Is Property Tax Relief on the Horizon?

Is Property Tax Relief on the Horizon?

11-09-2011_399(49).jpgProperty taxes in Illinois are the second highest in the nation. It’s a growing problem. However, Governor Rauner’s administration and the General Assembly are going to attempt to tackle it in the coming year. To reduce property tax rates for homeowners, the Local Government Consolidation and Unfunded Mandates Task Force is recommending a number of changes.

There are approximately 7,000 taxing bodies throughout the state. There are also several hundred mandates that local governments have applied. This creates an inefficient, and costly burden for taxpayers. Indeed, with so many authorities and mandates, it creates a confusing maze of bureaucracy for property owners to navigate with their real estate lawyer.

This bureaucracy is supported via property taxes. In February 2015, Governor Rauner created the task force to identify ways of reducing this burden for taxpayers. He did this prior to requesting tax increases on commercial property late last year. The task force identified unfunded mandates including public pensions, health insurance, the prevailing wage, and collective bargaining/interest arbitration as the primary influencers of the state’s rising property tax rates.

The task force further identified the difficulty in consolidating and reducing these burdens. For example, there is no process through which residents can merge special purpose districts with county, municipality, or township governments. While there are mechanisms in place to merge county-municipality functions, securing a referendum on the ballot is burdensome and nearly impossible.

The task force has recommend 27 proposals that would help reduce the property tax burden of Illinois residents. These include:

  • Enacting a four-year freeze on the creation of local governments.
  • Making it easier for citizens to merge or dissolve local government via referendums.
  • Capping township size at 126 sq. miles.
  • Repeal or reformation of prevailing-wage requirements.
  • Annual review of unfunded mandates local governments are responsible for.
  • Granting local governments the authority to blend Social Security and 401(k) plans for new employees instead of defined-benefit plans.
  • Merging pension funds for police and firefighters into a single investment authority.
  • Allow schools to contract out non-instructional services including maintenance, transportation, and food services.

The task force analyzed these expenditures and identified them as the primary drivers of the state’s property tax rates. By reducing these, the savings can be passed on to taxpayers via lower property tax rates. This would have a positive effect on homeownership rates as well as property values. While the recommendations are not binding, it is hoped that legislators will take action on them over the coming year.

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