The city of Kewanee’s property tax rate will be lower for next year. But residents’ tax bills might be higher anyway.
The reason: Property values in the city have been increasing, leading to higher tax appraisals for homes and businesses.
Property taxes are based on a tax rate created by taxing districts like the city, schools, park district and so on. The assessed valuation of a property is multiplied by the tax rate to determine the amount of the tax.
At Monday’s City Council meeting, James Webb, the city’s finance director, explained that the tax rate will be a bit lower next year because of the increase in property assessments.
But property tax bills could be higher, Webb said, not only because of the assessment boost, but because the city’s contributions to employee pension funds will be higher.
The city supports the firefighters’ pension fund, the police pension fund and the Illinois Municipal Retirement Fund (IMRF) for other city employees.
“Pension liability is a huge thing, not just for us but for the entire state of Illinois,” City Manager Gary Bradley said.
The tax levy has to be set by Dec. 1, but Webb said the county probably won’t report the total property valuations for the city until mid-December.
Council members agreed to the lower tax levy.
In other property tax news, the council voted to do away with three taxes. Those taxes were levied to ensure that annual payments would be made on three bond issues the city created in previous year.
The bonds raised money for water and sewer improvements and for refunding previous bond issues at a lower interest rate.
Payments on such bonds are made from the money raised by residents’ water, sewer and trash pickup bills. The property taxes are levied just in case those bills don’t raise enough money to make the bond payments. That makes the bonds more attractive to the investors who purchase them.
Each year the council determines that there has been sufficient utility-bill revenue to make the bond payments, and cancels the property taxes.
Bradley said that a few years ago, the city council in Geneseo forgot to abate the property tax on a bond issue, resulting in higher-than-expected property tax bills and some upset property owners.
