* 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.
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.