Leadership Matters September 2013 .pub

Levy, Truth in Taxation requirements and balloon levying

notice as prescribed by law, in a newspaper of general local circulation. This notice is called the famous “black box” for its bold print and requirements for completion and publication in the newspaper. The first thing to remember is that the “aggregate levy” is the entire levy for each fund, except for Bond and Interest. Therefore, the aggregate levy requirement of 5 percent of the previous extension excludes any amount levied for Bond and Interest. The main issue to avoid in the publication of the “black box” is the last line of the required publication, which indicates the approximate percentage of the new levy from the previous levy. Districts that “balloon levy” in excess of 5 percent are required to print this ballooned percent in the public notice. It is difficult to explain to taxpayers the concept of “balloon levying” when it is printed clearly in the public notice in the newspaper. Lastly, what is “balloon levying”? This is the concept that a district needs to ask for more funds to be levied than it actually expects due to the timing of the levy requirement. The levy must be provided to the respective county clerk(s) on or before the last Tuesday in December. The problem is that the districts Equalized Assessed Valuation (EAV) is not known until the spring of the following year, making the district guess as to how much can be levied. Therefore, almost all districts have to estimate or “balloon” their levy amounts based on incomplete knowledge at the time of the levy. The levy process is certainly an important process for school districts, making it is necessary for district superintendents to keep these requirements in mind.

Each school district is required to certify annually and return to the respective county clerk, on or before the last Tuesday in December, its Certificate of Tax Levy. This Certificate of Tax Levy is a single page document that lists twice the amounts requested to be levied for the next year. There is one item that districts need to be very careful in completing nearing the signature part of the form. This

Dr. William Phillips IASA Field Services Director

is the inquiry as to how many bond issues are outstanding for the district. There have been instances in which the incorrect number was provided or no number at all. This could result in the County Clerk levying an incorrect amount or no amount for the payment of the bonds. The schedule of principal and interest on bonds that have been sold should have been provided to the county clerk at the completion of the sale of the bonds. This schedule of principal and interest is utilized by county clerks in determining how much to levy to pay these principal and interest payments. The Truth in Taxation Act (35 ILCS 200/18-55) affects all units of local government. The requirements for this Act include publishing information: “at least 20 days prior to the adoption of its aggregate levy , for the current year exclusive of election costs.” Any district proposing to increase its aggregate levy more than 105 percent of its prior year’s extension, exclusive of election costs, must publish a

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