The recent stories about property tax levies in DeKalb and Sycamore areas are another reminder of how falling property values are hurting homeowners and their local governments.
Essentially, this has been another year where houses became more expensive to own and worth less to sell.
If there is good news to be found, it’s that there appear to be glimmers of hope for a turnaround in the housing market and the reemergence of new construction – both of which are needed locally.
Until that happens, we will have situations like the ones we’ve been reading about.
In Sycamore School District 427, the school district expects to receive $24.3 million in local property taxes in 2013, an $800,000 increase over this year.
Only about $113,000 of that money is revenue from new construction. Established property owners will cover the rest of the increase, and their tax rate will increase because the value of property in the school district fell for the third consecutive year, this time by 9 percent.
It’s a similar story in DeKalb, where property owners in School District 428 are expected to see their property tax rates increase from $6.22 per $100 of equalized assessed value for taxes paid this year to $6.99 per $100 next year.
Tax cap rules allow local governments to increase their property tax collection by 5 percent or the rate of inflation each year. For schools, there’s little option to forgo the increase – they’re already receiving less in general state aid each year.
The Sycamore City Council, meanwhile, is discussing holding its tax levy request steady this year. Even so, the decline in property value in the city means that property owners could see a small increase on their tax bills.
The City of DeKalb says increased revenue is needed to cover pension costs, and if the city council makes and receives a $10 million levy request this year, property owners will see their tax rate increase from 72 cents per $100 to almost 86 cents.
When the housing market was healthy and new homes and businesses were built at a healthy clip, the opposite was true. Property values grew faster than the rate of inflation, property tax rates fell, and along with them, the tax cap led to decreases in annual tax property tax bills.
About that good news? The Illinois Association of Realtors says the median home sale price in the nine-county Chicago metro area (which includes DeKalb County) was up 2.1 percent year over year in October, and that sales overall were up 44.1 percent year over year.
There’s also encouraging news about housing starts nationally, as American builders in October started construction on the most homes and apartments since July 2008, according to the U.S. Department of Commerce. The figure was still short of what is considered a healthy rate, however.
Still, given that Illinois property taxes are paid a year in arrears (2012 property taxes will be paid in 2013) there’s hope that the deflation in the housing market might be ending soon.
Until then, taxpayers and local governments alike will feel the squeeze.