Misconceptions about Property Taxes

Top 3 Misconceptions About Property Taxes

1. When an assessed value is reduced, the taxing districts lose money.

In Illinois, many taxing districts are subject to the Property Tax Extension Limitation Law (PTELL). This means, for
example, that a school district can only ask for a certain amount over and above whatever they asked
for last year (with some complex exceptions for new property, etc.). No matter what happens to the
aggregate assessed value inside the taxing district boundaries, they will receive the money they asked
for. When the real estate market crashed in 2008, it was very difficult for taxpayers to understand how
their taxes could possibly be going up when their homes had lost so much value. PTELL provides flexibility
where the tax rate can adjust upward or downward depending on what happens to the aggregate value
and the variations in the levy, or the amount of money the taxing district is requesting from the property
tax.

2. My assessed value went down so my taxes will go down.


This is a variation on the above. In periods of a declining real estate market, assessments should go
down. If they do go down, the taxes overall will not fall at the same rate, however, because the system
is set up so that the taxing districts can always ask for – and receive – at least what they asked for the
year before plus a small bump that is tied to the Consumer Price Index. Said another way – if all values
are reduced proportionally, nobody enjoys a reduction in their actual tax liability.

3. My taxes went up to $500. That means my child might get a school-funded iPad this year, right?


Unfortunately, no. Illinois has a pension crisis and most increases in property tax are utilized for payment
toward pension debt rather than enhancing services for taxpayers.

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