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NIU Economist: Property Tax Freeze 'More Like A Chill'


Illinois Democrats and Governor Bruce Rauner remain at a standstill over a new state budget.

Governor Rauner has been pushing for several overhauls including term limits, restrictions on civil lawsuits, and a hold on local property taxes. On Monday, he tweaked a property tax freeze proposal to include increased state funding for struggling schools.

"Property taxes are our number one problem tax, our most uncompetitive tax. The General Assembly has already indicated they are willing to pass a property tax freeze," said Northern Illinois University economist Jeremy Groves.

Rauner voiced frustration after a property tax freeze measure in the Legislature didn't include collective bargaining provisions.

He also tried to sweeten the deal this week by offering increased state support for high-poverty districts, including Chicago Public Schools.

The measures, which the Governor now wants as one package, face an uphill climb in the Legislature.

But back to the property tax proposal-- when is a freeze really a freeze?

“They’re using the word ‘freeze.’ It’s really a chill. If there are increases, your property taxes aren’t going to increase as fast,” Groves said.

He explains:

Credit graphic credit: Maria Boynton

“The levy is basically the district saying ‘this is how much money we are going to need this year.’ Then what they do is they plug those into a fraction," Groves said. "The levy is the top number, the total assessed value is the bottom number. You do the division and you get the extension-- that rate.   What the Governor is proposing is to take that rate number and freeze it for two years. That does not mean your property taxes will stay the same.”

So if your house increases in value, the property tax will still go up. If the house is worth less, there’s a good chance you could pay lower property taxes.

“Primarily the people who are going to feel the pinch from this is going to be the taxing districts, the schools, pension districts and so forth.” 

For example:

“The school district wouldn’t be able to ask taxpayers for more money, and can’t decide ‘we need even more money, so we are going to ask for more money.’ You are going to get, at best, the same thing you are going to get as last year.” 

Work arounds? 

“What you may end up seeing on a lot of these districts, if they are hurting on revenue, they may pass fees, for example. Licensing fees or extra student fees in schools districts simply to make up that lost revenue.”

Lori Fanello is the regional Superintendent for Winnebago and Boone Counties. 

“If they do a freeze, and make any cuts to it, it is going to be even worse. It’s going to so negatively impact that it will affect classes sizes, or cuts in jobs for people in the area. Hope that doesn’t happen,” Fanello said.

Julie Morris is superintendent for the Harlem School District in Machesney Park. She says she just hopes a deal is reached soon.

“We need to make our decisions about staffing in March and early April. We often don’t know what the state’s budget is for the next year until the summer. We just have to go with it and continue to move ahead whether the state is sending us the money. It makes it so difficult to plan, negotiate contracts, and do all of the things we need to do to operate.”

The DeKalb School district estimates the proposal to freeze property taxes would result in a $670,000 loss of revenue.

Supporters says the Rauner tax freeze proposal would allow property taxes to be raised through a voter referendum, giving taxpayers more “local control.” There are also calls for a complete overhaul of the school funding formula so it would rely less on property taxes.

Susan Stephens contributed to this report.