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1. How does the equalization factor effect tax rates?

Count Clerks calculate tax rates for each taxing district by dividing the district's tax levy by its tax base. A tax base is composed of the equalized assessed value of locally assessed property, less any homestead exemptions, plus the value of any State-assessed property. A levy is the amount of revenue a taxing district wants to raise through property taxes. The greater the tax base, the lower the tax rate needed to raise a given levy. An increase base, which may result from an increased equalization factor, generally results in a lower tax rate. A decreased base, which may result from the deduction of exemptions, results in an increased tax rate.

2. What is a levy?

- The governing board of each taxing unit determines how much money is needed to operate during the coming year and how much must be raised from the property taxes.

- Certified to the County Clerk no later than the last Tuesday in December.

- Tax levies are made for the various activities of government.

- Money is allocated separately for each levy by spending account or "fund".

- The fund structure is the framework within which the financial decisions of local governmental units are made.

- Government bodies are entitled by State statute to use a number of funds. These could include a corporate (or general) fund, a bonds interest fund, and other specialized funds, such as a fire protection fund, a library fund, or a street and bridge fund.

3. How do levies affect tax rates?

Levies are made in dollar amounts. In order to raise the money requested in levies, County Clerks must calculate numbers which, when multiplied by the total equalized value (the tax base), will yield the amount of the levy. This number is the tax rate. Property tax rates are subject to limits set by the State Legislature. The applicable limit depends on the type of governmental unit and the type of fund. If the rate necessary to raise the amount of the levy is greater than the maximum legal rate, the maximum legal rate is applied and the amount of money raised is less than the levy. In some cases the tax rate limits may be modified by referendum.

4. What makes tax bills increase?

The amount of a property tax bill is determined by two things:
1. A property's equalized assessed value (a taxpayer's share of the total tax base)
2. the applicable tax rates, which depend on the level of spending of local taxing units in which the property is located.

If assessed values increase because of inflationary increases in property values, tax bills will not necessarily increase. As long as taxing districts do not increase their spending, a general increase in assessed values (i.e. the tax base) will mean lower tax rates and tax bills will stay the same. If taxing districts increase their spending, however, tax bills generally will increase regardless of changes in assessments.

The "Truth-In-Taxation Law" requires taxing districts to publish notices to taxpayers if the districts' proposed levies are at least 5 percent greater than the amount billed to property taxpayers the year before (excluding bonds and interest and election costs). This amount billed is called the extension. Districts must hold public hearings regarding proposed tax increases. County Clerks may not extend more than 5 percent over the previous year's extension if a taxing district does not certify that it has complied with these publications and hearing requirements.

When taxpayers feel their property assessments are unfair when compared to assessments on similar properties, they should use the appeal procedures outlined previously. On the other hand, if their appeal is that tax bills are going up, they should attend "Truth-in-Taxation" hearings to become familiar with he needs of local taxing districts which are spending their money, and to express their concerns about increasing taxes.

5. When are taxes extended (billed)?

A County Clerk can begin the process of extending taxes only after the Board of Review has completed its work. State assessments and the final equalization factor have been certified to the County, and all taxing units have levied. Since many Boards of Review do not adjourn until December or later, extension of taxes does not begin until the year following the assessment year.

6. How is the tax rate computed?

The County Clerk calculates a tax rate for each fund used by each taxing district by dividing the tax levy for that fund by the district's total equalized assessed value that remains after deduction of homestead exemptions.

If the resulting rate exceeds the maximum allowable rate, the extension is limited to the amount which the maximum legal rate will produce when applied to the tax base.

The total district extension is further limited to 5 percent over the previous year's extension (excluding bonds, interest and election costs), unless the "Truth-in-Taxation Law" publication has been made and a hearing held.