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Tuesday, November 12, 2013

Where Does All The Money Come From?

As the leaves fall from the trees, we are reminded that it is once again time to plan for the annual tax levy.  Most local governments rely on property taxes to fund more than 50% of their operating expenses each year, making the tax levy the most important financial document.  To ensure no one misses the statutory deadlines in the process of approving the tax levy, we have prepared a simple reminder.

First, all taxing bodies in Illinois, regardless of whether they are home rule or subject to the tax cap, need to establish an estimate of the taxes to be levied for corporate and special purposes.  That estimate can be made by motion, resolution, or ordinance, just so long as it is reflected in the minutes of a public meeting and is established at least 20 days prior to the date when the final tax levy will be adopted. 

Second, if a taxing body plans to increase its corporate and special purpose levies by an aggregate amount greater than 105% of the previous year’s extension for corporate and special purposes taxes, a public hearing will need to be ordered and notice of the hearing will need to be published between 7 and 14 days prior to the hearing.  The calculation includes all corporate and special purposes property taxes, including taxes which are exempt from the “tax cap,” but excludes levies for debt service or public building commission leases.  The form of the notice of public hearing is established by law, must be strictly adhered to, and may not be published in the legal or classified section of the newspaper.  When a public hearing is required, it may be held on the same night that the final tax levy ordinance is approved (provided it is more than 20 days after the estimate of levy is declared by the public body).

Finally, all property tax levies must be approved and filed with the County Clerk by not later than the last Tuesday in December.  Because this date often falls in and around the holidays, we recommend our clients confirm the office hours for the County Clerk and file the tax levy early.  So long as your governing board complies with the schedule described above, there is no date which is too early to file a tax levy ordinance.  When the tax levy ordinance is filed, it is frequently a good practice to bring an extra copy so it can be file stamped and serve as your receipt and proof that the ordinance was filed on time.  Failure to file your tax levy before the last Tuesday in December can have catastrophic consequences for your taxing body and may require special legislation to permit an extension of your taxes.

Post Authored by Adam Simon, Ancel Glink


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