The city of Highland expects to collect about $110,000 more in property taxes in the next fiscal year.
The Highland City Council approved a tentative property tax levy on Monday, Nov. 20 of $3.84 million for the upcoming fiscal year, a 2.95 percent increase over last year’s levy.
For a homeowner with property valued at $150,000, monthly property taxes would cost around $80.40, about $1.17 more than last year.
Property taxes paid to the city of Highland help pay for city streets, parks, police and fire protection, ambulance availability, the summer municipal band and Peanut Butter and Jam entertainment, the parks and recreation programs, school crossing guards, as well as necessary employment taxes and retirement benefits, outside financial audits, and the city’s liability insurance.
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Property tax revenue only amounts to about 8 percent of the city’s overall budget.
The city must pass an estimated tax levy resolution before the actual tax levy can be adopted. That vote is set for Dec. 18, but the final levy could be different from the one passed last week, depending on what is needed to fund police pensions.
Finance Director Kelly Korte told council members in a memo that the police pension request will be known after the Police Pension Board meets.
“The council must decide which figure to levy for based upon this request,” Korte said in the memo. “I have used an estimated amount based on the pension board request at this time, but it could fluctuate upon receipt of the actuarial valuations.”
The council gave Korte direction at its Dec. 4 meeting to leave the levy request for the police pension at the higher level of $575,000. This contributes to an estimated tax levy rate increase of 1.93 percent over the prior year tax rate and a 2.95 percent increase in the overall estimated property taxes collected for the next year.
Korte said she recommended this estimate based on the current pension board request. She said that number could fluctuate it when the board delivers its receipt of the actuarial valuations.
Korte used a 1 percent increase in assessed valuation when calculating the new levy in an effort to take a conservative approach, “due to local economic conditions,” according to the memo.
The city of Highland’s property tax rate is $1.93 per $100 in assessed value increase the upcoming fiscal year. That would be a 1.93 percent increase over the current year’s rate.
Highland’s rates & levies
The city of Highland has many specific levies that combine to form its overall levy. An explanation of each follows.
General Fund: The city has levied a rate of .333, which provides approximately $606,756 for general administration.
Police Protection: The city’s statutory limit (without any referendum) of .075 should generate approximately $136,657 this year. This doesn’t begin to cover the $2.5 million police department budget.
Fire Protection: The statutory limit of .075 should generate approximately $136,657 this year.
Community Buildings and Gymnasiums: This also produces $136,657 per year with a tax rate at the statutory limit of .075.
Playground and Recreation: Set by referendum at .09, this levy generates $163,988 annually for for the operation of the city’s playground and recreation programs.
Comfort Station Tax: This tax was started in 2007 and is used to upgrade existing restrooms and build additional restrooms in the various parks around Highland. This levy will generate $20,000. Each building costs from $20,000 to $40,000.
Municipal Band: The rate of .0252, which could be increased to .04, generates $46,000 for the municipal band programs on the Square, as well as the Peanut Butter and Jam entertainment during the summer.
Police Pension Fund: This fund is levied at a rate necessary to produce a sum sufficient to meet the city’s contributions as required by the Illinois Department of Insurance’s Police Pension Division. At a rate of .3156, it should generate $575,000 next year. This amount was estimated until the final amount is determined by the Department of Insurance and an independent actuary hired by the Police Pension Board. These reports will be available soon and the final amount will then be included in the actual tax levy request.
Social Security: The city’s Social Security needs for the general funds (non-enterprise) are met by this levy, which generates $450,000.
Municipal Auditing: This tax is levied at whatever rate is necessary to produce a sum sufficient to meet the general funds’ portion of the cost of the required audit. The city enterprise funds (electric, fiber, water, and sewer) also help pay for the audit. Levied “to meets needs,” a tax rate of .0088 would generate $16,000.
Illinois Municipal Retired Fund: IMRF is another “to meet needs” levy, $450,000 toward the city’s contribution for employee retirement. This figure includes IMRF payments for the general funds only. Enterprise funds pay their own.
Insurance and Tort Judgment: Levied to meet anticipated insurance costs and to pay judgments or settlements, a rate of .18 will generate $328,000 for liability and workers compensation insurance. The city must levy to cover anticipated costs, plus rebuild a three-month reserve of cash required by the city’s financial policy.
School Crossing Guard: Used to hire part-time school crossing guards. The city needs to levy .0055 to generate $10,000 for school crossing guards this year.
Ambulance: With this levy, Highland would contribute $455,523 to help cover the full-time ambulance service, with a projected tax rate at .2500. Highland-Pierron, Grantfork, St. Jacob Fire, St. Rose, and Marine fire districts all levy their own taxes to cover their share of ambulance coverage expenses, which they then pay to the city.
Library Insurance and Tort Judgment: December 2004 (for 2005 tax bills) was the first time the library levied this tax. It is used for safety issues at the library. The library has used this tax money to replace carpet that was held together with duct tape, along with other safety upgrades. The tax, levied at .0192, will provide $35,000 for the library as work continues to complete needed improvements.
Library Tax: This is the only library revenue source the mayor and City Council control. It is levied at .15 and should generate $273,314. The Library Board is given the responsibility for administering the operation of the library.
Bonds: The 2014B general obligation street bonds, 2014A Korte Recreation Center bonds, 2012 TIF bonds, and 2013 sewer bonds all are ultimately backed by property taxes in order to get a better rate. The city has sufficient revenue from other sources, such as property taxes or user fees, to meet the bond requirements. Therefore, these taxes were abated at the recent council meetings.
Understanding property taxes
A tax levy extension is the amount of dollars a taxing district — e.g., a city or village, school district, county, township — intends on collecting. The overall tax levy is comprised of smaller levies that go toward specific purposes.
Property tax bills are calculated by applying tax rates to the equalized assessed value of one’s property. What those rates are depend on how much the levy is and how much assessed value there is to tax (Tax levy = Tax Rate x Equalized Assessed Value).
Below are some definitions of terms you will see on your tax bill and how they apply to what you pay.
Fair cash value: The amount for which a property can be sold in the due course of business and trade, not under duress, between a willing buyer and a willing seller.
Assessed value: The value placed on property for tax purposes and the basis for determining what portion of the overall tax burden each property owner will bear. Assessed value is calculated at 1/3 of fair cash value. (Example: A home worth $150,000 on the open market would have an assessed value of $50,000.)
Equalization factor or multiplier: The equalization factor (sometimes called a multiplier) is the tool used to bring all property to a uniform level of assessment, either bringing values up or down if assessments are determined to be too high or low, whatever the case may be, from one taxing district to another.
Equalized assessed value: The equalized assessed value, or EAV, is the result of applying the state equalization factor to the assessed value of a parcel of property. Tax bills are calculated by multiplying the EAV (after any deductions) by the tax rate.
Exemption: The removal of property from the tax base. An exemption may only be a portion of the equalized assessed value, such as a homestead exemption, or for the complete amount of the equalized assessed value, such as a church building used exclusively for religious purposes.
Tax rate: The amount of tax due, stated in terms of a percentage of the tax base. (Example: $6.81 per $100 of equalized assessed valuation (equal to 6.81 percent). You can obtain this percentage by dividing the levy for a fund by the equalized assessed value for the taxing district. Some funds have a maximum statutory tax rate that may not be exceeded. The sum of the fund rates equals the total district rate.