Exemption Information is 'Misleading'

In response to the assessor’s article in the township “newsletter,” I would like to clarify the impact of House Bill 944 increasing the General Homestead and Senior Homestead exemptions.

The proposed legislation would double each exemption to 12,000 for the General and 8,000 for the Senior Homestead exemptions. In the article, the assessor states “you could save $1,000.” This is a misleading statement and clearly demonstrates a lack of understanding of the assessment and taxation process. There are a few terms that need to be defined to better understand the issue.

• The tax base is the sum of all assessed values less all exemptions.
• The property tax extension is the amount of money received from the property taxes used by local governments to provide their services (spending).
• The tax rate is the relationship between spending by local governments divided by assessed value.  This is normally expressed as $1 of taxes per $100 of value.

The net effect of increasing the exemptions would result in a direct decrease to the tax base. My analysis of Avon Township’s assessed value from tax year 2011 confirms the tax base would decrease by -111,000,000 or -9 percent.  

The statement “you could save $1,000” assumes the tax rate would be the same. This could not be further from the truth. If spending remains the same and the tax base decreases the tax rate will increase. Using Avon Township’s 2011 property tax extension (spending) divided by the reduced tax base; the resulting tax rate for the township would increase by 10%. Therefore no tax savings would be realized.

The increase in the exemption amounts would shift a small portion of the tax burden from residential increasing the burden to commercial, industrial, vacant land and rental property owners. Also it could create funding difficulties for local governments especially schools.  In Illinois the Property Tax Extension and Limitation Law (PTELL) would limit funding due to the increase in the tax rate.

The best way to reduce taxes is to control spending. A reduction in spending reduces the tax burden for all taxpayers. The proposed legislation would only benefit a few taxpayers and would not result in significant tax savings to residential taxpayers. Commercial, industrial, vacant land and rental property owners would actually see an increase to their tax bill. The reduction in the tax base and the shift in the tax burden would cause more harm than good.

Sincerely,

Wayne George Flary C.I.A.O. Candidate for Avon Township Assessor

Avon Strong running mates: Robert D Kula for Highway Commissioner, William McNeill, Kathy deGroh and Jeanne Kearby for Trustees, and Patricia A Smart for Clerk. I am proud to be part of the Avon Strong team. We are ordinary citizens looking to improve services to the taxpayers of Avon Township.