Trustee Session at #ILAAC22
October 5, 2022
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The annual tax levy ordinance is the source of 90-95% of your library’s revenues. Determining the library district levy seems daunting and, indeed, there are plenty of “devils in the details.” But a few simple rules will help Trustees keep the levy process clear and better understood. The Trustee Forum presentation “Why the Levy Should be Easy for Trustees - But a Little Harder for Directors!” at the ILA Annual Conference at 9:00 a.m. on October 20 will explain how easy the levy can be, with the key highlights are below:
- The district can request a levy in any amount, but the law limits what can actually be extended for taxes. Ensuring that your levy request is above this limit will maximize the likelihood of getting all tax dollars possible.
- So, what is that limit? It depends on whether your district is subject to the property tax cap. Libraries subject to the tax cap are limited to an aggregate annual tax increase of inflation plus a tax on new property. Although the amount of new property can vary widely from district to district and year to year, this simplified formula makes it relatively easy to set a levy target. Districts not subject to the tax cap still have tax rate limitations on individual “capped” funds. For these libraries, the anticipated increase in a district’s equalized assess valuation (“EAV”) will be the primary limitation on tax increases. Knowing what is likely to happen to EAV can be little tricky, but there are ways to anticipate this.
- Still worried? A new law for tax capped libraries allows that even if you don’t levy the maximum in a given year, the formula maximum for the following year will be calculated as if you did.
- Finally, this year the inflation factor for the tax cap calculation is 5% (the statutory maximum), while property valuations may be increasing significantly, so that tax extension increases in excess of 5% may be achievable. Any district increasing its levy more than 5% over the prior year extension must hold a Truth in Taxation hearing prior to passing the levy. The Truth in Taxation process is detailed and time-sensitive, so consult with your library’s attorney to ensure it is completed properly.
Want more detail? Then we’ll see you on October 20th at 9:00am!
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