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* Perhaps Rep. Franks will learn a valuable lesson from this bit of success. Phil Kadner fills us in…
A bill that would freeze property tax levies during years when property values decline overwhelmingly passed the Illinois House of Representatives on Tuesday.
I first wrote about the proposal, from state Rep. Jack Franks (D-Marengo), to freeze property taxes last year.
Although that effort failed, Franks vowed the fight wasn’t over.
“It passed this year because I didn’t seek any publicity before the vote,” Franks said.
“Last year, I thought I could rally public support by talking about the bill. It turned out that gave the opposition, the government taxing bodies, time to lobby legislators to vote against it.
“This time I just put an amendment onto an existing bill, the groups that lobbied against it didn’t have time to rally opposition, and it received 74 votes (the final tally was 74 “yes” and 39 “no.”)
Under the measure, if the “total equalized assessed value of all taxable property in a tax district for the current levy year is less than the total equalized assessed value of all taxable property in the taxing district for the previous year, then the extension limitation is a) 0 percent or b) the “rate of increase approved by voters in a referendum.
Franks emphasized that taxing districts wouldn’t lose money.
“They would get the same amount of money they received the previous year, but could not increase their tax levy unless voters approved a tax rate increase in a referendum.”
* The Illinois Federation of Teachers laid out its opposition yesterday…
· Each year’s levy is based upon the previous year’s levy; therefore reductions are permanent, continuous, and compounding.
· The proposal eliminates a local school board’s authority to levy based on the needs of the community and student population. School board members are elected to serve as fiscal stewards of our school districts and consider the impact of fiscal decisions on their community prior to adoption a levy.
· A decrease in EAV can be caused or contributed to by many factors unrelated to declining home property values/assessments, including the county multiplier, a change in assessment factors, or large number of property tax appeals.
· One property owner’s lowered assessed valuation could cause the 0% extension limitation.
· The proposal would override rates previously approved by voters.
· Districts in tax-capped counties are already limited in their ability to access additional local revenue due to PTELL provisions.
· Freezing local resources will increase the amount of general state aid for which districts are entitled. This year the State Board of Education has indicated general state aid will be prorated, a result of inadequate state resources.
· School districts have already experienced reduced revenue through cuts in: Transportation, Elimination of the ADA Block Grant, GSA Hold Harmless,
Discuss.
posted by Rich Miller
Wednesday, Feb 22, 12 @ 9:46 am
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Franks’ bill is SB 2073.
The majority of the No/Present votes were cast by Republicans — the party of lower taxes — except when they’re not! Cross voted P.
http://ilga.gov/legislation/votehistory/97/house/09700SB2073_02212012_004000T.pdf
Comment by reformer Wednesday, Feb 22, 12 @ 10:03 am
Always better to sneak a law in.. Good civics lesson, kids.
“This time I just put an amendment onto an existing bill, the groups that lobbied against it didn’t have time to rally opposition, and it received 74 votes (the final tally was 74 “yes” and 39 “no.”)
Comment by the chicago way Wednesday, Feb 22, 12 @ 10:08 am
So let’s see if I have this right. This is a tax cap on the tax cap (one is good; two is twice as good). Schools will receive no new dollars in property tax even though inflation is 1.5% and 3.0% in the next two budget years (due to energy and insurance costs). And the State is cutting General State Aid to schools. And the State is contemplating cutting all student transportation aid. And the State is planning to pass the TRS pension payments it owes (and has missed payments on)onto the local districts. These items could create a 10% cut in revenue each of the next two years for schools. And, oh, make sure achievement goes up while you are cutting teachers.
Comment by soupperk Wednesday, Feb 22, 12 @ 10:09 am
Reformer - Who says Franks’ bill would actually save taxpayers money? If the decline in EAV was due to special reassessments, then those property owners who did not get a special reasessment would still receive a higher bill even if this bill were enacted. Nothing but smoke and mirrors to fool the people confused by how the property tax system works.
Comment by Bluefish Wednesday, Feb 22, 12 @ 10:11 am
bluefish
If the Franks bill would have no effect, as you suggest, then why are the local taxing bodies apoplectic? Either it would protect homeowners from higher taxes or it wouldn’t. You can’t have it both ways.
Comment by reformer Wednesday, Feb 22, 12 @ 10:14 am
@Soupperk =And the State is cutting General State Aid to schools. And the State is contemplating cutting all student transportation aid.=
Where are you getting these claims? The Governor has gone on record saying education funding will be flat (and reports I’ve read this morning are mentioning a modest increase for education), I would assume that would include both GSA & transportation.
Comment by TCB Wednesday, Feb 22, 12 @ 10:16 am
In times of decreasing values it only seems appropiate to freeze the levy. This is a good addition to PTELL IMHO.
Comment by Allen Skillicorn Wednesday, Feb 22, 12 @ 10:16 am
You had me at “Franks shuts mouth”. Hoping this is the beginning of a trend.
Comment by The Captain Wednesday, Feb 22, 12 @ 10:16 am
–“It passed this year because I didn’t seek any publicity before the vote,” Franks said.–
That couldn’t have been easy for him. Is this the new Sneak Attack Jack?
Comment by wordslinger Wednesday, Feb 22, 12 @ 10:17 am
I thought last year this was just a publicity stunt by Franks, so now I have to wonder if he really believes this is good policy……
Naah
Comment by mark walker Wednesday, Feb 22, 12 @ 10:28 am
Hmm… Is Jack using this to catapult his way to run for some statewide office?
Pretty difficult to pay the raises in CBAs to the labor force when your tax revenues are flattened.
This must be a double-secret tax cap.
Comment by Jake From Elwood Wednesday, Feb 22, 12 @ 10:39 am
Marango has a big new high school and the top teacher salaries are in the 85K range…. doesn’t surprise me they want to cap tax increases. We really shouldn’t be paying high school teachers more than college professors.
Comment by Liberty First Wednesday, Feb 22, 12 @ 10:40 am
==“They would get the same amount of money they received the previous year, but could not increase their tax levy unless voters approved a tax rate increase in a referendum.”==
I suspect this does not help Home Rule communities, which don’t need referendums to increase taxes and debt ever.
Comment by yinn Wednesday, Feb 22, 12 @ 10:42 am
IFT: “Each year’s levy is based upon the previous year’s levy; therefore reductions are permanent, continuous, and compounding.”
Isn’t the converse also true — that property tax INCREASES are “permanent, continuous, and compounding”? IFT doesn’t seem to decry THAT phenomenon!
On another note — piecemeal “fixes” for property tax anomalies and dysfunctions in this state (well meaning as they may be) really never seem to end up being fixes at all.
Whatever Franks’ intentions may be — all he’s doing, figuratively speaking, is squeezing toothpaste around in the tube.
Toothpaste-squeezing isn’t progress.
It’s dislocation that gets passed off as progress.
Comment by Dooley Dudright Wednesday, Feb 22, 12 @ 10:51 am
@TCB — ISBE and the Governor have led schools to believe that student transportation aid, cut deeply in each of the last two years, will be severely cut again or eliminated. Suburban school districts, due to nuances in the GSA formula, are seeing declining GSA and expect more of the same. “Level funding” is a euphemism for “let’s spend budget dollars on other services” (like student testing by the state).
Comment by soupperk Wednesday, Feb 22, 12 @ 10:59 am
Taxing bodies are upset because they permanently lose the increment. If the CPI goes up 4% but the levy is flat due to special reassessments, the municipality or school district faces increasing costs while revenues are now flat. Plus, they never can recover the loss due to the tax cap. Cuts are the only option at that point (and yes, municipalities and school districts have already made massive cuts in response to declining revenues). Now the property owner is getting less in services while still paying higher property taxes to pick up the freight for those who hired certain tax attorneys (we can all think of at least one) to get special reassessments.
Comment by Bluefish Wednesday, Feb 22, 12 @ 11:03 am
== “It passed this year because I didn’t seek any publicity before the vote” ==
Must be giving that up for Lent.
Comment by Shock & Awww(e) Wednesday, Feb 22, 12 @ 11:03 am
By the way: Best headline ever.
Comment by Shock & Awww(e) Wednesday, Feb 22, 12 @ 11:04 am
Franks shuts mouth, passes bill
Great headline. Jack should cut that out and tape it to his speak button as a reminder. He might pass more bills
Comment by Moderate Repub Wednesday, Feb 22, 12 @ 11:16 am
If Franks fully adopts this approach session could be done by April.
Comment by Michelle Flaherty Wednesday, Feb 22, 12 @ 11:23 am
Did the Illinois Federation of Teachers really register their opposition without mentioning how the changes will somehow “hurt the children”?!
Wow…
Comment by Color me amazed Wednesday, Feb 22, 12 @ 11:36 am
PTELL’s intent was to help property owners with tax extensions on skyrocketing home values. They capped the amount that could be extended and included in the calculation (creating the double whammy effect in GSA Foundation Grant funding). Now that the lag is catching up with the actual value of their homes they are crying foul.
Guess what? Your home is still valued at a higher rate than what you are paying on and you are getting extra relief through GSA due to the fact that the EAV used in the formula is the capped PTELL amount.
It must be nice to live in a district where you only have to pay taxes on a portion of the actual value of your home, where you get extra school aid on the capped EAV of your home and when you feel like moving you can sell it for its full value. How is this not like hiding assets? Because the state makes it legal.
Comment by Don't Worry About the Government Wednesday, Feb 22, 12 @ 11:39 am
If the Franks bill were to become law, homeowners would pay less than they would in its absence.
Comment by reformer Wednesday, Feb 22, 12 @ 12:34 pm
Ok, so no new revenue, state is 12 months late on paying reimbursement which means the money was spent in the prior year. Also, the state pro-rates the payment, now gas goes up, benefit costs go up, more students show up, and the state is about to add a 9% extra payment on local schools, and no new money. Even if all the staff take a freeze or a cut it won’t be enough to cover loss of revenue. Programs will get cut, services will get cut, that haven’t already been cut.
wait till your village has to raise other fees to pay for the extra fireman on the truck. that comes out of that pot too.
Comment by frustrated GOP Wednesday, Feb 22, 12 @ 1:49 pm
Can you say cover vote? First I voted no then I voted yes. I love election season
Comment by palatine Wednesday, Feb 22, 12 @ 1:49 pm
“Who says Franks’ bill would actually save taxpayers money? If the decline in EAV was due to special reassessments, then those property owners who did not get a special reassessment would still receive a higher bill even if this bill were enacted. Nothing but smoke and mirrors to fool the people confused by how the property tax system works.”
This bill will do nothing to reduce existing tax burdens. It has the potential (in a few situations) to limit/eliminate an increase in the overall dollars (extended) received by tax capped tax districts, but taxpayer’s individual tax bills will likely continue to increase.
Here’s why:
1) The assessed value decreases due to lower market values.
2) Tax Capped districts get the highest of the previous 3 years extended taxes, so even though the assessed values drop, the tax rates are increased (district levy / lower assessed value = higher tax rate).
3) The only real impact with Jack Frank’s bill is that there is no additional increase (CPI) on top of the calculated tax rates.
Simple version:
1) Assessed values decrease;
2) Tax levies stay the same as a prior tax year, 3) Tax rates increase
4) Property owners get to pay the same amount of real estate taxes as before on a property now worth less in the real estate market.
IMO, Frank’s bill isn’t much, but it’s better than nothing.
Comment by Judgment Day Wednesday, Feb 22, 12 @ 3:12 pm
== The only real impact with Jack Frank’s bill is that there is no additional increase (CPI) on top of the calculated tax rates.==
Agreed. But that would add up to thousands of dollars over ten years, which matters to people whose wealth is shrinking.
Comment by reformer Wednesday, Feb 22, 12 @ 3:28 pm
“But that would add up to thousands of dollars over ten years, which matters to people whose wealth is shrinking.”
To reach those types of numbers, you’ve got to be talking some big time assessed values (nothing cheap) over 10 years.
The real problem that everybody (including all the legislators) is tiptoeing around is that the assessments are based on a 3 year weighted average based on sales. We are in the 2011 tax year, pay 2012 tax bills. The entire state is using sales/assessment ratio data from 2010-2009-2008 years (an average across those 3 years) to determine the assessment levels, so residential properties in a large portion of IL are still wildly over assessed compared to the current real estate market.
And to make matters worse (or better, depending upon your viewpoint), 2011 sales for the first time are going to be using property sales coming out of forclosures, REO’s, and judicial sales.
And if foreclosures really pick up, the residential real estate market may take an additional hit, because the banks and Freddie/Fannie will want to clear all the foreclosure wreckage off their books.
And don’t even get me started on the CMBS markets. The amounts coming due and which need to be rolled over during 2012 are scary. That will certainly affect local Commercial real estate markets.
The locals are all trying to figure out a way to preserve their local tax base, because otherwise, it’s not impossible that we could see an immediate 30%+ reduction in the property tax bases for many units of local government, particularly for Northern IL (and even Central IL), including Chicago.
Comment by Judgment Day Wednesday, Feb 22, 12 @ 4:23 pm
“The locals are all trying to figure out a way to preserve their local tax base, because otherwise, it’s not impossible that we could see an immediate 30%+ reduction in the property tax bases for many units of local government, particularly for Northern IL (and even Central IL), including Chicago.”
Misleading there - that will only occur is the legislature changes the law from a 3 year average to use a one year average. Legislature does that, and local government tax districts everywhere are going bankrupt.
But staying with the current situation is also becoming untenable.
Comment by Judgment Day Wednesday, Feb 22, 12 @ 4:28 pm
Properties are reassessed every three years in Cook County. On the non-reassessment years I believe it wouldn’t be unusual for total EAV to go down a small amount due to appeals thus triggering this “cap on the cap.”
Our total EAV has gone down 2 out of the past 5 years for Palatine District 15 where I’m a school board member. First was 2006, which was a non-reassessment year and the other was 2010, which was a reassessment year reflecting general declines in property values.
What are legislators and our governor thinking with this “cap on the cap,” plus other school funding cuts, plus shifts of tax burdens to property taxpayers?
Comment by Scott Herr Wednesday, Feb 22, 12 @ 8:17 pm
“What are legislators and our governor thinking with this “cap on the cap,” plus other school funding cuts, plus shifts of tax burdens to property taxpayers?”
Simple. Brutal, but simple. Local tax districts (including, but specifically schools) can file bankruptcy. State governments cannot. The federal bankruptcy Court can order adjustments to pension obligations for units of local governments - literally everything gets put on the table for possible cuts/revisions.
And the State of IL gets to re-direct a couple of bil $$$ to State requirements, and not to local school districts.
Think that approach won’t send a pretty clear message to all the other units of local governments? Think that approach won’t send a message to unionized state workers? (when you are politically isolated and wear a target on your back everywhere you go, life isn’t fun).
There’s another adjective I would use - Harsh.
IMO, it’s the local government financial version of the “Irresistible force meets the immovable object”.
We’ll see if that actually turns out to be the plan, but that’s the gossip out there.
Comment by Judgment Day Wednesday, Feb 22, 12 @ 11:20 pm
I think a major issue is that the parents, kids and taxpayers are concerned about cuts being translated into teacher firings. There is an option: freeze or reduce pay raises and retain teachers to avoid higher class sizes or loss of programs. The person in the street has faced a tough time on personal income since the 2007/8 credit crunch and has no capacity to pay more taxes than necessary.
Teachers can agree to take a pay freeze (or a cut if their district is really in bad shape); but their union officials would never agree to that, based on past practice. When a budget cut is needed, they fire the newest teachers while keeping the tenured, higher paid ones on the gravy train. That needs to stop. It cannot be justified.
Comment by Casa Thursday, Feb 23, 12 @ 5:29 am