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S Illinois | What is the PI of your soil? There are some wonky things going on with IL assessment right now that have less to do with any politician or taxing body and more to do with how the formulas were arrived at and historical caps put in place.
The major one for those with low quality soils, I believe the cutoff is like 115 or 120 PI soil ratings, is the upward(and downward if it ever came to that) % change that is allowed under statutes. The problem for the lower end PI soils is that cap artificially kept assessments low. For example if a soil had a $5 an acre tax the max increase was 50 cents. On a soil with a previous $10 tax, the max was a dollar increase. With the basics of IL valuation to keep a ratio between soil types, one can easily see how this difference would grow extreme in a few years so that the ratio instead of 2:1 became 3:1 or 4:1 over time. That is the big hit lower PI soils are facing for a few more years to get valuations back in line.
The other large player is the formula itself. When establish those many years ago the formula took into consideration the cap rates or interest rates. Those rates are in the denominator of this big equation. So as those rates have gotten lower and lower and closer to the lower zero bound, their influence has become more pronounced. Taking interest rates from 10%to 5% affected valuation the same as 5%-2.5%. Being on the lower end of interest rates small movements in those rates gives valuations a much more pronounced move than expected.
It could just be your county and local taxing districts pushing for higher rates too. We should push back on the local districts and their tax rates. However those deeply involved with the initial establishment of our current valuation system say in no uncertain terms, do not go back an open this back up. The political clout of the agriculture community is nothing like it was and they saw nothing but downside redoing the farmland valuation formulas. | |
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The Final Countdown from The Screaming Karl!
