Assessment Equalization Factors Q&A

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WHAT IS AN EQUALIZATION FACTOR(MULTIPLIER)?

A mathematical number (multiplier or factor) applied to a type of property (residential, commercial, etc); a township; or the county as a whole. They are used by local assessors and the State of Illinois for the purpose of improving assessment equity (equality) and/or reaching the State required assessment level of 33 1/3% of market value.

WHY DOES STATE LAW REQUIRE EQUALIZATION FACTORS?

Illinois Department of Revenue classes explain that multipliers are used to put assessments at the same level between counties (state multipliers & county multipliers) and between townships (township multipliers). Illinois law states that assessments are to be at one-third of the properties market value.

If a person owns a $150,000 home, they should have an assessment of $50,000.

If a person with a $150,000 house in one county has the appropriate $50,000 assessment and a person in an adjoining county or township with a $150,000 house has an assessment of $35,000 and they are in the same school district – the person with the $50,000 assessment will pay more taxes to the school than the person with the $35,000 assessment for a house worth the same amount.

For example:
If the school rate is $3.00 per 100 of assessed value the difference would be as follows:

$50,000 x $3.00 divided by 100 = $1,500 would be paid to the school
$35,000 x $3.00 divided by 100 = $1,050 would be paid to the school

Since both properties should be valued at $50,000 based on both being worth $150,000, the $35,000 property needs to be increased by a multiplier/equalization factor of 1.42857.

$35,000 x 1.42857 = $50,000 x $3.00 divided by 100 = $1,500 paid to the school.

This adjustment results in both properties paying their “fair share” of the tax based on
their market values.

Statistical studies called sales ratio studies.

WHO DOES THESE STUDIES?

The official studies are done by the Illinois Department of Revenue. These are done by county and by township when enough data is available. The Supervisor of Assessments Office also does studies to compare to the Department’s as well as more detailed studies of townships and property classes.

WHAT INFORMATION IS USED FOR THESE STUDIES?

The Illinois Department of Revenue requires forms (Real Estate Transfer Declarations) to be filed with the County Recorder’s Office when sales of property take place. These forms contain information on the sale and must be signed by the buyers and sellers of the property.

When the sales are determined by the Department of Revenue to be “arms length” (advertised in the open market with neither party forced to buy or sell), they are compared to the assessment applied by the local assessor from the year prior, resulting in a sales ratio. The Department then adjusts the results of the ratios by adjustments assessors and multipliers have made to prior year assessments.

These adjustments are made because State law defines one-third market value assessments as being based on one third of market value for the three prior years.

WHAT YEARS SALES WILL BE USED FOR 2016 ASSESSMENTS?

State law requires that the sales ratio studies for 2016 be based on sales from 2015, 2014, and 2013. These sales are compared to local assessor’s assessments for 2014, 2013, and 2012 respectively, and must be adjusted by the Department’s study results of increase and decreases for prior years.

WHAT FACTORS INFLUENCE EQUALIZATION FACTORS (MULTIPLIERS)?

Multipliers are affected by increases and decreases in sales prices in the real estate market.
Multipliers are affected by increases and decreases made by assessors in assessments.
Multipliers are affected by methods utilized by the Department in the studies themselves.
Multipliers are affected by the number of arm’s length sales available.

WHAT HAPPENS IF TOWNSHIP EQUALIZATION FACTORS (MULTIPLIERS) ARE NOT APPLIED AT THE COUNTY LEVEL?

If the local assessor has not reassessed individual properties to the required level and the County Assessor and Board of Review do not apply equalization factors to adjust the county to the state required level – the State Department of Revenue will issue required factors to the County Clerk who must apply them at the their level prior to extending (calculating) taxes.

DOES AN EQUALIZATION FACTOR AUTOMATICALLY INCREASE OR DECREASE TAXES?

No.

Taxes are increased or decreased by:
1) An increase or decrease in a levy request (amount of dollars) requested by a taxing
district over or under the amount of tax dollars the district received the prior year.

2) A shifting of the increase or decrease in amount of dollars requested by a district
from one taxpayer to another because of exemptions, TIF’s, and other special tax
treatments established by State Law.

SIMPLIFIED EXAMPLE – IF TAXING DISTRICT DOES NOT REQUEST AN INCREASE OR DECREASE IN AMOUNT OF DOLLARS FROM THE PRIOR YEAR

Calculate Tax Rate

                               2015/Pay 2016    2016 Factor       2016/Pay 2017
District
Equalized Assessed Value         74,000,000     x     1.10    =     81,400,000

District Levy ($’s Asked For)        90,000                             90,000

Tax Rate = Levy/Value             .00121622                          .00110565

When Equalized Assessed Value goes up and Levy (money asked for by the District stays the same) the Tax Rate goes down accordingly and the taxpayer does not see an increase in taxes.

How Individual Taxpayer would be affected.

Individual Taxpayer

Individual Assessed Value            50,000     x     1.10    =         55,000
                                          x                                  x
Tax Rate                          .00121622                          .00110565

Tax Bill                             $60.81                             $60.81

DOES AN INCREASE IN EQUALIZATION FACTOR USUALLY RESULT IN AN INCREASE IN AN INDIVIDUAL’S TAX BILL?

YES.

Increases in costs to provide services and State mandated legislation to taxing districts are two reasons tax bills may increase as districts normally must increase their levy amount to cover their increased costs. Even if no equalization factor is applied, the recouping of increased costs to the taxing district will increase the taxes an individual pays.

SIMPLIFIED EXAMPLE – IF ASSESSMENT DOES NOT CHANGE BUT TAXING DISTRICT REQUESTS AN INCREASE IN DOLLARS

Calculate Tax Rate

                                  2015/Pay 2016        2016 Factor     2016/Pay 2017

District
Equalized Assessed Value            74,000,000       None (1.000)       74,000,000

District Levy                           90,000                             100,000

Tax Rate = Levy/Value                .00121622                           .00135135

When the Equalized Assessed Value stays the same but the Levy (money asked for by district) goes up, the rate increase and the individual taxpayer pays more even though his assessment does not change.

Individual Taxpayer

Equalized Assessed Value               50,000                               50,000
                                            x                                    x
Tax Rate                            .00121622                            .00135135

Tax Bill                               $60.81                               $67.57

HOW DO I KNOW IF AN EQUALIZATION FACTOR HAS BEEN APPLIED TO MY PROPERTY?

If a factor is applied by a township assessor to a neighborhood, property type etc., it is considered an individual change and the taxpayer will receive a notice and the change is published in the newspaper.

If an equalization factor for a property class or township is applied by the County Assessor or Board of Review the multipliers/factors by law are published in the heading of the newspapers listing of assessment changes for the township when the assessment year’s changes are published.

If equalization factors are issued by the Department of Revenue, they are published in local newspapers.

DOES FARM LAND RECEIVE A MULTIPLIER BASED ON SALES OF FARM PROPERTY?

NO. Farm Land assessments are based on economic value as established by the State Farmland Assessments Committee and certified to the counties by the Illinois Department of Revenue. Land soil types are increased or decreased by state factors of no more than 10% change per year. Farm homes and home sites are assessed just like any other residential property and are subject to the same equalization factors and multipliers.

IF I HAVE ADDITIONAL QUESTIONS?

Please contact the Supervisor of Assessments Office at 815 434-8233.