Truth in Taxes
Before I even begin this post, I don't want to bury the lead or not state from the beginning where I personally stand on the subject of taxes -- property taxes specifically.
I have NO desire to increase Lakewood's taxes.
While the Lakewood portion of our taxes is an incredibly small portion of our full property taxes, it's the one we control and as such; I believe that controlling out of control spending, having good budgeting procedures, and doing the due diligence of getting appropriate bids for all projects will go a long way to making every single tax dollar go further.
Ok -- with that out of the way, there have been some incredibly misleading things sent out to residents regarding taxes lately -- so let's just walk down the uncomfortable subject of taxes to understand why our current administration is telling you they did something they did not do.
When people talk taxes, they tend to talk about three different things and depending on what they are selling, they will to pick the number that fits their narrative. The three numbers are:
The Property Taxes WE pay -- this is based on the assessed value of your home times the tax rate less any discounts. When most residents hear a politician say "lower your taxes" --- they believe the politician is meaning this number.
The Tax Rate -- this is the total levy requested by the village divided by the EAV (Equalized Assessed Value) that the county sets for the village. So -- since this is a fraction, if the bottom number (a number not controlled by the village) grows or shrinks the % is affected -- specifically, it is affected in an INVERSE way -- if the EAV goes up, the tax rate goes down as long as the levy stays constant.
The Levy Amount -- this is the ONLY number in the taxation equation that the village has any control over. Every year, the village tells the county how much money it will need from property taxes to run the village, the levy total.
Since the Levy Total is the only number the village has any control over or affect on, it's the only number I think is pure enough to evaluate the situation with our property taxes. Yes, as home values increase, we would expect our tax bill to go up -- the question is always if they go up or down proportionally to the increase or decrease in home values.
There is a claim that this current administration has lowered taxes. This is highly misleading -- so exactly the reasons I stated as it is a claim based on whichever number is picked that fit their narrative. Here's the reality of what the village has said annually they needed to run the village from our property taxes:
In the blue box is Erin Smith's presidential terms. It is often claimed that she raised taxes, but during her term as President, the tax levy requested dropped 12% over the 8 years she was in office and in 2011, there was a 21% drop in the levy. During this SAME period, we achieved the AAA bond rating --- which is a direct result of good money management. Now, I will not tell you that I agreed with every decision over those 8 years. But I think Erin worked very hard to keep the levy to what was needed. She identified the need for a diversified tax base -- I heard her speak to it in the transition meeting between her final meeting and the first meeting of Paul Serwatka.
When Paul was elected President, Phil became a Trustee. As an elected official, his time in office (regardless of position) has affected this village -- it was during his trustee period that he ripped off the stairs to the RedTail deck and spearheaded the costly renovations to the RedTail trailers. Also during this time, he insisted that the bar at RedTail be called the "Hawk's Nest Pub" and he attempted to remake the menu to be the "Augusta of the Midwest." So -- yes, his history of poor financial choices goes back to his first elected position as Trustee.
So, the red box is the time that Phil has held public office, with the shaded section the time he's been president. Despite a 10% cut in the only levy that Paul had passed, over the past 4 years, we have seen the levy amount grow 4.6%! We are essentially operating on the same levy we had in 2012 --- do we have more homes in Lakewood than we did in 2012? Yes, yes we do. Do those homes require services? Yes, yes they do. Our EAV has grown 18% in those 9 years -- and effectively, our levy total has been flat.
What's the result of that? We have less income per home than we did in 2012. Ok, so on one hand you can say -- well, then we've had to tighten our belts and do more with less to keep taxes low. But have we? The simple answer to this is no -- we are making up the difference by spending our reserves. But this is the village level -- what do these levies mean at a homeowner level.
Well -- over the past 15 years -- the average home (valued at $396K with a taxable value of $133K) has seen a 3.1% decrease in the Lakewood portion of their taxes. That is OVER 15 years. In the past 4 years, the period Phil has had his hand in our tax pockets, there's been a 1.77% increase in that same mythical house's taxes. But what about a real house -- specifically, Phil's house. Over the past 15 years (not all of those years he's lived in that house), the house saw a 58.79% DECREASE in the Lakewood portion of his property taxes. Over the period of time he's been elected, he's enjoyed a 43.8% DECREASE in his property taxes.
His story on the huge reduction on his assessment is that the assessor made an error an it was corrected. Remember how this process works -- the village is going to get the full levy -- so if one house is UNDER assessed, other houses need to make up the difference. So, the one year 50% reduction in Phil's taxes, meant that some number of other houses had to have tax increases to offset that reduction.
With this understanding of how all our property taxes affect one another, did Phil reach out and report that there may have been an error that might negatively impact some of the residents of the village he claims to serve? There is no record of that. In fact, it appears that the county discovered several issues with assessments and went to correct them in the following year. So, naturally, Phil, being responsible, accepted the fact that his house was properly assessed in 2020, right? Um, no -- he appealed.
Here's his assessment for 2019 taxes -- note, prior year would be 2018:
Here's the assessment for 2020 (prior year is 2019):
In 2020, the board of review had set his assessment at $144,986 and this was appealed. He requested the S/A (Supervisor of Assessment) Equalized value of $99,353 -- which while greater than the $80,482, it is still far less than any prior year's assessments. Now, as I understand the assessed values are supposed to be roughly 1/3 of the market value -- he was arguing that his home would be FAIR market value of just shy of $300K. The board of review members all note that fair market value is more like $410K-$435K, depending on whose notes you read. However, this is my favorite notation from the clerk of the review board:
In summary -- when you read that our president has lowered taxes, you might want to ask WHOSE? When our current president says that the Travel Center will allow us to lower taxes more and increase services -- you might want to ask how with the out of control frivolous spending going on? The travel center, once built, will be good thing for our community -- but until ground is broken, until the ribbon is cut, AND until the travel center exceeds the incentives offers, it will not have brought any cash into the village -- I was raised not to count my chickens before they were hatched.
Full disclosure -- my Lakewood taxes dropped in 2019 too from what the previous owners paid in the prior year -- by $200. When I got my notice, the Market Value was listed as my sale price and that made sense to me. When I got the notice this year, my assessed value jumped by $11K so I expect my property taxes will go up too. What is interesting is that my house is currently assessed at $6,000 less than Phil's. I live on about 1/3 of the land he does, I don't have a pool, I don't have a walk-out basement, and I'm not in a ranch, which means I have a higher above ground square footage, but less total square footage. The ONLY thing in common is that both of us are on a golf course. Here's my 2020 numbers -- for transparency.