A bill authored by state Sen. Alberta Darling and soften the impact of a valuation error on taxpayers unanimously passed the state Senate Thursday.
The error made by Shorewood’s assessor forces the village to add an additional $2 million to this year’s levy.
To avoid an artificial spike in property taxes, Shorewood officials plan to decrease the levy by $2 million, borrow or use cash on hand to fund the difference, and then raise the levy the following year by the same amount.
However, state law prohibits municipalities like Shorewood from increasing its tax levy for any reason other than through development or referendum.
Senate Bill 224, authored by Darling (R-River Hills) and Rep. Samantha Kerkman (R-Powers Lake), would exclude Shorewood from the levy limit law, which would allow village officials to make good on their plan. The legislation needs to be approved quickly because the village must set its levy by Nov. 15.
The bill now moves on to the state Assembly.
As a backup plan, , an arm of the state Department of Revenue, arguing that Shorewood shouldn’t be forced to harm property owners with additional taxation.
Associated Appraisal Consultants Inc., the village's assessor, recorded the value of Shorewood’s Tax Incremental Financing District No. 1, which blankets much of the business district, as $77 million instead of $77,000. It sent that figure to the state Department of Revenue, which then published that incorrect value.
Department of Revenue officials say state law prohibits them from changing property values after they have been published.
As a result, the total equalized value of property in Shorewood is artificially inflated for next year and village property owners could have to fork over $2 million more on the tax bills that will be mailed in December. That's a $442 increase from last year on a home assessed at $300,000.
Officials have said raising property taxes due to the error is a worst-case scenario.