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District 161 expects 2.3% increase to 2020 tax levy

Flossmoor School District 161 may be looking at a roughly 2.3% increase over last year’s extension in its tax levy for the 2020 calendar year, but actual money through the door is expected to remain down from just two years prior.

The district agreed to abate $1.93 million in property taxes in exchange for receiving a $1.7 million through a Property Tax Relief Program grant from the Illinois State Board of Education earlier this year. To receive the grant the school board agreed to abate taxes by that amount in both 2020 and 2021.

District 161 was one of 39 school districts receiving grants. The grant, part of the Evidence-Based Funding for Student Success Act, allows eligible school districts like District 161 to cut local property taxes and replace that revenue with state funds.

The school board began its tax levy discussions for the year on Monday, Oct. 26, during a special meeting, with Associate Superintendent Fran LaBella suggesting a 2.3% increase over last year’s levy extension of $23.80 million. That is in line with the Consumer Price Index (CPI), which is based on December 2019 and up from 1.9% in levy year 2019.

“Really, you’re looking at a CPI increase no matter what,” LaBella said.

It is expected to translate to an additional $520,000 in tax revenue, though Cook County’s triennial assessment for the southern area of the county has an increase in assessed valuation from 12% to 15% across the district’s properties in Rich and Bloom townships, with new property estimated at roughly $500,000 but possibly as high as $1 million.

“We increase at about a half a million a year,” LaBella said of the estimate. “I will probably levy a little bit more than that within the fund. In case property comes in any higher, we will be able to capture any funds owed to us.”

But the levy extension was down 5.6% in 2019 at $23.80 million, from $25.21 million in 2018, because of the board’s decision to abate $2 million in property taxes in exchange for $1.7 million as part of the Illinois Tax Grant Relief program. That means a 2.3% increase would equate to a levy of roughly $24.43 million in 2020, when considering new property.

LaBella said it is important to note that the levy year is based on a calendar year, but the district’s fiscal years run from July 1 to June 30 of the following year, causing incongruity between the two. When and how taxes are collected adds to the confusion.

“We’re collecting too much in the first installment, and all of the abatement is going to hit you in the rear-end of the second installment,” she explained.

The bulk of the abatement will hit D161 in what constitutes fiscal year 2021 but rebound the following fiscal year, LaBella said. It will look like a 6% increase in taxes next year but really is not, according to LaBella.

“This year our taxes are almost artificially low, and next year they pop up,” she said.

If the district maintains expected CPI increases, its tax levy would return to 2018 levels around 2022, and then see bond debt drop off the rolls in 2023.

“This is where we’re going to have our conversation about our long-range financial plan,” LaBella said.

As with everything else right now, LaBella said officials will have to continue to keep an eye on the impact on the COVID-19 pandemic. How the Illinois Allow for Graduated Income Tax Amendment (Fair Tax) fares on Nov. 3 is worth watching, too, she said.

“That may or may not have an impact on our state funding,” she said.

But officials also discussed whether the CPI should not just be a given.

Board member Cameron Nelson asked if other officials had an “appetite” to consider asking for less than the CPI in 2020. He said while he understands following the CPI is typically seen as “good policy,” there were other considerations.

“We consistently have a number of taxpayers who would like to see their taxes go down a bit,” he said. “It’s not an easy decision.”

Board Secretary Misha Blackman said she would like to talk more with the Finance Committee before considering that. In general, nothing is going to be gained by going with less on the levy, she said.

“It’s complicated,” Blackman said. “There are so many moving pieces that go with it.”

To that end, LaBella said the district has “no control over the actual taxpayer’s bill.”

“That has to do with your assessed valuation,” she said. “Even if you were to freeze your piece of this levy … it is very unlikely someone’s bill will be identical one year to the next.”

Properties could see taxes go up regardless of the district’s levy. The only difference would be the district not capturing that income, she said. It would be hard to show taxpayers how they benefited from a move like that by the board, but the district would definitely see an impact, she said.

Board Member David Linnear said he would at least like to see a discussion from the Finance Committee about balancing what the board can do for taxpayers and the district’s needs.

Board Member Stephen Paredes said he would be “vehemently opposed” to not following LaBella’s recommendation but was willing to have the conversation.

“As the costs of school go up, our costs go up,” Paredes said. “That’s just the bottom line. But it is important to at least entertain the question.”

Nelson said if they stick with a CPI increase, it might at least be worth carrying out an educational effort.

“There may be value in the board at least explaining why it’s adopting CPI, or that we considered not doing it and this is why,” he said.

The School Board must approve its tentative levy by the Nov. 9 meeting. Before then, the district’s Finance Committee is expected to review the particulars of the levy. A final levy is expected to be up for approval at the board’s Dec. 14 meeting.

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