State Rep. Jack Franks has tried without success to pass laws limiting governments’ ability to raise their property tax levies when property values fall.
Now he’s trying to do something that hasn’t been successfully done since 1978 – ask voters for their opinion with a statewide advisory referendum.
House Bill 4273 seeks to put a nonbinding advisory question on the Nov. 4 ballot, asking voters whether they would support a state law forbidding governments from raising their levies if their overall assessed value drops from the previous year, except if approved by voter referendum. The language mirrors what Franks has attempted to do legislatively in recent years.
“I think we need to do this, because I’m not sure the local taxing bodies are hearing the complaints of their constituents.” Franks said. “The way it’s structured now, they can raise taxes with impunity, regardless of property values.”
Most McHenry County governments that levy property taxes have not hit their maximum tax rates under the law, which means they can collect more money every year by raising them to compensate for the decline in property values caused by the bursting of the housing bubble that caused the Great Recession. Outcry from homeowners whose property tax bills have increased while their home values plummeted prompted Franks to file the bill.
In a twist of irony, it is the tax cap that lawmakers passed 25 years ago to keep collar-county residents from being taxed out of their homes that has caused the problem.
The cap, created by the Property Tax Extension Limitation Law, limits the annual increase that taxing bodies can receive to either the rate of inflation or 5 percent, whichever is less. McHenry and the other collar counties were capped by state statute in 1991, and lawmakers later allowed other counties to enact them by voter referendum.
But when home values decrease – a scenario lawmakers never considered – the tax cap works for government and against the taxpayer by guaranteeing that taxing bodies can collect the inflationary increase, which will be 1.7 percent on the property tax bills paid this year. While some governments, such as the McHenry County Board, have spurned the annual increase in recent years, most others have raised their rates in order to capture it.
Franks has made several unsuccessful attempts since 2011 to pass laws that would forbid governments under the tax cap from increasing their levies and collecting more money while property values decline. Opposition has been bipartisan, stoked further by Springfield lobbying groups representing county, municipal, township and other units of government.
Northwest Herald stories in recent years have revealed that lobbying groups for our local governments – which pay their dues with tax dollars – have fought the Franks bills and other tax relief measures, and have fought to further restrict right-to-know laws such as the Freedom of Information and Open Meetings acts.
Although housing values are starting to recover – the number of McHenry County property owners who appealed their 2013 assessments fell for the first time in almost a decade after consecutive record-breaking years – Franks said state and local governments have an obligation to reform tax law so that taxpayers never again pay more while their values drop.
“Maybe [the advisory referendum] would give some courage to those lawmakers who didn’t vote for it in the General Assembly,” Franks said.
The only statewide advisory referendum that has gone to voters since the ratification of the 1970 Illinois Constitution also was a tax-control measure. Commonly called the “Thompson Proposition” after former Republican Gov. James Thompson, the 1978 referendum asked voters whether state law and the Constitution should cap taxes and spending by state and local governments. Voters said “yes” by a resounding 83 percent, but state lawmakers did not advance any legislation as a result.
As of 2012, Illinois had the second-highest property taxes of the 50 states, second only to New Jersey, according to a November 2013 report by the Urban Institute, a Washington, D.C.-based economic and social policy research agency.
The General Assembly returns to regular session Wednesday to hear Gov. Pat Quinn deliver the State of the State Address.
What it means
House Bill 4273, filed by state Rep. Jack Franks, D-Marengo, would put a statewide advisory referendum on the Nov. 4 ballot asking whether local governments’ property tax levies should be capped in years when their overall assessed value declines.
On the Net
You can read the text of the bill at www.ilga.gov.