House bill would require referendum before local tax hikes

House bill would require referendum before local tax hikes

A new bill introduced in the General Assembly would prohibit local lawmakers from passing tax hikes without voters' permission.

Enduring years of tax increases at the state and local level, Illinoisans have by now learned that they’re entitled to vote with their feet. However, depending on the success of a bill recently filed in the General Assembly, residents across the Land of Lincoln could be empowered to vote directly against tax hikes at the ballot box.

House Bill 4490, filed Jan. 31 by state Rep. John Cabello, R-Machesney Park, would put the fate of tax hikes in the hands of those who pay them. The bill amends the Illinois Municipal Code, prohibiting municipal taxing bodies from imposing on taxpayers “any tax increase or levy [or] any new or additional tax without prior referendum approval.”

The change would include both home-rule and non-home-rule municipalities, and would be effective immediately upon becoming law.

Average property tax bills have grown six times faster than household incomes in Illinois. But by narrowing the path between public treasuries and taxpayer pockets, local officials would be forced to think creatively and constructively about fiscal management.

Out-of-control costs of government are a common problem for municipalities across Illinois – but it’s not unsolvable. In fact, some local governments have even begun to ease their residents’ tax burden on their own. In December, members of the Lakewood village board voted to cut Lakewood’s property tax levy by 10 percent. The board achieved this by targeting administrative bloat. By consolidating management positions with duplicative roles, the village was able to reduce compensation costs and offer relief to taxpayers.

And this wasn’t the first fiscal reform initiated by the village. In May, Lakewood village trustees voted to dissolve Lakewood’s Tax Increment Financing, or TIF, district. TIFs divert tax dollars away from public bodies and into opaque funds, where revenues are often reallocated to chosen companies in exchange for the promise of investment. The idea behind TIF is to stimulate economic activity, but evidence has shown that it more often squanders local revenues.

HB 4490 would pressure local governments to follow Lakewood’s lead in exploring measures that reduce spending and therefore property tax levies.

By hinging tax hikes on voter approval, HB 4490 would demand more disciplined actions from public officials. In particular, it would add pressure on local leaders to exercise greater transparency with public finances.

While skipping town is often taxpayers’ chosen rebuke to routine tax hikes, HB 4490 would make “no” an option.

With HB 4490 signed into law, local lawmakers would be forced to sell voters on the idea of a tax increase before it’s written in stone. As a result, lawmakers would be forced to exercise greater caution when considering potential new expenditures.

Enhanced fiscal accountability would invite enhanced fiscal restraint.

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