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Yet another fiscal hole we’ve dug ourselves into

Friday, Dec 20, 2019 - Posted by Rich Miller

* Press release

An increase in state funding for K-12 public education could enable Illinois municipalities to limit the growth of local property tax rates, boost the economy by up to $1.25 billion, and create as many as 14,000 new jobs according to a new study by the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois Urbana-Champaign.

Read the Report: Assessing Potential Options to Provide Property Tax Relief in Illinois

“Illinois ranks 50th nationally in state support for public schools, and it’s no secret that municipalities are relying on property taxes to fill the gap,” said study co-author and ILEPI Policy Director Frank Manzo IV. “However, property taxes are regressive and reliably consume a larger share of income for working and middle-class families than the state’s highest wage earners. This leaves lawmakers with the choice between finding ways to equitably boost state funding or dramatic reductions in the delivery of local public services.”

Illinois currently has the 7th-highest property tax collections per capita in the United States, and the average Illinois taxpayer pays more in local property taxes than state income taxes. A state task force is expected to issue a report on the cause of increasing local tax burdens later this month, but four prior efforts since 1982 have called out a lack of state funding for public education and the expansion of local units of government as major contributing factors.

In its analysis, ILEPI and PMCR evaluate three possible solutions to providing property tax relief— increasing the state’s share of funding for public schools, consolidating townships, or drastically cutting municipal services. ILEPI and PMCR researchers concluded that by adding $5 billion in state funds over four years to the coffers of K-12 public schools, property tax levies could be held constant. The additional funds could be fully financed by either Governor Pritzker’s progressive income tax proposal, by subjecting retirement income over $100,000 to state income tax (which 38 of the 41 states that have state income tax systems already do), or by expanding the state’s sales tax to 81 services that are currently taxed in Iowa but not in Illinois.

* One Illinois

Adding $5 billion in state funding — on top of the additional funding allotted last year and retweaked this year under the evidence-based funding formula — would enable counties to hold property taxes flat for four years. […]

The study concludes: “Local schools are responsible for about two-thirds of all property tax assessments, so any effort to reduce property taxes likely relies on increasing the state’s proportion of the revenue spent on public education. Any other approach would have little effect and may produce negative unintended consequences for school quality. By rebalancing the state’s share of the investment in public education, Illinois lawmakers could reduce Illinois’s overreliance on property taxes and promote both taxpayer fairness and funding equity across school districts.”

That’s a lot of dough, but the state has neglected to fund K-12 for decades. Just another deep hole we’ve gotten ourselves in.

* But here’s something interesting from the study

The state could also reduce administrative costs by consolidating townships.

    • While Illinois’ 1,431 townships account for 24 percent of all local government units, they only receive 2 percent of all property tax revenue.

    • Township consolidation could reduce the average property tax bill by 0.4 percent.

Everyone talks about township consolidation, and it’s not a bad idea at all. But even eliminating townships wouldn’t cut your taxes by all that much (especially since lots of their duties would still have to be performed). And consolidation would provide only minimal savings.


  1. - Donnie Elgin - Friday, Dec 20, 19 @ 9:57 am:

    I predict that we see many more study like in the next few months. The constitutional amendment proposing a non-flat income tax will be on the ballot November 3, 2020.

  2. - Grandson of Man - Friday, Dec 20, 19 @ 10:11 am:

    “Illinois ranks 50th nationally in state support for public schools, and it’s no secret that municipalities are relying on property taxes to fill the gap”

    Very unacceptable. It is so very important that we reform the state income tax and the state-local education funding ratio. This should be a big part of the message for the Fair Tax amendment, and for the wealthiest to finally start shouldering more of the financial burden. It should be the opposite of what Illinois has—the highest incomes should pay the biggest share of SALT.

  3. - Say What? - Friday, Dec 20, 19 @ 10:19 am:

    The real local savings in downstate and rural areas is a reorganization of schools. It is not a one size fits all dynamic due to the large geographic school district foot prints in some areas. But this is an area that could be navigated in a win=-win fashion with locals and the State.

  4. - Dance Band on the Titanic - Friday, Dec 20, 19 @ 10:21 am:

    “An increase in state funding for K-12 public education could enable Illinois municipalities to limit the growth of local property tax rates”

    Not exactly a good line to lead with. Increases to K-12 funding would have zero impact on the municipal property tax levy. They are two separate units of government.

  5. - Anon y mouse - Friday, Dec 20, 19 @ 10:23 am:

    Another fiscal hole? It’s one giant, unfixable-in-our-grandchildrens’ lifetime fiscal hole.

    And although they’re low-hanging fruit, IL’s failure to pick that fruit when fresh -elimination/consolidation of townships & many other duplicative units of local government- is one reason why that fiscal hole is so profoundly deep.

  6. - Chicagonk - Friday, Dec 20, 19 @ 10:24 am:

    .4% isn’t nothing though. Of course it’s not a panacea, but anything and everything helps.

  7. - pay raises - Friday, Dec 20, 19 @ 10:36 am:

    I won’t be happy until our teachers have more time off and the starting salary is 150,000 a year.

  8. - Commonsense in Illinois - Friday, Dec 20, 19 @ 10:40 am:

    Illinois could also increase funding for classroom activities by consolidating the current four education agencies into one and drive better alignment and policy while saving on administrative costs.

    While this may not provide the windfall some believe is needed, every million dollars saved in state bureaucratic costs is a million dollars that can go to local districts.

  9. - Proud Sucker - Friday, Dec 20, 19 @ 10:42 am:

    Thanks Dance Band. That’s a distinction I must make time and again. The municipal levy has no direct relation to school district and comm college levies. Yes, they are part of the total property tax burden, but 40 cops, 50 firefighters, 30 PW folks and 15 admin personnel require a set amount of money. That’s what the Muni levy must support. One affect lowering ed levies will have is raising more awareness of the Muni share. Right now, the Muni share is between 6% and 10% vs. 65% to 75% for Ed. When the Ed levies drop the Muni share could push to 15% to 20%.

  10. - qualified someone nobody sent - Friday, Dec 20, 19 @ 10:46 am:

    Evanston eliminated Township government and the City of Evanston assumed the Township functions. Then they voted to add the Library district as a stand alone taxing body. Overall City tax levy went up to meet he increased needs and a NEW taxing body to pay into. Township consolidation isn’t the problem. State funding of education increased to at least a mid-pack level compared to across the Nation would alleviate the property tax issue.

  11. - Benjamin - Friday, Dec 20, 19 @ 10:52 am:

    I wonder if the puzzle of the townships and the property tax bills isn’t because the highest property tax revenue comes from Chicago, which doesn’t have a township level of government. The vast majority of townships are downstate where total property tax revenues are low.

    I guess I’d like to see a figure for how much eliminating townships would save not for the average Illinoisan, but for the average Illinoisan who actually pays taxes to a township.

  12. - Benjamin - Friday, Dec 20, 19 @ 10:57 am:

    Come to think of it, do the bigger cities of downstate Illinois (like Springfield and Peoria) have overlapping township governments? Or were they consolidated with the city at some point?

  13. - City Zen - Friday, Dec 20, 19 @ 11:16 am:

    Add $5 billion to K-12 funding over 4 years, $3 billion to K-12 funding over 10.

    Guys, please get on the same page. We can only spend the same dollar so many times. And you’ve wrinkled that dollar so much that the vending machine won’t accept it.

  14. - R A T - Friday, Dec 20, 19 @ 11:17 am:

    Actually Rich it was the third bullet that caused my confusion. How would this lead to job growth?

    } The net economic impact of consolidation is small– a growth of $11 million and a gain of about 100 jobs

  15. - Grandson of Man - Friday, Dec 20, 19 @ 11:25 am:

    Oops, sorry wrong thread, my post at 11:24 am.

  16. - Anyone Remember - Friday, Dec 20, 19 @ 11:26 am:

    Benjamin -
    Springfield has an overlapping township (Capital), & the GOP dominated Sangamon County has tried to take it over (like Pat Quinn, the Sangamon County GOP loves themselves some patronage). Were it not for Andy Manar, they may have succeeded by now.

  17. - Lucky Pierre - Friday, Dec 20, 19 @ 11:30 am:

    Why is anyone surprised Evanston voted to expand government and raise taxes?

  18. - TheInvisibleMan - Friday, Dec 20, 19 @ 11:34 am:

    The push to get rid of townships comes because townships give the most power to a citizen.
    Once a year a resident can present any item to the board for a vote. No other taxing body allows this.
    Eliminating this removes power from residents and places it in a more tightly controlled municipal or county level that does not allow for residents to place items on a board agenda. The board is exclusively in control of what comes before it.

    I wonder if the ’small government types’ thT have been convinced to support eliminating townships understand that such an action increases central government control over their affairs.

  19. - DuPage - Friday, Dec 20, 19 @ 11:56 am:

    Townships are sometimes more accessible to and respond to residents concerns better then the county.

  20. - Da Big Bad Wolf - Friday, Dec 20, 19 @ 12:30 pm:

    We would have to increase income taxes to replace the property taxes but it is worth doing.

  21. - Commissioner Fischer - Friday, Dec 20, 19 @ 12:59 pm:

    As has been noted, school district and municipal taxing bodies are separate, except in the minds of many taxpayers. People tend to only look at the bottom line on the bill and not the details. Earlier this week I moved and helped pass a 1.9% increase in the city levy, which only makes up about 13% of the total tax bill for a homeowner. Naturally, I am being (figuratively) burned in effigy on social media. Meanwhile the school districts (71% of the bill) passed higher levies, and it was barely noted. I haven’t read the study yet, but funding reform for K-12 would lift a huge burden off the average homeowner.

  22. - Merica - Friday, Dec 20, 19 @ 1:28 pm:

    saying Illinois ranks 7th in property tax “collections” is statistical malpractice.

    Property tax collection rates are only relevant when you compare them to fair market value of property.

    when you compare illinois tax rates to illinois property values, you see that Illinois easily and by a wide margin has the highest property tax collection rates in the country.

    i would rather pay $2,357.00 in property taxes for a $422k house (median home sales price for a house in MA) than pay $2,115.00 in property taxes for a $202k house (median homes sales price in IL).

    the amount collected and the value of the property are the only two data points that matter.

  23. - RNUG - Friday, Dec 20, 19 @ 1:33 pm:

    == do the bigger cities of downstate Illinois (like Springfield and Peoria) have overlapping township governments? ==

    == Springfield has an overlapping township (Capital), & the GOP dominated Sangamon County has tried to take it over ==

    The township (as well as the city and county) have looked at, and actually done, some consolidation where it made fiscal sense. The biggest fights have been over whether to move the services to the city or the county.

  24. - RNUG - Friday, Dec 20, 19 @ 1:35 pm:

    You want to save money on the schools, look at all the regulations that have resulted in added administrative staff required to meet the State mandates.

  25. - City Zen - Friday, Dec 20, 19 @ 2:52 pm:

    ==saying Illinois ranks 7th in property tax “collections” is statistical malpractice.==

    All the states that rank higher than Illinois have 2 common traits: They are located in the Northeast and, like Illinois, rank near the top in education spending on a per pupil basis.

  26. - Demoralized - Friday, Dec 20, 19 @ 3:52 pm:

    ==i would rather pay $2,357.00 in property taxes for a $422k house (median home sales price for a house in MA) than pay $2,115.00 in property taxes for a $202k house (median homes sales price in IL).==

    If you are only paying those amounts in property taxes on those house values then you are doing pretty good and I would’t whine too much about your property taxes.

  27. - Anonymous - Friday, Dec 20, 19 @ 4:06 pm:

    Magical Thinking

    I appears the state can spend approximately $10 billion of the projected $2.5 billion that would come from the “Fair Tax” if the constitutional amend is approved.

    The extra funds have been promised for shoring up pension funds, increasing K-12 funding, property tax relief, and a number of other desirable program including increased higher education support.

    The state needs a “loaves and fishes” miracle.

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