Voters in St. Clair County can express their opinion on property tax caps in an advisory referendum when they cast their ballot in the November election.
The state legislature is considering PTELL (Illinois Property Tax Limitation Law) revision and a property tax freeze. PTELL was enacted in 1991 and is currently in effect in 39 counties.
The non-binding referendum asks if local governments should be required to seek voter approval prior to increasing the property tax levy.
To help raise awareness and understanding of this complex issue, representatives from Americans for Prosperity and Stifel Public Finance gave an overview Friday at the O’Fallon Pachyderm Club meeting.
Steve Springer, O’Fallon School District 90 board member, also provided information.
Illinois has the highest property taxes in the country. The taxes have risen 2.5 faster than inflation and 3.3 times faster than the median household income.
Dave From, statewide director of AFP-Illinois, said middle-class wealth is wrapped up in their property. With the recession that began in 2008, governments had less ways to pay bills but didn’t curb spending. Businesses aren’t coming here because of the high taxes and related expenses.
“It’s a real problem. Property taxes are out of control. There has been deficit spending for decades, so that’s in the mindset. It seems like we keep getting stuck,” From said.
In an effort to stem escalating property taxes and additional sales taxes, AFP-Illinois created the Local Anti-Tax Initiative in 2012, which has assisted in fighting 186 tax increases in communities.
There are limits on how much local governments can collect from property and sales taxes, and to implement a new tax, raise an existing tax or issue a new debt (in the form of bonds), voter approval must be sought.
Anne Noble, managing director of Stifel Public Finance and the bond representative for O’Fallon School District 90, explained that PTELL does not cap or limit individual property tax assessments or individual property tax bills.
PTELL’s intentions are to limit the growth of property taxes. It caps the total dollar amount certain property taxes may increase from year to year — only by CPI (Consumer Price Index) or 5 percent, whichever is less, plus any new property added to the tax rolls each year.
New property is new revenue on top of what’s already collected.
“Tax caps are not good at dealing with a recession time,” Noble said.
PTELL slows the growth when property values and assessments are increasing faster than inflation and increases the growth of property taxes when property values and assessments are increasing slower than inflation, or decreasing.
In 2006, St. Clair County rate setting EAV (equalized assessed value) was $3,167,564,886 — a 9.8 percent change in EAV with a 2.5 percent change in CPI.
In 2015, the rate setting EAV was $3,414,470,377, a 0.15 percent change in EAV and a 0.7 percent change in CPI.
A tax bill on a $150,000 market value of a home was $3,520 at an 8.00 tax rate, which it was in 2005. Today, it is $4,313.
“Some school districts, like District 90, live off funding balance, and move things around,” Noble said.
But a flaw in the law, she said, is that there is no provision for collecting less as that maximum rate never decreases. She said school districts should have the option to seek less, and then if they need the maximum rate again, to return.
“Now, a drop in one year’s levy becomes permanent — which is a disincentive for taxes to ever decrease,” she said.
With tax capped tax rates, the county clerk calculates the total operating tax rate for each taxing unit.
“The property tax caps could prolong Illinois from fast-growing taxes,” Noble said.