I wanted to give you a closer look at Champaign's estimated $20,212,800 property tax levy for 2010 (payable in 2011) and what fate lies for homeowners' tax money. (WARNING: Tax charts ahead.)
The good stuff is at the end if you want to jump there now, but bear with me while I take a roundabout way to explain a somewhat complicated issue. If you love taxes, you'll love this explanation.
City officials calculated that $20.2 million as what they expect to collect from property owners with a tax rate of $1.2942 per $100 of equalized assessed value. That means the owner of a $150,000 market value property, with no exemptions, would pay about $647 in property taxes to the city. Property owners, keep in mind that does not include payments to the other taxing bodies, so don't say I lied to you when your tax bill is five times that high.
That tax rate is identical to what the city of Champaign has approved for the past several years, so looking at the growth in the tax levy is a direct reflection of the growth of the tax base in the city. And the change in the tax base reflects changes in existing property values plus new construction. The chart to the left shows the change in the city of Champaign's tax levy since 2000. The graph is a little small, but is easy to see that the tax levy is not growing as quickly as it had been earlier in the decade. Thanks to the city for providing me with these charts that they used to explain the tax levy to the city council on Tuesday.
Property taxes are a key revenue source for local governments, and budgeters rely on ever-increasing property values to cover ever-increasing city costs. This year, Champaign budgeters estimate that the tax levy will grow by 1.4 percent over last year's: that's actually a 0.7 percent decrease in existing property values and a 2.1 percent increase in the city's overall tax base as a result of new construction.
So here (again to the left) is a breakdown of where those property taxes go. Nearly half of that $20.2 million tax levy goes to pay for police, fire and IMRF pensions (IMRF stands for Illinois Municipal Retirement Fund, the pension plan for non-police or fire municipal employees).
One-third of that $20.2 million goes to the library, which relies heavily on property taxes for its budget. The roughly 20 percent leftover of that $20.2 million homeowners pay the city in property taxes goes toward the things that residents typically perceive as city expenses: capital expenses like fixing potholes and services like police and fire (keep in mind that police and fire service costs are separate from what the city pays to fund their pensions).
So let's go back that $150,000 home and its owner, who will pay about $647 in property tax to the city next year. Of that $647:
$58.23 (about 9 percent) will go into the city's general fund, which pays for miscellaneous city costs like police and fire service, personnel costs, cleaning sewers, etc.
$71.17 (about 11 percent) will go to the city's capital budget, which pays for rebuilding and repaving roads, building sewers, new sidewalks, and other infrastructure expenses.
$213.51 (about 33 percent) will go into the Champaign Public Library budget.
- $304.09 (about 47 percent) will pay for police, fire and IMRF pensions. This fund is ever-increasing, and states and local governments everywhere consistently struggle to keep up with its funding during a tight economy.