Mayor's goal: Drop property tax rate

Mayor's goal: Drop property tax rate

More taxable properties needed for that to happen

URBANA — As property tax bills swell, city officials say it will be their goal during the next few years to bring Urbana's rates down to Champaign's levels.

Mayor Laurel Prussing says it's not as simple as just dropping those rates, but officials have a plan in mind.

This year, Urbana property owners paying the highest tax rates were billed $10.462 per $100 of equalized assessed value. In Champaign, the highest payers will pay at a $8.3368 rate.

A big portion of that difference was created recently, when a new state law exempted a large chunk of Carle Foundation Hospital properties. In one year, Urbana's total taxable property value dropped from $569 million to $520 million, according to the Champaign County Clerk's office.

Despite the drop-off in assessed value, some government agencies decided they could not afford to collect less revenue. That drives rates up, as the same tax burden is spread across fewer taxpayers.

Champaign rates went up this year, too, but not by nearly as much. It has a total assessed value of $1.492 billion this year, compared to $1.517 billion last year.

"We knew last year what was coming when Carle took off another $300,000, I guess, from the" city's tax extension, Prussing told a south Urbana neighborhood association this week. "We decided that the city was not going to raise its taxes because we knew the school district and the park district and everyone else would have to raise them."

And raise them they did — by more than 10 percent, translating into nearly $300 more this year for the owner of a $100,000 home.

"That really put this city into a tailspin, and I want to avoid a downward spiral," Prussing said.

The Urbana City Council was something of an anomaly locally in that it did not raise this year's property tax rates. The city, however, is directly responsible for only about 13 percent of most homeowners' tax bills. Other taxing bodies lifted their rates to cover losses in the assessed values of their districts.

Because the city can only control its smaller portion of the tax bill, it has to work to raise the city's taxable value to bring rates down. That would spread the burden out, lowering rates across all the taxing bodies without creating a shortfall for any agency.

"Otherwise, it's not a sustainable situation for Urbana," Prussing said.

To get Urbana's property tax rates down to Champaign's level, the city east of Wright Street would need to add about $120 million in taxable property, which would bring its total assessed value to about $640 million.

Between the hospitals, the University of Illinois, churches and other kinds of nontaxable entities, anywhere between 28 percent and 50 percent of all property in Urbana is tax-exempt, said community development director Libby Tyler. City officials are planning on looking more closely at the situation to nail down what that number actually is, but either way, Tyler said it's too high.

Prussing called it an "achievable" goal, but it will take some effort. The first step would be getting $77 million worth of Carle property onto the tax rolls — the city is fighting the constitutionality of the state law that exempts Carle.

Carle contends that the community benefit of the free and discounted care — "charity care" — it provides for its patients outweighs the property taxes it would otherwise owe. As long as the state law exists, Carle will remain tax exempt as long as its charity care exceeds its property tax bill. That legal battle may continue for a while.

But, if the law were struck down and Carle were ordered to pay taxes, that would also bring about $13 million worth of Presence Covenant Medical Center properties back into the city's taxable value. And the city council this week OK'd a University Avenue student apartment complex expected to add $9.7 million to the city's assessed value.

With those three, Prussing said, it gets the city pretty close to its $120 million goal.

"We're up to about $100 million, and we have $20 million to go," Prussing said. "This will take maybe two or three years."

Tax rate gap

Homeowners who live in each city's most-highly taxed areas historically have paid at a higher rate in Urbana than in Champaign. But the difference between the two was driven even farther apart this year when Urbana lost 8.6 percent of its taxable properties, spreading the burden among fewer taxpayers.

Year payable Champaign Urbana
2014 8.3368 10.462
2013 8.0167 9.3704
2012 7.68 8.8466
2011 7.4449 8.4922
2010 7.3194 8.3408
2009 7.2954 8.2237

Rates in dollars per $100 of equalized assessed value.

SOURCE: Champaign County Clerk

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