Illinois’ property taxes are out of control, let taxpayers take driver’s seat

Piecemeal fixes to the state’s property-tax problem have failed. It’s time to give the purse strings back to average Illinoisans.

When Gov. Bruce Rauner proposed freezing property taxes across Illinois, Barrington Area Unit District 220 Board President Brian Battle opposed the idea.

“I don’t understand why property taxes are an issue for the state,” he told the Daily Herald.

How could they not be an issue?

Illinois has the highest property taxes in the Midwest. In 2013, property taxes on the average Illinois home were $3,939, about 14 percent higher than runner-up Wisconsin. Neighboring Indiana’s average was $1,507. Is it any wonder Illinoisans are leaving for the Hoosier State?

When it comes to Illinois’ property taxes, a lot of hands are in the pot. Nearly 7,000 local units of government wield taxing power, far more than any other state.

Every year, each entity decides how much money it wants from property taxpayers, an amount known as a tax levy. In 63 counties, if an entity raises the levy by 5 percent or more, it must hold what it known as a “Truth in Taxation” public hearing. This is where officials explain the increase and the reasons for it. Afterward, a governing body may adopt the higher levy.

A cursory Google search will show that many entities increase their levies by 4.99 percent, the highest possible rate without triggering a public hearing. This loophole is a major driver of Illinois’ astronomically high property taxes.

Piecemeal fixes to the property-tax problem, such as the Property Tax Extension Limitation Law, or PTELL, have been attempted with little success. In 39 counties, including Cook and the collar counties, local officials can use the PTELL to restrict property-tax levy increases to the rate of inflation or 5 percent, whichever is lower, keeping property taxes artificially low. Though PTELL allows voters to keep property taxes low, it is used primarily as a tool to get more state funding for education. Essentially, the state subsidizes these lower property taxes.

PTELL is not the answer – taxpayers across the state should not subsidize other counties that exercise this loophole to get more state money. But Rauner has proposed freezing property taxes for good, and giving voters the power to decide if taxes should ever be raised.

Under his plan, taxes would stay at 2015 levels, with exceptions for new construction and government consolidation. This would be stronger protection for property taxpayers, whose taxes essentially serve as a second mortgage.

Under the governor’s proposal, entities could still increase tax levies, but they would have to win over voters, who would likely put spending under the microscope.

Such scrutiny might bring wasteful spending to light. That could pressure entities to identify services they could share with other agencies, saving taxpayers money. This new attention could pave the way for consolidations – for instance, the mergers of park districts and municipalities.

The governor’s proposal also could put a spotlight on entities accustomed to flying under the radar. Townships, for instance, account for just a small fraction of a property-tax bill, which means they often get far less scrutiny than municipalities and school districts. The governor’s proposal would hopefully require even the smallest agencies to justify why they need more money.

In short, the proposal would shift power from government to local taxpayers – a long-awaited solution in the Land of Lincoln.