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Property taxes again take the forefront, to be folded into the rates bill

Tuesday, May 28, 2019

* Greg Hinz

Pritzker had to do some bargaining. Two Democratic reps who had signaled opposition, Northbrook’s Jonathan Carroll and Sam Yingling of Round Lake, in the end got a promise the House this summer will consider steps to guarantee some property tax relief as part of a graduated income hike, which under current plans would hit only taxpayers with income of more than $250,000 a year.

The governor also had to engage in some Illinois-style finagling, as one Democratic rep who was opposed to the bill, Jerry Costello, miraculously left the General Assembly to take a job with—surprise!—the Pritzker administration and was replaced by someone with a different view.

Rauner did that I don’t know how many times. Quinn did it the opposite way: Vote for his tax hike and then get handed a sweet government gig.

* Capitol News Illinois

While Democratic Gov. J.B. Pritzker played no formal role in the legislative process to put the amendment on the ballot, at least one Democrat who previously said he would vote against the bill credited the governor for his sudden switch.

“I was a very vocal critic about this, obviously, I came out with some concerns,” said Rep. Jonathan Carroll, D-Northbrook. “… Governor Pritzker reached out to me right away, had some conversations with me and heard that my issue is property taxes.

“Along with his help and the help of my colleagues in the House and the Senate, we’re going to form a property tax task force to review how we tax in Illinois for property taxes and make sure that we do it better and we do it right.”

The state does not levy or collect property taxes in Illinois; only local taxing bodies such as school boards, municipal governments and counties have that authority. The largest contributor to most local tax bills are K-12 schools, which for years have faced funding shortfalls and proration from insufficient revenues provided by the state.

Still, Carroll and Rep. Sam Yingling — a Grayslake Democrat who also said at one time he would vote against the graduated tax — said state action is needed to overhaul the property tax system and the graduated tax is part of that process.

Another task force.

* Will this be any different than all previous task forces? From a press release…

The Property Tax Relief Task Force would be created through an amendment to the fair tax rate legislation that passed the Senate earlier this month, and the group would be required to report back to the Governor and the General Assembly by Dec. 31, 2019. An initial report will be due 90 days after the law takes effect.

“For far too long, families across Illinois have struggled under too-high property tax burdens and an unfair income tax system that protects the wealthiest,” Gov. JB Pritzker said. “This task force is a commonsense addition to the fair tax, which aims to protect the middle class and those striving to get there while those making $250,000 and above pay more.”

The Property Task Relief Task Force will be charged with using a racial and economic equity lens to identify the causes of increasingly burdensome property taxes across Illinois, review best practices in public policy strategies that create short- and long-term property tax relief for homeowners, and make recommendations to assist in the development of short- and long-term administrative, electoral, and legislative changes to create short- and long-term property tax relief for homeowners.

The group will include two appointees from the Office of the Governor, as well as members of the House and Senate appointed by their chambers’ leaders. An overview of the measure is attached.

So, if you were wondering if the House was going to take up the Senate’s rate bill, there’s your answer. It’s going to be paired with the task force language.

* Another idea was also floated this week…

State Senators Terry Link and Julie Morrison, & State Representatives Daniel Didech, Rita Mayfield, and Bob Morgan introduced HB 3845 to address the crippling effects of Illinois’ property taxes. To enact a tax system that is truly fair for all Illinois residents, the adoption of a graduated income tax structure should be accompanied with reform that will lower property tax bills for every homeowner in Illinois.

Proposal:

    * In the event that the Governor’s Fair Tax proposal is approved by Illinois voters in 2020, create the Illinois Property Tax Rebate Fund which will receive money appropriated by the General Assembly.
    * Begin with initial allocation of at least $400 million in 2021. This allocation will provide an estimated $200 in property tax relief for every Illinois resident claiming a Homestead exemption.
    * Establish dedicated funding streams growing the Fund to $1 billion by 2023. This funding will provide approximately $500 in annual property tax relief to each homeowner.
    * Money will flow from the Fund through county treasurers, who will reduce homeowners’ property tax bills and lower each homeowners’ property tax bill.
    * This proposal will not impact local government levies or school funding.
    * This Fund will help stabilize the property tax burden being felt throughout the State of Illinois.
    * Every region of Illinois will benefit from the Fund, reducing each homeowners’ property tax bill equally regardless of property values.
    * This Fund creates structural change in our property tax system - relieving the burden on homeowners without impacting funding for education or other critical local services.

I’m thinking that idea to lower everybody’s property tax bills equally may not go over too well in some quarters. We’ll see.

- Posted by Rich Miller        

32 Comments
  1. - Lucky Pierre - Tuesday, May 28, 19 @ 9:16 am:

    Great another property tax task force, run by Democrats, that will continue to ignore the unsustainable pensions that are the #1 reason property taxes are among the highest in America.


  2. - Former State Worker - Tuesday, May 28, 19 @ 9:24 am:

    This is only for people who claim Homestead Exemptions in 2021? Then every homeowner gets $500 in 2023? Is the distinction because the fund wouldn’t be very well established until 2023?

    $200 per resident works for me. I’d rather see a cap for X years, however. I think that would be a better sell. I can just see the “You’re only getting a $16.67/month rebate!” attack ads now.


  3. - wordslinger - Tuesday, May 28, 19 @ 9:26 am:

    –While Democratic Gov. J.B. Pritzker played no formal role in the legislative process to put the amendment on the ballot, …–

    No “formal” role? Like he didn’t wear a tux?

    Of course he played a huge role. It was the centerpiece of his campaign, he won in a landslide and he’s in the Big Chair. It’s his deal all the way.


  4. - Occam - Tuesday, May 28, 19 @ 9:55 am:

    ==Establish dedicated funding streams growing the Fund to $1 billion by 2023. This funding will provide approximately $500 in annual property tax relief to each homeowner.==

    I take it that to raise this incremental revenue, this means JB has to either find something new to tax beyond all the new taxes that are already on the table and/or raise existing taxes beyond the already proposed increased rates because all the new taxes/rates has already been spent.


  5. - Grand Avenue - Tuesday, May 28, 19 @ 9:56 am:

    Quinn was able to do it in reverse because he was working with lame ducks.


  6. - Perrid - Tuesday, May 28, 19 @ 10:03 am:

    Uh, word, “formal role” is actually a pretty normal term. Governors have no official duties, or powers, when it comes to constitutional amendments. All of the negotiating and backroom deals, and the ads, and the press conferences, would be considered informal.

    The proposed payments to homeowners seem sill to me. People are going to pay the income tax, which goes to the state, and then the state is going to give some money back to the taxpayer to offset the money the taxpayer is giving to the local government. Wouldn’t it make more sense if the state and the local governments worked something out directly? Plus, as Rich said, treating all homeowners as if they paid the same amount is silly.


  7. - JB13 - Tuesday, May 28, 19 @ 10:10 am:

    “I won’t support this income tax hike unless you deal with the crippling property taxes that are killing my constituents! Crippling!”

    “We’ll form a task force, state the obvious and do nothing. How’s that sound?”

    “Go Team!”


  8. - A guy - Tuesday, May 28, 19 @ 10:14 am:

    I guess it was a Semi-Formal role, Black tie optional kinda thing? He was all over this.


  9. - Not a Billionaire - Tuesday, May 28, 19 @ 10:26 am:

    I am voting for All ready but a 500 dollar road credit will get me out on day one of early voting.


  10. - Former State Worker - Tuesday, May 28, 19 @ 10:27 am:

    =I take it that to raise this incremental revenue, this means JB has to either find something new to tax beyond all the new taxes that are already on the table and/or raise existing taxes beyond the already proposed increased rates because all the new taxes/rates has already been spent.=

    Pretty sure they are just talking about the extra revenue generated from the graduated income taxes. They couldn’t even start collecting it until 2021 at the earliest (through withholding or estimated payments) with the full tax collection not happening until April of 2022. That’s why the fill effect wouldn’t be felt until 2023.


  11. - City Zen - Tuesday, May 28, 19 @ 10:41 am:

    It’s a start. Good to see them trying something. But for most folks, their effective property tax rates will remain over 2% even after this reduction. Need a 4-figure reduction to move the needle.


  12. - JS Mill - Tuesday, May 28, 19 @ 11:09 am:

    =that will continue to ignore the unsustainable pensions that are the #1 reason property taxes are among the highest in America.=

    Here we go again with more of your falsehoods.

    The pension systems are not responsible for high property taxes.

    Debt created by republicans and democrats alike is responsible for STATE financial issues.

    The states failure to fund education properly is partially responsible for property taxes.

    The pension systems didn’t create that debt.


  13. - Rich Miller - Tuesday, May 28, 19 @ 11:26 am:

    ===the #1 reason property taxes are among the highest in America===

    1) Most of your property tax bill goes to fund schools;

    2) The state picks up the tab for teacher pensions.

    …Adding… Your BFF Bruce proposed shifting state pension costs to school districts.


  14. - Mockingjay - Tuesday, May 28, 19 @ 11:34 am:

    $200 is not property tax relief. Get real.


  15. - Lester Holt’s Mustache - Tuesday, May 28, 19 @ 11:47 am:

    ==…Adding… Your BFF Bruce proposed shifting state pension costs to school districts.==

    Hey, is that the same Bruce that was against more state funding for school districts, and then tried to take credit for the idea in campaign commercials when it became law despite his opposition? Or was that a different Bruce?


  16. - Rich Miller - Tuesday, May 28, 19 @ 11:50 am:

    ===Or was that a different Bruce?===

    Both.


  17. - Lucky Pierre - Tuesday, May 28, 19 @ 12:13 pm:

    The school districts pick up the tab for the employee portion of the pension contribution

    My BFF? I met the man a grand total of two times.


  18. - Blue Dog Dem - Tuesday, May 28, 19 @ 12:34 pm:

    Yesterday i spent a beautiful couple hours at a Memorial celebration in a small Randolph Co. Town. Dozens of retired prison workers in attendance. Young Reitz is toast. Noone is happy about the last two changing of the guards


  19. - Rich Miller - Tuesday, May 28, 19 @ 12:40 pm:

    ===The school districts pick up the tab for the employee portion===

    They are not required to do so. Some choose to do so via collective bargaining agreements.


  20. - Nonbeleiver - Tuesday, May 28, 19 @ 12:41 pm:

    When I see real property tax relief in MY tax bill I will believe it. Not until then.

    This is a complex issue and many localities and schools have many ways to just keep increasing one’s bill regardless of what any politician promises.

    This had better be very tightly written or will be a farce.


  21. - Demoralized - Tuesday, May 28, 19 @ 12:43 pm:

    ==My BFF? I met the man a grand total of two times.==

    And you spout his talking points 100% of the time


  22. - Shemp - Tuesday, May 28, 19 @ 12:47 pm:

    I suspect the fastest growth in property taxes in most places (like around here) is for local fire and police pensions. Those aren’t changing and the situation is not improving. Ironically, Senator Link has been a big driver of the padding for those pensions, particularly fire. Any reduction in schools will probably be matched with increases for local police and fire in most places.


  23. - wordslinger - Tuesday, May 28, 19 @ 12:48 pm:

    –This is a complex issue and many localities and schools have many ways to just keep increasing one’s bill regardless of what any politician promises.–

    It is complex, because property values in many suburbs are tied to the perceived values of their school systems. The “better the schools,” the more valuable your real estate.

    That’s why some choose to fund their schools (outside of state pension contributions) to the tune of 90%+ from property taxes.


  24. - Nonbeleiver - Tuesday, May 28, 19 @ 1:25 pm:

    @Wordslinger,

    Yes, and other issues as well including police and fire pensions.

    ost of us know that. t does not chnage the reality of so called property tax relief being dubious at best.


  25. - Looking down the road - Tuesday, May 28, 19 @ 1:54 pm:

    Rich, I believe in one of your articles you quoted someone (Harmon?) to the effect that significant property tax relief would require 7 to 8 Billion. Anything else is just nibbling around the edges. Considering the 4.8 Billion increase in the unfunded pension liability last year for the five state run pension plans the 3.5 Billion increase in income taxes looks pretty small in comparison. Its difficult to believe that there is going to be ANY state money available for property tax relief. One possible source of funding would be taxing retirement income, but that’s fraught with political peril unless its limited to only high income seniors. I believe that the best that could happen would be a property tax freeze, but that isn’t going to happen.


  26. - JS Mill - Tuesday, May 28, 19 @ 2:05 pm:

    =The school districts pick up the tab for the employee portion of the pension contribution=

    That is not driving property taxes. It is 9% of the salary. and that only applies to Tier 1 employees. The number of Tier 1 employees continues to drop rapidly costing districts and the states less. Tier 2 employees cost districts nothing in terms of pensions.

    The annual cost of the pensions is less than $1.7 billion. That means the debt cost is over $6 billion annually.


  27. - City Zen - Tuesday, May 28, 19 @ 3:56 pm:

    ==The number of Tier 1 employees continues to drop rapidly costing districts and the states less.==

    Actually, the cost is going up. The normal cost for Tier 1 employees is now 12.65% and projected to hit 13.75% in 2020 (pg 96). Before there was a Tier 2, it was less than 9%.

    https://www.trsil.org/sites/default/files/documents/CAFR-FY2018_0.pdf

    In other words, this year’s cost of a Tier 1 pension is now equal to a Social Security contributions and an unheard of 6% employer match.


  28. - Rich Miller - Tuesday, May 28, 19 @ 3:58 pm:

    ===Before there was a Tier 2, it was less than 9%===

    And now the combined is 9.85%.


  29. - City Zen - Tuesday, May 28, 19 @ 4:16 pm:

    ==And now the combined is 9.85%==

    And projected to hit 10.66% next year (same chart). Surprising, considering what we’ve been told of Tier 2 savings.


  30. - Bavette - Tuesday, May 28, 19 @ 5:54 pm:

    What’s driving the extremely high cost of the supposed money saver Tier 2 pensions?


  31. - Froganon - Tuesday, May 28, 19 @ 6:45 pm:

    If developers/buyers paid for all school construction and operational costs upfront, it would take a huge bite out of the school tax. When a municipality approves new housing, the impact fees are a fraction of the actual costs to build and operate the required schools. Pay for schools, road/bridge expansion (to accommodate the increased traffic) like we pay for sewers and water, add it into the sales price. This would raise the price of each house by 100K or so but the existing residents would no longer have to subsidize the new folks.


  32. - Blue Dog Dem - Tuesday, May 28, 19 @ 10:17 pm:

    ….was replaced by someone with a different view. Not elected. Replaced. Is not the Reitz kid a Representative? Shouldnt he reflect the wishes of his district. Enjoy your short stay.


Sorry, comments for this post are now closed.


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