Friday, January 20, 2012

Cost Of Living Increase Sets Limit For New Tax Levies

The U.S. Bureau of Labor Statistics announced Thursday its Urban Consumer Price Index rose 3 percent in 2011.  That sets the growth limit for the next round of property tax levies in McHenry and Kane counties but it's one that's double the size of the one that governed 2011 tax bills due this Spring.  Last year's CPI increase was only 1.5 percent.

Illinois' Property Tax Extension Law is loosely referred to as "the tax cap" but, in fact, it's a tax levy cap which isn't quite the same thing.  It doesn't set a bar on individual property taxes, rather, it limits the yearly increase of each taxing district's collective tax bite.  The max is 5 percent unless the CPI is less, in which case, as this year,  that's the limit. 

CPI-U is a model basket of goods and services that's supposed to measure inflation for most people.  By that measure, that same thing that cost $1 in Dec. 2010 cost $1.03 this Christmas.  Some economists argue it's not really an accurate measure of "the cost of living" but it's the one the Legislature specified for PTELL 20 years ago.

This year's expected to be one of battles over budgets and levies.  Locally, Algonquin and LITH actually cranked their levies back on 2011 taxes due this Spring and Huntley held the line.  District 158 promised it, in effect, would, too, by paying part of the levy with State Aid it never expected to receive but actually did.  McHenry County, in contrast, increased its levy to the limit and did many other taxing bodies.

Looking ahead, Thursday's CPI announcement was likely to have the greatest impact at District 300.  Budgeteers there were forecasting a $2.8 million deficit for next year but that assumed a 2.5 percent CPI increase.  Thursday's number boosts the possible levy increase 20 percent but CFO Cheryl Crates said she wasn't sure how much more money that meant.  "I've got 55 (budget) spreadsheets," she said.  "I'll know in a couple of weeks."

A history of PTELL's tax levy limits is located here: http://tax.illinois.gov/LocalGovernment/PropertyTax/CPIhistory.pdf

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