Landmark state report lights path toward lowering Illinois property taxes
Absurdly high property taxes demand bold reforms from Illinois lawmakers. New recommendations from a state task force show exactly what kind.
Illinois has the second-highest property taxes in the nation, but it’s likely the state will take the No. 1 spot in taxing homeowners very soon. For too many Illinois families, property taxes have become a second mortgage they can never pay off.
But a new report published Jan. 4 by the state’s Local Government Consolidation and Unfunded Mandates Task Force shows how lawmakers – whose residents are being squeezed out of their homes – can take steps to ease this burden.
How did Illinois get here?
Under the weight of nearly 7,000 local taxing bodies and hundreds of new unfunded mandates for local governments, Illinois property taxes have grown more than three times faster than the state’s median household income since 1990, according to Illinois Policy Institute research.
Gov. Bruce Rauner created the Local Government Consolidation and Unfunded Mandates Task Force in February 2015 to identify ways to consolidate local governments and to lift some of the state-imposed unfunded mandates that drive up property taxes, which take a larger cut of family budgets across the state year after year.
In its report, “Delivering efficient, effective and streamlined government to Illinois taxpayers,” the task force found that the number of unfunded mandates from the state for local governments in Illinois has skyrocketed since 1982, identifying 266 new unfunded mandates since then. Meanwhile, school districts saw 145 new unfunded mandates from the state since 1992.
Months of surveying local governments revealed the most costly mandates to be, in order:
- Public pension benefits
- Collective bargaining and interest arbitration
- Workers’ compensation
- Health insurance
- Prevailing wage
Lowering costs in these areas will be essential if state leaders hope to provide residents with sustainable property-tax relief.
On the topic of layers of government, the report notes that Illinois is the only state in the nation where a majority of residents live under three layers of general-purpose government – a county, municipality and township – and is home to the most local taxing bodies in the nation, at nearly 7,000. That’s over 1,800 more than the next-highest state, Texas.
The task force found that existing state law is the biggest obstacle to local government consolidation in Illinois. Even with overwhelming support for consolidation, it can be impossible for residents to start consolidation proceedings.
For example, there is no process by which citizens can initiate merging special-purpose districts – such as park districts, fire districts and library districts – with a county, municipality or township government.
The report also notes that it is more difficult to merge townships with county governments than it is to amend the Illinois Constitution. To place a binding government-merger referendum on the ballot requires signatures from 10 percent of registered voters in every affected township within 90 days, which the report deems “virtually impossible,” while the latter requires signatures from around 4 percent of registered voters in the state over 540 days.
Despite all this, one county has been able to prove why consolidation is so necessary across the state.
Changing course: Consolidation success story in DuPage County
Results from DuPage County – the single county that has been permitted by the state to pursue aggressive consolidation – have been overwhelmingly positive. Through consolidation of services, eliminating government agencies, trimming payrolls, signing joint purchasing agreements, and overhauling employee benefits, among other reforms, the county estimates it will save taxpayers $116 million over the next 20 years.
“It’s very difficult, tedious work, but it has the potential to pay huge dividends for taxpayers,” DuPage County Board Chairman Dan Cronin told the Associated Press.
DuPage County leadership has made it abundantly clear that with the right tools, positive reform at the local level is possible in Illinois.
Task force recommendations
The task force put forth 27 legislative recommendations with the goal of providing better public services at a lower cost to Illinoisans.
They are as follows:
Consolidation-related recommendations
- Enact a four-year freeze on creating new local governments
- Give Illinois citizens the power to consolidate or dissolve local governments via referendum
- Expand DuPage County’s pilot program to all counties in Illinois
- Allow all townships in the state to consolidate with municipalities covering the same boundaries
- In order to allow consolidation of two or more townships into one, remove the limitation capping township size at 126 square miles
- Following a successful referendum to dissolve townships into a county, allow the county to retain its existing form of government
- Following a successful referendum to dissolve townships into a county, protect taxpayers by allowing a county board or citizen-initiated township referendum to peg the first year’s local tax rate to the lowest rate among the consolidating townships
- Allow counties with fewer than 15,000 parcels and $1 billion in equalized assessed value to dissolve all elected township assessors and assessment districts covering multiple townships into one elected county assessor position and office
- Encourage local governments to continue coordinating services through intergovernmental agreements
- Provide the Illinois State Board of Education flexibility to incentivize school district consolidation
- Encourage state agencies to advise regional sharing of public services, assets, personnel and functions
- Allow the merging of township road and bridge districts maintaining fewer than 25 miles of road
Unfunded-mandate-related recommendations
- Allow local units of government the option to post online public notices and other public information, as well as the option to store public documents digitally
- Repeal or reform prevailing-wage requirements
- Allow schools to contract out services not related to instruction, including building maintenance, transportation and food preparation
- Give local school districts the option of allowing physical education exemptions to children for academic or athletic reasons
- Give local school districts the authority to contract out driver’s education instruction
- Give elected municipal boards and councils, counties and school districts the authority to decide whether employment issues should be subject to collective bargaining
- Eliminate minimum-manning requirements from collective bargaining
- Use the federal definition of “catastrophic injury” in the Public Safety Employee Benefit Act
- During interest arbitration, allow arbitrators to use existing financial parameters of local government as a primary consideration
- Require an annual state review of unfunded mandates imposed upon local governments
- Merge downstate and suburban police and fire pension funds into a single pension investment authority
- Pass a constitutional amendment that requires the state to reimburse local governments and school districts for increased expenses related to state mandates, and requires mandates that cannot be reimbursed to pass both chambers by a three-fourths majority
- Use the governor’s amendatory veto power to insert “if economically feasible” language into any legislation authorizing new unfunded mandates
- Provide an economic-feasibility exemption for units of local government, school districts, community colleges and institutions of higher education
- Give local governments the power to give blended Social Security or 401(k) plans to new public-safety employees, instead of defined-benefit plans
Time to act
Illinois is losing more residents to other states than ever before.
Providing property-tax relief to homeowners and businesses is essential in stemming that tide, and reducing the growth and cost of government is a key part of keeping a lid on taxes.
Middle-class Illinoisans can only shoulder the ever-growing burden of property taxes for so long before leaving for greener pastures. State and local lawmakers now possess a comprehensive roadmap for fixing this problem. It’s time to act on it.