Unfunded mandates keep property taxes high
When local governments must comply with a new state law, it often increases costs. Those costs are passed on to the taxpayer.
Upset with your high property tax bill? Public pension liabilities and layers and layers of local government are generally to blame. But you can also thank costly unfunded mandates in many state laws.
Unfunded mandates are requirements imposed on local governments by state law that create new costs without providing additional funding.
When the state passes a new law requiring additional reporting, new or more frequent training or classroom time for local officials, or increased benefits or protections for local public employees, costs for those governments increase. If these mandates are not offset by funding from the state, then the local government must bear the burden of increasing their revenue or cutting their spending to comply with the law.
According to a 2021 report by the Illinois Municipal League, local governments face hundreds of these mandates without receiving any additional compensation from the state. Over 180 unfunded mandates were proposed just last year, and 30 of those were passed and sent to the governor. Twenty-nine unfunded mandates were sent to the governor in 2022, and 35 were sent to the governor in 2023.
Without additional funding, local governments pass the burden of these mandates onto taxpayers, most often in the form of increased property taxes. Residents can see their bills. The typical Illinois homeowner pays more property taxes than those of any other Midwest state and double the typical American’s tax bill.
The State Mandates Act requires reimbursement for some mandates, but the General Assembly can exempt whichever bills it wants from those requirements, and the list of sections added since it first passed shows that they regularly make use of those exemptions.
Some mandates should not have a price tag attached, such as laws that improve ethics, transparency and accountability in local government. But often these policies require local governments to implement a state level policy, increased training requirements and increased benefits to public employees. The costs of these policies are passed on directly to homeowners.
The General Assembly should review these mandates with a goal towards repealing those that cannot be justified, such as the requirement that local governments collect and publish data on whether vendors the local government contracts with is a minority-owned, women-owned, or veteran-owned business or the requirement that local government employers take responsibility for deducting union dues from public employee’s paychecks, or requiring local governments to pay employees above-market wages. Local governments then should return any cost saved from a repealed mandate to the taxpayers. Doing this is one immediate way to chip away at Illinoisans’ heavy property tax burden.
Some Illinoisans will have a chance to have their voices heard on the issue in the April 1 consolidated election. Seven Illinois townships have passed resolutions to put the question of unfunded mandates to the voters in a nonbinding advisory referendum. The question will ask: “Should the state of Illinois be allowed to force unfunded mandates on local governments who may raise property taxes to cover the costs of those mandates?”
Lawmakers would do well to listen when they give their answers.