By, Rick Pearson Chicago Tribune
Jun 25, 2021
SPRINGFIELD — Legislation headed to Gov. J.B. Pritzker’s desk could set the stage for a wave of annual real estate tax increases across Illinois by giving local taxing bodies the ability to make up for refunds they’ve issued due to erroneous property over-assessments by shifting those costs onto the rest of their taxpayers.
Under the measure, starting with next year’s property tax bills, a taxing district levy shall be increased to reflect refunds through rulings of the Property Tax Appeals Board, a court-ordered assessment correction or a certificate of error. Because such appeals can often take years, and due to annual assessment errors, the recapture provision means likely annual future increases in property tax bills regardless of current limits in state law.
The legislation points to the power of the education lobby in Springfield, from local school districts and administrators to teachers’ unions, amid Illinois’ overly dependent system of funding schools at the local level through property taxes rather than through state funding.
Property taxes for schools traditionally make up the biggest line item on real estate tax bills and proponents of the legislation came largely from the education community.
The measure, approved May 31 with only a lone negative vote in the House and Senate, received little debate despite its potential financial ramifications for taxpayers who have long been weary of ever-increasing property tax bills.
Pritzker has not stated a position on the bill. He has not yet formally received the bill from the legislature and his office said he looks forward to reviewing the measure.
The legislation has the potential to further shift school and other local government costs from businesses to homeowners since the bulk of successful over-assessment appeals are made by commercial property owners.
For example, if a commercial property was over-assessed by $10 million, the other property owners — who had already received their notices and thought they knew what their tax burden was going to be — would have that $10 million collectively added to their tax bills the next year. (Note from Lake County Appeal: The author of this article is wrongly equating assessed value with tax liability. Assessed value X tax rate less exemptions equals tax liability.)
The legislation requires county treasurers each Nov. 15 to issue a report listing the amount of refunds that their local taxing bodies had to make due to successful assessment appeals, often times amounts that require back interest to be paid.
Taxing bodies can recoup the losses the following year by tacking it onto their basic tax levy, regardless of whether it exceeds the limits of 3% or the rate of inflation under the state’s Property Tax Extension Limitation Act, which covers non-home rule units of government.
Local taxing districts cannot build the refunded levy money into their base levy the following year. But due to the length of time in processing property tax appeals, levies and tax bills are expected to increase annually. The concept of the legislation is an attempt to hold local taxing districts harmless for drawing up their annual budgets, only to see the amount of revenue they have available to spend through property taxes reduced by having to issue refunds due to erroneous over-assessments.
The legislation was the initiative of state Sen. Don DeWitte, a St. Charles Republican, after requests by officials from northwest suburban Huntley’s Community School District 158 for help in making up for lost revenue due to erroneous over-assessments.
“What this bill will do is it ensures that if you’re assessed a million dollars in a given year, the following year when it pays out, you will see a million dollars in property tax revenues,” DeWitte said of local governments. “Then any adjustments that are made in the process are washed over to the following year’s property assessment.”
DeWitte said he believed the legislation would put more pressure on assessors to deliver more accurate assessments to avoid constant property tax increases driven by mistaken calculations. “That definitely was one of the byproducts of this legislation,” he said.