October 2, 2008

Will taxes keep pace with valuation increases?

Will taxes keep pace with valuation increases?

Valuations have gone up for most cities in the county, with increases ranging from one percent in Ruso to 17 percent in Underwood. Three cities, Benedict, Butte and Coleharbor showed a decrease of less than one percent.

Will taxes follow at the same rate? McLean County Auditor/Treasurer Les Korgel said the verdict isn’t in yet, as some entities have yet to submit their budgets to the county. But, he did say taxes don’t necessarily increase at the same rate as valuations.

Korgel said there are two pieces to the puzzle. "One is the valuation of property and the other is the amount of money that the tax districts need," said Korgel. "If the taxing entities don’t request anymore than last year, or even request less than last year, your taxes could possibly go down, even though your valuation went up."

Two areas where that scenario doesn’t apply are the state levy or Garrison Diversion, which are statutory mills. Those mills remain the same regardless of the value of a mill, so if valuation increases, that amount will go up.

The good news there is the rate is one mill and Korgel said that generally equates to a matter of cents. It is county schools which collect the largest chunk of property taxes.

Taxing entities that are capped, or can only levy a specific number of mills, will see an automatic change when valuations increase or decrease. One example is an ambulance service that is set at five mills, if valuations increase; the service will see more dollars because those five mills are now worth more money.

Korgel gave one hypothetical scenario. "In Underwood for example, if the school district holds about the same, the city holds about the same, the other taxing districts are capped and we haven’t finalized our budget for the county yet, but it is not going to be much more than last year, you might be looking at a five percent increase in actual dollars that you’ll have to pay for property taxes," said Korgel.

Last year Underwood had a total of 398.03 mills, with a mill valued at $731.08. The school district’s portion was 186.45 mills, or 47 percent of the total mills. The city, which also includes the park district, was at 37 percent. The county’s portion, including the health district, fair and library received 12 percent. The other four percent is distributed between the fire, ambulance and soil conservation districts.

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