By: Mark Glennon*

You probably know the joke about what you get when a committee designs a racehorse. A camel.

But what do you get when an 88-member committee with seven subcommittees, comprised mostly of Illinois politicians, offers its ideas on property tax reduction? The draft report by the Illinois Property Tax Relief Task Force.

It’s pathetic. It’s a hodgepodge of maybe-be-this-maybe-that non-conclusions and half-baked evasions from different subcommittees. It omits any quantification of the ideas it presents and offers no concrete recommendations whatsoever that can reasonably be expected to lower taxes meaningfully.

I reached Joe Sosnowski (R-Rockford), a very sensible member of the committee who summarized it nicely:

As the current draft, the report is a collection of a bunch of thoughts with no real recommendations that was put together by a handful of people. There was no actual discussion or debate at the committee level on the draft report. This grossly oversized committee was created in a deal with the governor to convince a couple legislators to support an income tax increase being placed on the ballot apparently so they could have political cover. This is a complete disaster.

The document indeed reflects no indication of any input from fiscal realists, which is undoubtedly why Republicans are objecting strenuously, according to Crain’s.

By law, the final report was supposed to have been completed by December 31. One reason it’s late, according to Crain’s, is those members’ objecting to having their names on it, claiming their input was ignored. Good for them. No self-respecting people of either party should want their names on it.

Most important, in the end it’s focused not on tax reduction at all, but on a shell game –swapping lower property taxes for higher taxes on other things. That does no good for a state where the real problem is the total tax burden, making Illinois the “least tax-friendly state” in the nation, as Kiplinger said. 

Here’s a key line from the draft: “New revenue sources will be needed to ensure that schools can continue to meet Illinois’ needs. New funding sources for schools could also go a long way toward reducing school levies and thereby reducing property tax bills.” Schools consume 62% of Illinois property taxes, though much higher in some areas, so shifting school taxes to the state means the tax reduction effort has morphed in a tax swap effort.

Insofar as we can summarize the barely intelligible draft, here is what it says:

Consolidation:

The report endorses the notion of consolidating Illinois’ notoriously large number of governmental units, especially school districts. However, there’s no teeth in any proposal, deferring instead to local voters, just like consolidation laws already in place. That reliance has proved ineffective.

The consolidation section of the report lists various “thorny” problems, and therefore concluded that codifying a general rule to urge consolidation is “rife with risk.”

So, what’s left to recommend? The consolidation section lists just these minor things, most of which don’t even relate to consolidation:

  • Close the loophole allowing districts to engage in continual bonding after a bond issue has expired.
  • Allow school districts to petition for increased state funding to lower their levy.
  • Mandate that school districts with significant cash reserves must either abate the excess reserves by lowering the levy or identify the purpose and utilization timeline of the funds
  • Instruct the Illinois State Board of Education to establish best practices for school districts with regards to debt and reserve ratios and mandate long-term planning goals to assess the financials of a district

But here is the big one: Two subcommittees “recommend the identification of new revenue streams to fund education…. Both subcommittees recommend expanding the sales tax base to achieve this goal.”  In fact, one subcommittee recommends entirely removing school funding from property taxes and shifting that to the state. Schools alone account for about $20 billion – about two-thirds – of total property taxes.

That’s right, raise sales taxes to fix the property tax problem! Our sales taxes already are seventh highest in the nation. In Chicago, they are a minimum of 10.25%.

What would that mean for sales or other taxes? The report doesn’t say, but we can tell you. Shifting school costs to the sales tax would mean Illinois sales taxes would more than triple. Shifting it to the personal income tax would mean they would have to double.

TIFs:

Various subcommittees did make some concrete suggestions on tax increment financing, but there’s no indication how these measures would cut overall taxes:

  • Mandate a provision of 25% of all newly-created TIFs to be set aside for the school districts.
  • Release all uncommitted TIF funds to public service providers if not used within five years.
  • Shorten the timeframe for TIF districts from 23 years to 10-15 years.
  • Tighten the definition of “blighted” to incorporate objective standards rather than an open interpretation of the “but for” requirement.

The PTEL Subcommittee:

Good luck seeing what if any property tax reduction would result from these suggestions by the PTELL Subcommittee. (PTELL is the current system of property tax caps, which every owner knows is full of holes.) The draft report certainly doesn’t provide any support for these, and the first one would actually raise taxes:

  • Allow “recapture” of lost opportunities for tax extension increase by extending ability to compute current PTELL limits as if the maximum levy was taken within previous years.
  • Consider allowing voter referenda to lower taxes in all PTELL taxing bodies.
  • Study and remove, spread out, or limit growth elements in the PTELL formula for new construction and possibly TIF expiration, in order to reduce growth and volatility in our tax burden.
  • If the overall Commission wishes to propose a Tax Freeze, extend PTELL to all home-rule and non-home rule taxing districts, and establish 0% CPI and allow0% for other growth rates, using the PTELL formula. If the overall Commission wishes to propose a Reduction to previous lower tax rates, then one simple potential. move would be to allow the PTELL formula to calculate a new extension based not on the current year extension, but on the lowest extension of the previous five years.
  • Do not rule out eliminating PTELL entirely and relying on local governments and local voters to produce responsible funding and taxing levies.

Assessments and Exemptions Subcommittee:

  • Increase homestead and senior exemptions in the collar counties to the same levels as Cook County. All other counties should have a right to increase their exemptions to the same levels by county board.
  • Provide properties that qualify for a homestead exemption a 10% state rebate on the total amount of the property tax bill.
  • Share industrial and commercial assessed value across the county for school funding.
  • Increase training requirements of township assessments who represent townships with over $1 billion of valuation.

Those supplements to exemptions would be nice but the report doesn’t say where corresponding cuts to pay for them would be made. The other recommendations would have no impact on total taxes paid.

Pensions?

The Pensions Subcommittee offered these two gems:

  • Enact the consolidation bill for downstate and suburban pensions.
  • Second, “explore alternative methods of amortization.

That consolidation proposal is already law. Why is it even in the draft? As for amortization alternatives, the document offers no specific, alternative methods, and changing the amortization is just a euphemism for can-kicking — pushing pension contributions out to a later date.

On all the above, there’s no estimate of dollar impact on property taxes. None.

Finally, who drafted this thing? It reads like a model for our schools’ failure to teach expository writing. It wanders among different topics. Sections aren’t labeled. The index at the front has no page numbers. Recommendations from different subcommittees are sprinkled in with background material, leaving it unclear what, if anything, the task force as a whole is recommending. Yes, it’s just a draft, but come on.

A proper report would have started and ended with something like this: Illinois’ flight of population and tax base results primarily from its uncompetitive tax burden. Property taxes must be cut without shifting that burden elsewhere. Those cuts cannot be achieved without, among other things, (1) real pension reform, which requires a constitutional amendment to the state’s pension protection clause, and (2) an end to unfunded mandates imposed on local units of government, including collective bargaining mandates and “prevailing wage” rules.

And if lawmakers think the proposals for new revenue provides justification for the pending progressive tax increase, as Rep. Sosnowki says some intended, forget it. The $3.5 billion of new revenue it supposedly would raise has already been promised for other things several times over and will have no appreciable effect on property tax bills.

*Mark Glennon is founder of Wirepoints.

 

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James Zuber
4 months ago

I personally think in the shape of Illinois debt problem lies at the feet of Illinois politicians. And all non essential Illinois government should be cut emidatily. Pay for politicians should be cut in half and they shouldn’t receive any money until they pass good legislation and get our state back on track to recovery from the huge debt they they the politicians have created. for I believe Illinois citizens are paying way more than their fair share. And maybe we the citizens of Illinois need to take the checkbook away from the politicians who have over promised and miss… Read more »

debtsor
4 months ago
Reply to  James Zuber

It’s been almost entirely Democrats who are responsible for this. They’ve been in charge of the legislature for 39 of the last 41 years. To blame ‘politicans’ is not quite capturing the problem. As for cutting legislature pay, I agree, but not for the reasons you think. Legislator make $66k plus a per diem (and a roughly $10k ‘bonus’ if they are on a committee chair). It’s really, in the scheme of things, not all that much money for a full time job. Don’t get me wrong, it’s above average income, but it’s not great pay. I couldn’t work for… Read more »

Conn
4 months ago
Reply to  debtsor

The state legislature is a part time gig. They have a full benefit package.

Freddy
4 months ago

As I said before there are 88 members on the property task force and coincidentally the same amount as keys on a piano and it will definitely play out of tune. It did. Way too complicated with so many different viewpoints and not much in substantial tax relief options. Was there any public input as to how address this monumental boondoggle? There should be town hall meetings ASAP all across Illinois with both sides present to address possible solutions. This affects all property owners and taxpayers and we should have input. After all it is OUR money!

mqyl
4 months ago

I agree that the report is pathetic but, unfortunately, predictable. Lower property taxes but make up for the lost revenue by increasing or creating other tax and user fee revenue streams. I predicted this recommendation in my earlier comment. This is another example of the misuse of IL taxpayer money by conducting a study that intelligent people knew would have no meaningful recommendations to significantly ease the burden on the IL taxpayer.

Fed up neighbor
4 months ago

Ok I’m gonna say this and at the same time apologize to wirepoints now. Pritzker grow some balls freeze property taxes now for 2 years and get your lazy ass task force people to do there JOBS. Stop the damn smoke screen, stop the bulls-it and get the job done. If not impeach this ass governor now. ENOUGH taxpayers have had enough of your little games SPRINGFIELD. LET TAXPAYERS DECIDE before you trash this state further.

Fed up,neighbor
4 months ago
Reply to  Mark Glennon

Thank you

Rosalie Huebener
4 months ago

Did I miss the recommendations that call for the elimination of departments that are political patronage or are not needed? I can’t remember any elected official calling for the cleaning of political waste.

4 months ago

1- Would’ve been nice if they had numbered the pages.
2- Anyone else notice the first PTELL Subcommittee recommendations makes it easier to circumvent PTELL and RAISE property taxes? And the last recommendation is to eliminate ANY restrictions on RAISING property taxes?
3- Names in alphabetical order…by first name.

Not encouraging.

riverbender
4 months ago

Something I see missing on all of the tax articles is where is the sales tax windfall going to go? Internet sales agencies including Ebay and Amazon are now collecting sales tax that I would assume amounts to a sizable number. Does these funds just go into more assorted vote buying slush funds or is it to be accounted for and, in this station, be allocated to lowering property taxes?

Mike Williams
4 months ago
Reply to  Mark Glennon

So in other words, Illinois couldn’t even wait and accumulate the new internet revenue before spending it. They sold the rights to the future revenue so they could spend now. Is that the correct interpretation?

Willowglen
4 months ago
Reply to  Mark Glennon

Mark – your illumination of how lenders are getting liened up everywhere they continues to give me concern. In any kind of insolvency proceeding, there likely won’t be sufficient sources of non-liened revenue to bring about a fresh economic start. I fear property rights will be ignored, bringing on its own form of anarchy. The far left doesn’t care about property rights, but our economy, one of the few vibrant ones on the globe, runs on respect for them.

Mike Williams
4 months ago
Reply to  Mark Glennon

So, future revenue is actually owned by the bond holders and not the city. If the city declares bankruptcy, since the city doesn’t own the revenue, the courts must ignore it. That revenue can’t be allocated to public union pensions. Since I’ve never worked in the public sector, I’m ok if the bondholders are indirectly cutting off the funds for the overcompensated unions. In fact, they have my full support.

Sid Sigerson
4 months ago

It’s unfortunate living in such a blue state, when the rest of the country is really doing well and we just keep getting driven into the ground. No wonder Democrats think Trump is bad in this state it’s hard to see the light.

I will NOT answer the CENSUS, I would much rather house representatives move to a red state where I will be better represented.

debtsor
4 months ago
Reply to  Sid Sigerson

That’s not a bad idea.

Gemini
4 months ago

Illinois’ Lieutenant governor is too busy smoking weed to be bothered with anything like this.

DantheMan
4 months ago

Just more proof that Illinois can’t fix itself. Personally, I see no reason for hope. Consider the following…. 1. The majority consistently votes Democratic (and/or socialist). Occasionally there is an exception, but because they are basically a lone wolf, they can’t effect change. 2. Common sense traditional methods of handling a budget crisis are mostly ignored. Has Illinois drastically reduced public employees or frozen wages? Has it made any drastic organizational changes at all? As you would expect in a liberal state, the expense part of the balance sheet is allowed to grow while all efforts are focused on finding… Read more »

nixit
4 months ago

Tax Farce™️