Editor’s note: For more information on District 202’s proposed property tax levy, check out the RoundTable’s full coverage here.
On Monday, Nov. 14, the District 65 School Board approved a tentative property tax levy that it plans to make in December. Property owners would be required to pay the taxes in calendar year 2023.
The board has scheduled a public hearing on Dec. 19, when it plans to adopt the tentative levy that same evening.
The board plans to increase property taxes for operations by 5.98%, which is the maximum allowed under property tax caps. The board also plans to include about $6.1 million to cover bond and interest payments. The total levy planned is $133.1 million.
There was no discussion of the tentative levy at the board meeting, but the matter had been discussed at an October Finance Committee meeting.
Property tax caps
Under Illinois’ Property Tax Extension Law, a school district’s authority to increase property taxes for operations is capped at the lesser of the increase in the Consumer Price Index or 5%. The Property Tax Extension Law also allows a school district to levy an additional amount on new construction.
The district’s tentative levy for 2022 provides that property taxes for operations will be $126.8 million, which is about $7.2 million, or 5.98%, higher than the district’s estimated final approved levy for operations in 2021. (As of Nov. 14, the tax levy made by the district in December 2021 had not yet been approved by the Cook County Clerk. Raphael Obafemi, the district’s chief financial officer, told the RoundTable that the clerk was behind in approving the 2021 levies for all school districts.)
Of the $7.2 million increase, about $6 million, or 5.0%, is the increase permitted by the increase in the CPI in calendar year 2021 The CPI in 2021 exceeded 5%, so the property tax cap is 5%.
About $1.2 million of the increase in the 2022 levy is a tax on the estimated value of new construction within the geographic boundaries of District 65 in 2022.
At this point, the amount included for new construction in the 2022 levy is still an estimate. Obafemi said the district estimated the value of new construction in 2022 and then increased that amount to ensure that it captures all the new construction that becomes subject to the district’s property tax levy in 2022. The Cook County Clerk will make adjustments to the levy after the equalized value or all new construction in 2022 is determined.
Increases to property tax
District 65 has increased its property tax levies for operations from $87 million in 2015 to $126.8 million in 2022, or by 46%. A significant portion of that increase was due to the referendum approved by voters in April 2017 that authorized the district to levy an additional $14.5 million for the 2016 levy year. That increase carries through to each subsequent year.
In addition, a RoundTable analysis in November 2021 shows that between 2017 and 2020, District 65 has been able to increase its property tax levy by significant amounts due to the value of new construction within the district. As an example, in its 2020 tax levy, the district was able to increase its levy by more than $4.9 million due to new construction added to the district’s property tax rolls in the years 2017, 2018, 2019 and 2020.
Data presented to support the 2022 tax levy shows that the district is estimating that its property tax levy in 2021 will increase by about $1.1 million due to new construction within the district. Assuming that is the case, the accumulated increase in the property tax levy due new construction between 2017 and 2021 will be about $6.0 million. Because of the way property tax caps operate, the $6 million will carry through to each subsequent year.
The table below, prepared by District 65, provides a history of the property tax levies since 2015. The column headed Levy is the year in which the tax levy was made, which is generally in December of the year listed. Property owners pay the taxes levied in the following year (e.g. taxes levied in December 2022 are paid in 2023). The CPI is the CPI that applies to the levy year, and it is the CPI for the prior calendar year (e.g. the applicable CPI for the 2022 levy is the CPI for calendar year 2021.) Aggregate Extension shows the final tax levies approved by Cook County for operations for 2015 through 2020, and the estimated amounts for 2021 and 2022. Aggregate Increase is the total increase permitted under the CPI, new construction and for 2016, the referendum.
Limit on tax increase
At a Finance Committee meeting on Oct. 17, committee Chair Joey Hailpern said, “As a Board member who’s supposed to be a steward of taxpayer dollars, people in the community might say, ‘Well, you’ve survived on funding the district on a 1.4% and 2.3%. increase before. Why go for the max this time knowing that it’s going to be that big of an impact on community members?’”
Obafemi said, “Because of inflation; we’re not immune to inflation. That’s number one.” He added that the biggest area of the district’s expenditures is the cost of salaries for employees and noted that some union contracts have raises tied to increases in the CPI. “Since inflation is so high, the cost of settling those contracts may be higher than it was before,” he said.
Obafemi added that the district’s facilities need repairs, and the district needs funds to make those repairs. He added that if the district did not raise property taxes by the maximum among this year, it would limit revenues for not only this year, but also future years, and the district may end up regretting it down the road.
Although it was not mentioned as a reason to tax the maximum, the funds to pay the lease certificates and interest costs for the new school in the Fifth Ward must be paid for out of operating funds, Obafemi told the RoundTable.
The School Board did not ask administrators to assess what impact the property tax increase would have on households with low or fixed incomes, or what impact it would have on affordable housing in the district.
The CPI is currently on track to exceed 5% for calendar year 2022. If it does, District 65 would be permitted to increase its property tax levy for operations by an additional 5% in 2023, plus an amount for the value of new construction.