City of O’Fallon anticipates a reduction in property tax rate

Even though some variables may shift, O’Fallon’s property tax rate continues to be at a low level that, like last year, had not been seen since the 1970s.

In 2022, by the largest amount in 20 years, the O’Fallon City Council lowered the city tax rate by more than 4%, back to the 2014 level.

Mayor Herb Roach said the finance department and the council’s committee worked with the details they had in October and November so that this could be ready for the county by the deadline.

“So many unknowns right now. In the past six years, this council has reduced the rate back to where it was about 35 years ago. We have the lowest rate of any community over 20,000 population in St. Clair and or Madison County, and we will continue to be due diligent with our tax dollars,” Roach said at the Dec. 4 council meeting.

For the new annual tax levy, an estimated rate-setting assessed valuation is expected to be $843,908,272, which is $5 million higher than the 2022 final rate setting Equalized Assessed Value (EAV).

The equalized assessed value is based on applying the state equalization factor to the assessed value of a parcel of property. Tax bills are calculated by multiplying the EAV, after any deductions for homesteads, by the tax rate.

Based on the preliminary calculation of the estimated EAV, the requested rate is 0.8188 compared to last year’s certified rate of 0.8142. This would be a $3.83 increase for a $250,000 home.

However, the city anticipates that the final EAV will be higher than the estimate, which would result in a decrease in the city portion of their property tax bill.

That is based on figures as of Nov. 27. Finance Director Sandy Evans said St. Clair County is continuously updating records, so this EAV is only an estimate. Staff expects the EAV to increase.

The rate setting EAV is the base for next year’s estimate as provided by the county.

The city uses property tax to pay for such services as fire, ambulance, library, and contributions to pension-related funds.

When an O’Fallon taxpayer pays his property tax bill, St. Clair County receives the money, and then disperses it to each taxing body based upon its tax levy.

Evans said because there is a surplus in the IMRF fund, the amount requested for this year’s levy is reduced by $200,000 and the Fire Pension fund, based on the actuarial valuation, is currently funded at over 200% and that amount was reduced as well.

Evans informed the O’Fallon City Council’s finance and administration committee on Nov. 27 of the fluctuating numbers.

The annual tax levy for the next fiscal year May 1, 2023, to April 30, 2024, must be filed with the county by the last Tuesday in December.

Committee members agreed with Alderman Nathan Parchman, finance committee chairman, that even with all the variables, this needed to be moved forward, and they can expect changes.

The council advanced the ordinance on first reading Dec. 4, with final approval set for the next meeting on Dec. 18.

“The tax levy is based on dollar amount, not by rate. Therefore, if the estimated EAV is even higher than projected, the tax levy rate will be lower, and if the EAV is lower, the tax levy rate will be higher,” Evans explained.

They will have the final EAV in March or April.

The current disabled veterans’ exemption totals $128,195,801, which represents a 3.5% increase from the previous year. Disabled Veteran exemptions now represent 15.5% of the residential EAV, Evans said.

Recently passed state legislation will provide reimbursements to taxing districts for a portion of the disabled veteran property tax exemptions, but the city does not have confirmation on how much the reimbursement will be or when they will be received.

Based on preliminary calculations of the DAV reimbursement, the city should receive $290,000 and the library $71,000 for FY 24. For FY 25, the city should receive $685,000 and the library $159,000.

Evans said the staff has been in contact with the county, and they still do not know how the process will work. Therefore, the exemption relief is not included in this tax levy request.

Staff have been in contact with the county, as they are the ones responsible for submitting the calculations to IDOR by Dec. 31 to be reimbursed by the state.

She said at this time, the county staff still does not know all the details as to the process, so at this point we are not relying on these funds at this time or using these funds to offset the tax levy as we do not have all the details at this time.

“When we receive more information from the state and county about reimbursements, then the city council will have an opportunity to discuss what to do with the money,” she said.The disabled veteran tax exemption relief is a five-year pilot program, so it may not provide a long-term solution, she noted.

Evans explained that the multiplier for O’Fallon Township is estimated at 1.0867% and Caseyville Township is estimated at 1.0183%, with an average of 1.052%, thereby increasing the EAV by $8,810,455.

Evans said according to the Assessor’s office, the reason for the gap in the multiplier rate is partially due to Caseyville Township being assessed this year and O’Fallon last year.

“In addition, based on the Department of Revenue’s sales ratio calculation, the O’Fallon equalization came in under the 33-1/3% threshold, therefore the higher multiplier,” she said.

Because of petitions to review property assessments that could be filed with the Board of Review, staff reduced the projected EAV by $2 million.

The Library Board has indicated that they are seeking an additional $57,186, which is an increase of 0.0058 from last year. For a $250,000 home, that would mean $4.83 more in property tax.