Local Government

McHenry County lawmakers file bills aimed at property tax relief

Emboldened by a new governor prioritizing property tax relief, several local lawmakers are filing bills aimed at curtailing how much local governments can collect.

House Bill 3129, filed by state Rep. Jack Franks, D-Marengo, imposes the tax cap law on all counties in Illinois, and lowers the maximum annual increase local bodies can collect from 5 percent to 1.75 percent.

House Bill 177, filed by Rep. David McSweeney, R-Barrington Hills, imposes a freeze on levy increases altogether until fiscal 2019.

And House Bill 3130, also filed by Franks, makes another attempt at a law forbidding local taxing bodies from collecting any increase if their total assessed valuation decreases from the previous year.

All three bills allow exceptions for local voters to allow increases by referendum.

Franks said his two bills will work together to rein in property taxes – McHenry County per capita has among the nation’s highest, according to one survey.

“The local [governments] aren’t immune to what’s happening in society,” Franks said. “When the citizens have less, the government should have less.”

The tax cap, officially called the Property Tax Extension Limitation Law, limits the increase that taxing bodies can receive over the previous year’s tax extension to either 5 percent or the rate of inflation, whichever is smaller.

State lawmakers imposed the cap on McHenry and the other collar counties in 1991 to rein in skyrocketing property tax bills that were increasing by double-digit percentages.

A 1995 law that imposed the cap on Cook County also gave voters in other counties the ability to impose tax caps by referendum.

Thirty-three other counties have since imposed tax caps – although the most recent were in 2002 – while voters in nine other counties have rejected them, according to the Illinois Department of Revenue.

But the tax cap law became governments’ friend and taxpayers’ enemy with the bursting of the housing bubble and the ensuing Great Recession. When property values fall, a scenario lawmakers never imagined, the tax cap limit becomes a guaranteed minimum for taxing bodies to collect, provided they have not yet hit their maximum overall tax rates.

Local taxpayers were shocked to see their tax bills increasing substantially despite their homes’ loss of value.

While a number of governments, such as the McHenry County Board, have kept their levies flat in recent years, others have not and take the maximum rate to which they are entitled each year.

The Tax Foundation, a Washington, D.C.-based think tank, has rated McHenry County’s property tax burden in recent years in the top 30 for counties nationwide.
Another Washington think tank, The Urban Institute, puts Illinois’ property tax burden at second-highest in the nation behind New Jersey.

Newly elected Republican Gov. Bruce Rauner’s agenda prioritizes property tax reform through various avenues, from an outright freeze as presented in McSweeney’s bill to promoting consolidation. Illinois has almost 7,000 units of government, far more than any other state.

McSweeney’s bill calls for a three-year freeze on property taxes, although Rauner is expected to ask for two years in whatever legislation his backers end up filing.
“This is a top priority for me,” McSweeney said.

Another McSweeney bill, House Bill 178, seeks a one-year freeze on tax levies for townships with fewer than 100,000 residents located in counties under the tax cap.

Read the texts of lawmakers’ bills and track their progress at www.ilga.gov.

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