Property Tax Cutting & Raising Referendums in Non-Tax Cap Counties

State Rep. Allen Skillicorn asked the Legislative Research Unit to take a look at two questions:

  1. Could property taxes have been lowered by referendum before PTELL [FN 1] [called the Property Tax Cap by most folks]?  If so, did that ever occur?
  2. Is it still possible in the non-PTELL counties to do so?  If so, can a PTELL county revert to non-PTELL status?

McHenry County Blog will share the reply over the next few days.

Referenda to Increase or Reduce Property Tax Limits

The Illinois Municipal League [FN7] and our research identified sections 18-120 through 18-130 of the Property Tax Code, which authorize referenda to increase or reduce the maximum tax rate
limit in effect in some kinds of taxing districts. [FN8]

Those sections (which we will call the “referendum provisions”) were in the Revenue Act of 19399 before enactment of PTELL10 (in 1991) [FN11] and before codification of the Property Tax Code (re-placing the Revenue Act of 1939) in 1993. [FN12]

We found nothing in the Property Tax Code suggesting that the application of those referendum provisions varies based on a taxing district’s PTELL status.

But the referendum provisions are restricted in two significant ways.

They apply only to tax rates that are made specifically subject to them (presumably by other laws), and only to non-home-rule entities.

We describe below those two restrictions, and the process for initiating a referendum under the referendum provisions.

Rates Subject to Referendum Provisions

Section 18-120 of the Property Tax Code says this about its application to local property tax rates:

This Section applies only to rates which are specifically made subject to increase or decrease according to the referendum provisions of the General Revenue Law of Illinois. [FN13]

The term “General Revenue Law of Illinois” means the Property Tax Code [FN14] (as successor to the Revenue Act of 1939).  [FN15]

A 1998 Illinois Appellate Court case [FN16] interpreted the referendum provisions as applied to school districts.

A panel of the Fourth District of the Appellate Court held that the referendum provisions did not apply to school districts because of the limitation quoted above [FN17] (at that time it said, “This
Section shall apply . . .” instead of “This Section applies . . . ,” but otherwise it was identical to the sentence just quoted). The court stated that the referendum provisions could not authorize a referendum by themselves without some other law making the tax rates subject to the referendum provisions. [FN18]  The court found no provision in the Revenue Act specifically addressing the setting of school district tax rates.[FN19]

It also held that the School Code creates school district taxing authority and has its own provision for reducing tax rates by referendum. [FN20]

We searched for laws that specifically subject property tax rates to increase or reduction under the referendum provisions. [FN21]

We found over 60 statutory sections that appear to make specific local tax rates (or maximum rates) of counties, municipalities, and many other types of taxing districts subject to the referendum provisions.

In each such instance, the statute authorizing, or setting a maximum limit on, a particular type of property tax says that the limits imposed on the tax may be increased or decreased under “the referendum provisions of the General Revenue Law of Illinois.” [FN22]

More tomorrow.

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