property manager Andrew Altman of East St. Louis-based Sieron & Associates Real Estate, Inc. “That’s the way it is. It’s unfortunate because now you’re taxing your poorest populations.”
Greg Lewis, a homeowner in East St. Louis, says his city hasn’t been able to keep up with increasing property taxes like other metro-east communities have.
“We don’t have a whole lot of growth like we used to. Our area has been more depressed than those areas,” Lewis said. “I’ve been fortunate enough that both my wife and I are professionals. We’ve maintained good jobs all our lives. We’ve been able to do it, but I see a lot of families that struggle, that are not necessarily college grads, or just people that maybe have a basic job.”
Even though county government “equalizes” tax assessments to ensure fairness in how properties are valued — a $35,000 home in East St. Louis is not the same as a $35,000 home in O’Fallon — residents still have to cough up the cash needed to cover what their taxing districts request in an annual levy. A homeowner can contest their property’s assessment with the county Board of Review, but the county clerk calculates the rate to produce the amount of revenue needed. The clerk’s office uses pure math to get that number, says Dina Thurlow, chief deputy for the St. Clair County Clerk.
$1,996Amount of property taxes paid in East St. Louis on a $35,000 house.
$1,034Amount of property taxes paid in O’Fallon on a $36,000 house.
“The lower the EAV (equalized assessed value) of a district, the higher the rate,” Thurlow said.
It’s the taxing districts, Thurlow added, not the county, that decide how much is needed to pay their bills. The county’s job is purely administrative.
“They turn in their tax levies,” Thurlow said. “We take what they give us.”
Education makes up the bulk of homeowners’ property tax bills in metro-east cities, as it does in most Illinois municipalities. The rate in O’Fallon District 90 was 3.16 percent and 2.31 percent for O’Fallon High School District 203, in 2016, while taxpayers in East St. Louis School District 189 saw a 10.83 percent rate.
The East St. Louis district has one of the highest rates and a relatively low property value. The state average equalized assessed value per student for consolidated unit school districts was $149,663, compared to District 189’s average of $17,716, according to data from the Illinois State Board of Education.
The owner of the $36,000 home in O’Fallon paid $669 in 2016 to two school districts while the owner of the similarly priced home in East St. Louis paid $1,266, according to St. Clair County property records. In Cahokia, the owner of a home worth $20,000 paid $713 toward Cahokia Unit 187 based on an 11 percent tax rate.
O’Fallon’s high school district requested $21.7 million on a 2.31 percent rate to pay its bills for 2016. The property being taxed comes up to a total of $626 million. The East St. Louis District requested $18 million. East St. Louis will see a 10.8 percent rate on $166.3 million in taxable property value for an early childhood learning center, five elementary schools, two middle schools, one high school and one alternative school. The district was home to 6,086 students in 2016, according to the Board of Education, while O’Fallon’s high school was home to 2,441.
Lewis, the East St. Louis homeowner, said he won’t complain about paying his taxes, even though they’re higher than other communities.
“I realize the taxes are driven by the school district’s needs, the street department, firemen, police, and I do want those services, so I don’t mind paying taxes,” Lewis added.
But as Gov. Bruce Rauner reminded residents this week when he announced his bid for re-election, property taxes in Illinois are notoriously high. The state’s per-capita property tax payments ranked first in the Midwest at $1,978, above the national average of $1,399, according to a report by the Commission on Government Forecasting and Accountability.
State Rep. LaToya Greenwood of East St. Louis says she supports a plan to increase property tax credits for certain vulnerable populations. The bill (HB 156) would cut taxes for those populations, Greenwood said, rather than simply freeze property taxes, which Rauner has proposed. The bill includes an increase on property tax exemptions for seniors, an annual $8,000 exemption for all homeowners and more exemptions for disabled veterans.
“High property taxes are a major concern for not only impoverished communities in the metro-east but throughout the state of Illinois,” Greenwood said in a written statement. “This property tax package is about lifting up the middle-class and providing relief to families who are burdened with increasing property taxes each year.”
Property tax relief might come in the form of an education funding reform law championed by Democratic State Sen. Andy Manar of Bunker Hill.
We don’t have the tax base, so it gets passed on to the homeowners. We have the (housing) projects. In the projects, you don’t pay (property) taxes, so that’s upon the homeowners and business owners as well.
Derrick Maxwell, East St. Louis business owner and homeowner
After initially vetoing the bill, Rauner in August signed a similar bill (SB 1947) into law. It provides money to schools based on student need. As a result, schools in communities where property values are low will receive more funding, relieving the burden on homeowners, according to the legislation.
An analysis by the Illinois State Board of Education estimates the East St. Louis district will see a $1.2 million increase under the new law. Cahokia would see a roughly $388,000 increase.
But it’s unclear exactly how much the changes will affect property taxes, which run on a two-year cycle. Property taxes are paid on values assessed the previous year, and populations in some communities continue to decline.
O’Fallon’s population has increased to 30,440 from an estimated 27,348 in 2007, according to U.S. Census Data, an 11 percent increase. The population in East St. Louis has remained largely static from 27,006 in 2010 to an estimated 26,922 in 2016 with 45.8 percent living in poverty. Only 8.3 percent of the population in O’Fallon lives in poverty, according to U.S. Census data.
In Cahokia, the population has decreased 6.4 percent from 15,238 in 2010 to 14,260 in 2016.
Behind Cahokia and East St. Louis, Belleville’s 10.2 percent overall property tax rate stacks up as among the highest in the metro-east, with 3.9 percent of the total going to Belleville District 118, 2.1 percent to District 201 and 2.1 percent to the city.
Belleville increased how much it taxes homeowners this year by about 5.7 percent, or $45 more on a $100,000 home.
But it’s the poorer communities that still suffer most, the East St. Louis property manager said.
“I’ve been doing business down here for about 10 years. From what I can tell, it’s been this way for a while. Tax rates have only gone up, not gone down,” Altman said.
That’s a worry shared by Lewis, the East St. Louis homeowner.
“They’re constantly going up. I guess they have to try to make up that money somehow,” Lewis said.
How the property tax cycle works, according to the St. Clair County Treasurer’s Office:
Generally, the property tax cycle is a two-year cycle. During the first year, property is assigned a value that reflects its value as of January 1 of that year. During the second year, the tax bills are calculated and mailed and payments are distributed to local taxing districts.
This two-year cycle can be divided into six steps.
1. Assessment — All property is discovered, listed, and appraised so that values for property tax purposes can be determined. Assessing officials determine most property values. Assessments are “equalized” to ensure that assessment levels are uniform and at the legal assessment level.
2. Review of assessment decisions — The Board of Review determines whether assessing officials have calculated assessed values correctly, equalize assessments within the county, assess any property that was omitted, decide if homestead exemptions should be granted, and review non-homestead exemption applications. Property owners and local taxing districts may appeal unfair assessments to The Board of Review and, if the owner is dissatisfied with the board’s decision, the State Property Tax Appeal Board or circuit court.
3. State equalization — The Illinois Department of Revenue equalizes assessments among counties and issues a state equalization factor for each county.
4. Levy — Taxing districts determine the amount of revenues that they need to raise from property taxes, hold any required public Truth-in-Taxation hearings and certify levies to the county clerk.
5. Extension — The county clerk applies the state equalization factor, calculates the tax rate needed to produce the amount of revenues each taxing district may levy legally, apportions the levy among the properties in a taxing district according to their equalized assessed values so that tax bills can be computed, abates taxes as directed by taxing districts and prepares books for the county collector.
6. Collection and distribution — The county collector prepares tax bills, receives property tax payments from property owners, distributes taxes to the local government taxing districts who levied them and administers sales of liens on real estate parcels due to nonpayment of taxes.