Illinois Community College Trustees Association Calls for “Improving” the Tax Cap

In an Illinois Community College Trustees Association report supplied to McHenry County College trustees is a little item that would go a long way to removing restrictions imposed by the Property Tax Cap.

See if you can figure out what this proposal would do:

Improve the Property Tax Limitation Law

“Amend the current law to allow extensions to increase by the Employment Cost Index (currently the Consumer Price index) or 5%, whichever is least.”

The community college trustees join the Illinois Association of School Boards in asking for this large hole in the tax cap. The proposal would tie the tax cap to the “employment cost index,” which tracks changes in workers’ salaries. Now, the tax cap is tied to what it costs taxpayers to live, the consumer price index.

If passed, the result would be dramatic. If the legislation had been passed in 2003, when I first saw it, for instance, instead of being able to increase the amount taken from property owners (and, indirectly, renters) by 1.7%, schools and community colleges—or maybe even all tax districts—would have been allowed to increase their “tax take” by over twice as much—3.7%.

School officials are disturbed that when voters pass a tax rate hike referendum, the tax cap often permits schools from collecting the voter-approved tax rate from their tax bases.

The reason is that the tax base or the assessed valuation often increases more than the rate of inflation.

If home values in a tax district go up 5% in one year, for instance, as they have in many suburbs until quite recently, the school district is not allowed to take the entire 5% inflationary increase.

That means the tax rate goes down.

The school still receives whatever the percentage increase the tax cap allows.

The fact that tax districts regularly did capture this complete real estate inflationary increase during the 1980’s is one of the reasons tax caps were enacted.

What the schools want is a partial return to the days when their tax collections can exceed the rate of general inflation.

Other school districts have been unsuccessful in convincing their voters that tax hikes are necessary. Modifying the tax cap the way the Community College Trustees and School Board Association advocates would obviously make it easier to get more money, even in the face of voter rejection.

Of more merit is the Community College Trustees Association desire to be able to assess developer impact fees to support construction needed to house additional students…assuming additional classrooms are needed in an increasingly computerized learning environment.

And do you know what the increase in the CPI was for the last twelve months?

You can find that out and what the implications are to tax districts and taxpayers here.

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