McHenry County Blog

Getting as much money out of taxpayers is pretty much the goal of every tax district official, from school board member to township trustee.

To do that, boards need to ask for more than the increase in the Cost of Living allowed by the Illinois Department of Revenue under the Tax Cap law.

Virtually every tax district will ask for the maximum increase allowed.

That’s 3% this coming year.

103% is multiplied by what is called the “tax extension,” the amount of taxes each district is allow to collect from local property owners, to determine how much the tax district can collect in 2013.

But there’s more.

If there has been new construction, as there has been on Crystal Lake’s Route 14 shopping corridor, local park districts, schools, McHenry County College, the Mental Health Board, townships, county government, etc., have to ask for more than 103% of last year’s tax take IN ORDER TO capture the new growth.

I have suggested that legislators could amend the PTELL (the technocrats’ acronym for the Real Estate Tax Cap) law by allowing each government under it to pass a resolution authorizing county officials to tax all of the new growth, rather than using the current practice of balloon levying.

So far, I haven’t noticed such legislation has been introduced.

Last week, the McHenry County Board approved a multi-year contract with the McHenry County Economic Development Commission that uses the same formula for increases contained in the Tax Cap formula used to maximize the Tax Take.

Might the roll call on that question be a good indication of which County Board members will vote in favor of maximizing the County’s Tax Take?

I think it will, so I present it below:

EDC related Resolution vote count is as follows:   19 yes    5 no

AYES:       Merkel, Miller, Munaretto, Nowak, Peschke, Provenzano, Salgado, Schmidt, Wheeler, Bless, Breeden, Donner, Draffkorn, Heisler, Hill, Jung, Kurtz, McCann and Koehler

NAYS:     Schuster, Yensen, Donley, Evertsen and Hammerand

McHenry County Board during the consideration of Jack Franks’ County Executive Referendum.

My prediction is that most of those who will vote to maximize your County tax bill voted “Yes” on the EDC subsidy resolution.

I will further predict that the vote on the tax levy will not occur until after the election, so the above roll call, plus last year’s “Tax to the Max” roll call will be the best you are going to get before you have to cast your vote.

If you think the County Board is not moving in the direction of maximum taxation, please read this May 13, 2012 article.

Those voting against cutting the budget (read the story here) were

• Bob Bless (D1)
• Scott Breeden (D2)
• Mary Donner (D3)
• Jim Heisler (D2)
• John Jung (D5)
• Donna Kurtz (D2)
• Mary McCann (D6)
• Peter Merkel (D4)
• Marc Muneratto (D1)
• Kathy Schmidt (D3)
• Ken Koehler (D2)

On a second roll call the following voted for the “Tax to the Max” levy (again, see this article):

15 members voted in favor:

• Robert Bless
• Scott Breeden
• Sue Draftcorn (a switch)
• Mary Donner
• Jim Heisler
• Tina Hill (a switch)
• John Jung
• Donna Kurtz
• Mary McCann
• Pete Merkel
• Anna May Miller (a switch)
• Marc Munaretto
• Robert Novak (a switch)
• Kathy Bergan Schmidt
• Ken Koehler

Maybe the League of Women question screeners at the last week in September County Board candidates’night will allow a question that will pin down the incumbents running for re-election on the question of whether they will vote to increase the County levy so much that our County taxes will increase as much as the law allows.

McHenry County College, Northeastern entrance.

Dateline April 17, 2012. Finance and Negotiations Committee, McHenry County College.

Trustees Dennis Adams, Ron Parrish, Carol Larson present, Barbara Walters absent.

President Vicky Smith and Chief Financial Officer Larry West.

The minutes tell of West explaining that “the College went out for a levy representing a 9.9% increase, but the actual levy, once figured by the County, came out to a modest levy increase of 1.97%.”

Of course, it was the Real Estate Tax Cap that saved McHenry County Taxpayers from the 10% tax hike approved by the College Board.

The Board Taxed to the Max, as most other governmental entities in McHenry County did.

Take a look at what the McHenry County Board will look at when they decide whether to give taxpayers a break next year.

You remember, the break the Board majority did not give in the real estate tax bills we just received.

Approximate 20 Year Effects of Not Taking CPI Increase on Future Levies

The right hand column shows what taxpayers would save each year through 2023 if the McHenry County Board doesn’t squeeze taxpayers for all they can get.

On May 22nd, the County Finance Committee approved this wording for leveling a tax increase for the 2013 Budget:

Consumer Price Index – The County of McHenry is mandated to follow the Illinois Property Tax Extension Limitation Law (PTELL) by the State of Illinois.

PTELL allows governing bodies the ability to cover the costs of inflationary increases incurred in their day to day operations by increasing their previous year’s extension by the CPI or 5%, whichever is smallest.

For the fiscal year 2013 budget, in the event that revenue projections should grow less than 2% or show declines (see Revenue Estimation paragraph above), the County Board will allow usage of the CPI to cover only the additional increased costs of

• union/non-union wage adjustments,
• health insurance increases,
• pension increases,
• fuel,
• utilities (electricity, natural gas, water & sewer) and
• all other new costs that have been presented and approved by the County Board (without source of funding stated) since the passage of the fiscal year 2012 budget up to the passage of this budget policy.

Once a balanced budget is presented to the full County Board with a prioritized listing of the supplemental requests, and if the full amount of the CPI was not needed to cover the costs mentioned above, the County Board will bring forth a decision on using the remaining CPI funds available to cover the costs of the recommended supplementals.

Can’t imagine why the song “I’m Just a Girl Caint Say, ‘No’.”

“I’m just a girl who caint say, “No.’”

What percentage of the budget do you think the items listed above comprise?

If you prefer the original, which I remember seeing in Baltimore, Maryland, on the first row of the balcony when I was about 5, the movie version is below:

Can anyone spell “tax hike?”

Under the heading of

“Why your tax bills went up,”

in Kevin Craver’s article on the issuance of Property Tax bills is a misstatement from the McHenry County Supervisor of Assessments.

The Northwest Herald story says Robert Ross indicated,

“The answer is a simple one – mainly because of the tax cap, and to a lesser extent the record number of people who challenged their assessments.”

That indirect quote, if accurate, is completely wrong as far as implicating the Tax Cap for tax increases.  It is true if you are one who did not appeal your real estate assessment last year.  The latter shifts the tax burden from those who receive assessment cuts to those who don’t.

Tax increases are caused by elected (and appointed) tax district officials (mainly school board members) asking for more money.

Over the first approximately fifteen years of the life of the Real Estate Tax cap law, assessments were shooting up much more than the increase in the rate of inflation.

I remember the year before the Tax Cap went into effect in the early 1990′s real estate inflation was huge.

Crystal Lake High School District 155′s Board took the entire 17% increase. In other words, the last year before the law, the largest high school district in McHenry County raised taxes 17%.

Talk about taxing to the max.

In subsequent years tax districts were not allowed to increase their tax requests by more than in the increase in the Cost of Living, even if their assessments increased by a tremendous percentage.

"Balloon levying" wrings every tax dollar possible out of property taxpayers.

There was an exception and that was for new construction.

In order to make certain they got every last dime, tax district “ballooned levied,” that is, asked for far, far more than knew they could get so they would not leave the new construction tax crumbs (really more than crumbs until real estate values collapsed) on the table.

When property inflation was higher than the cost of living’s increase, the tax rate was forced down.  That was done as the County Clerk’s Office applied the Tax Cap law.

Remember all those press releases from local school boards and municipalities about how good they had been to taxpayers because they lowered their tax rates?

Well, it was claiming credit for something the County Clerk did automatically in order to limit the total taxes that could be pulled out of taxpayers’ pockets.

If assessments went up more than inflation, the tax rate had to be adjusted downward to comply with the collection limit imposed by the Tax Cap, that is, last year’s collection, plus whatever the increase was in the Consumer Price Index, plus new growth.

The result is that most, if not all, local tax districts are beneath the tax rate they are allowed to charge under state law.

So, if assessed valued decreases, the County Clerk must raise the districts’ tax rates if they as for more money.

If they do what the majority on the McHenry County Board did

(See “Remembering the County Board Members Who Voted to Maximize Our Tax Increases,”)

the district still balloon levies in order to grab all the new construction assessed valuation.

And, if it takes a higher tax rate, that’s what taxpayers see.

The electronic sign outside of the McHenry County Treasurer's Office says, "First Installment Due."

Ross tells it as it is in this sentence in the same article:

“When you have tax levies going up and assessments down, there’s only one way the rates can go.”

And that’s what will continue to happen until tax districts start bumping up against their statutory limits.

While I have not done an analysis of which tax districts increased or decreased (some did, e.g., my Village of Lakewood, where the pre-Tax Cap, non-referendum Golf Course Bonds were paid off last year, cutting real estate taxes a big chunk) you can read what happened to various categories of tax districts in the article linked below:

Municipalities Cut Tax Take! Fire Protection Districts Cut Even More! Libraries, Sanitary Districts Flat

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If you would like a chuckle, please read Kevin Craver’s rant about how his wife, cats and he could cover all the tax districts to which they pay taxes.

A press release from Carpentersville School District 300 [I have inserted some comments in brackets.] is below:

D300 opposes Tax Cap Bill as “anti-public service”

District 300's logo.

On Feb. 21, Senate Bill 2073 passed the Illinois House of Representatives including an amendment (#6) that was secretly attached with no public notice.

This bill is known as the Tax Cap Bill.

It is being framed by its proponents as a way to “protect homeowners and the middle class.”

The truth is that it will forever limit the ability of schools, cities, parks, and libraries to keep up with the growth in their communities and provide the services now in place.

SB 2073, Amendment 6, is anti-education and anti-public service. If passed by the Senate, it will have a long-term negative impact on District 300.

SB 2073 requires that if the equalized assessed valuation declines in communities with tax caps, such as the D300 community, the allowable increase in a taxing body’s levy would be 0 percent (or a higher rate if approved by voters).

Working closely with legislators, our latest information is that this legislation has stalled in the Senate and probably will not be called for a vote in the near future.

However, our experiences in Springfield have taught us that things change quickly and quietly at the state capitol.

We felt it was important to inform you of our concerns now.

While the flaws in this legislation are numerous, the following are the four primary reasons that D300 opposes this bill:

1. D300 would lose about $5 million this year. [One could not the converse, which is that taxpayers would save $5 million.] That is the equivalent of increasing class sizes by 5 students per class, when our class sizes are already some of the largest in the state.Even a one-year reduction in funding would be permanent and compounding. [Compounding of the cost of living increase in public pensions is a primary target of pension reformers.] In other words, as D300 enrollment continues to grow by at least 300-400 students a year, our ability to serve all of our students would continue to shrink due to the permanent loss of revenues.
2. D300 made significant sacrifices that parallel the sacrifices made by homeowners and businesses in our community. The School Board has cut $14.2 million from our budget in the past two years, with all employee groups making concessions and all schools being negatively impacted.
3. Any legislation that seeks to decrease revenues for public services must be balanced with fewer mandates on public services. Like other school districts, D300 must follow dozens of unfunded state mandates. [Every school district has the right by statute to ask for waivers of mandates and have had that right since the mid-1990's.]The state has also cut our General State Aid (GSA) by 10 percent and our transportation funding by 40 percent. Additionally, the chronic delinquency in state payments forces D300 to spend hundreds of thousands of dollars in interest to cover those late payments. The state should not consider further eroding our local ability to pay our bills without first addressing the long-ignored issue of unfunded state mandates.

An email from the Township Officials of Illinois asking help in killing a bill in the Senate Revenue Committee similar to the one State Rep. Jack Franks got passed the House, but was deep-sixed by the Senate sponsor (Terry Link) to whose bill it was attached.

It should be noted that those who voted for the Franks’ bill in the House knew it would be killed in the Senate.

State Senator Martin Sandoval’s bill is pretty much the same idea–no increase in tax dollars if assessed valuation decreases.

Here’s the email from Bryan E. Smith, Executive Director:

Senate Bill 2862 will be heard by the Senate Revenue Committee next Wednesday, May 2.

This bill will further hinder townships and road districts in tax-capped counties in their ability to generate revenue.

Under Senate Bill 2862, local governments (including townships and road districts) for which the total taxable Equalized

Assessed Valuation (EAV) is less than the previous year would be restricted to a 0% increase in the districts extension, or

the rate approved by voters.  Local governments in tax-capped counties are already limited in their ability to increase local revenues by the amount of the Consumer Price Index (CPI) or 5%, whichever is less.

This bill would have a very negative impact on townships and road districts in tax-capped counties.  Please contact your State Senator before next Wednesday by phone 217.782.2000 State Operator, and ask them to oppose Senate Bill 2862.

Thank you for your help with this urgent legislative matter.

Yesterday, McHenry County Blog noted that State Rep. Jack Franks’ bill was “headline” bill, that is one, that was put up to garner local press, but never intended to be enacted.

In fact, I quoted a state legislator close to the Illinois Municipal League to the effect that the bill was going nowhere.

Now the proof.

The Ilnois Municipal League logo. The motto is "Educate, Advocate, Empower."

Look what is on the Illinois Municipal League’s web site:

Senator Link Message on Property Tax Legislation

By Joe McCoy, Legislative Director, IML

State Senator Terry Link has asked the IML to make our membership aware that he has no intention of advancing a PTELL provision opposed by communities across the state. SB 2073, as amended in the House, proposes to prevent non-home rule local governments from capturing inflationary increases through the property tax if the overall assessed valuation within the local government jurisdiction has declined from that of the prior year. Senator Link’s statement is below.

The IML would like to thank Senator Link for his opposition to the House amendment.

Terry Link

Dear friend,

When I introduced Senate Bill 2073, the original intent of the bill was to require the Property Tax Appeal Board to issue a decision within one year from the date the appeal was received.

However, once the bill passed over to the House, Representative Jack Franks signed on as the chief sponsor.

He then amended the measure with house amendment 6, a hostile amendment which essentially limits local municipalities’ authority to levy a tax based on the needs of the community and student population, removing local control.

I am sending this letter to inform you I DO NOT SUPPORT Representative Frank’s amendment.

I will hold this measure in the Senate and make sure it never comes to a vote.

I share your concerns and appreciate your interest in the matter.

The measure is dead on arrival.

You should know that there is another bill in the General Assembly that is similar to Senate Bill 2073.

I recently learned of Senate Bill 2862, which is similar to the amendment Representative Franks placed on my legislation.

If you have any questions or concerns, please feel free to reach out to my Springfield office.

Sincerely,

Terry Link
State Senator, 30th Legislative District

In the past there has been tension between Link and Franks.

The Sun-Times announced the passage of Jack Franks' Tax Cap bill.

The Chicago Sun-Times is reporting that State Rep. Jack Franks (D-Marengo) has reversed the House defeat of his bill to prevent local tax districts from raising the tax take when assessed valuation is not growing…regardless of the increase in the Consumer Price Index.

Only voter approval could overcome the mew tax cap rule

While last time around he only got 34 votes, this time the bill garnered 74 votes.

Locally, the taxpayer-financed McHenry County Council for Governments sent the following email of opposition Monday night:

Good Evening,

Attached is a letter we have drafted to Rep. Bradley, requesting his “No” vote on Representative Franks’ PTELL bill. This same letter will be amended to be addressed to all members of the House Revenue and Finance Committee.

We request your consideration of including member Mayor’s, President’s, County Board Chairman Koehler and Township Supervisor’s signature on this letter. If you agree, please e-mail an electronic version of your signature to me at your earliest convenience.

As of this evening, Rep. Franks’ bill HB4608 is still in the House Rules Committee. However, there is a good chance it could be assigned to the Revenue and Finance Committee this week or early next week. Therefore, we request that you provide your signature, if you wish to include it, as soon as possible.

I will be in Springfield this week and will provide updates as they occur. In the meantime, please do not hesitate to contact me if you have any questions or need more information.

Best regards,

Anna

The bill that passed was Senate Bill 2073.

If you like to express your opinion about tax dollars being used to lobby against the best interest of taxpayers, here are some email addresses that might be useful:

amoeller@mchenrycountycog.org
To: a.osten@foxrivergrove.org; williamganek@algonquin.org; robby723@comcast.net; bsager@woodstockil.gov; peterson@village.lakewood.il.us; cblack@ci.mchenry.il.us; csass@huntley.il.us; cpeters@johnsburg.org; djohnson@huntley.il.us; d.brouder@foxrivergrove.org; edh@rdthiel.com; eplaza@woodstocklawpros.com; erin.smith.lakewood@gmail.com; kbeatty37@gmail.com; gmayerhofer@crystallake.org; gsagona@lith.org; Mayor@cityofharvard.org; jattermeier@villageofhebron.org; glindagood68@aol.com; johnschmitt@algonquin.org; jblakemore@cityofmarengo.com; jolson@springgrovevillage.com; mgeraghty@ci.mchenry.il.us; meisenberg@springgrovevillage.com; nsujet@lith.org; nelson@cityofharvard.org; mack5207@mchsi.com; rmcmahon@huntley.il.us; troutmayor@aol.com; rparr80069@aol.com; sduda@prairiegrove.org; suelow@mc.net; mccullomlake@comcast.net; tclifton@woodstockil.gov; toddweihofen@yahoo.com; supervisor@mchenrytownship.com; lindamooregt@hotmail.com; algtwsp@mc.net; pbaustin@co.mchenry.il.us

There will be, of course, a bitter fight between the tax eaters and the taxpayers in the Illinois Senate.

Below is the House Roll Call:

Click to enlarge this House Roll Call of Senate Bill 2073, now a Tax Cap bill.

From the roll call you can get an idea of where the first priorities of these legislators are.

Daily SouthtownStar column by Phil Kadner about Jack Franks' bill to freeze the amount of real estate taxes that schools and other tax districts can get in a declining real estate marker.

It was the late 1960′s or early 1970′s when I heard or read State Rep. CL McCormick of Vienna coin the word “taxeater.”

I think it was when WBBM was running an evening Illinois House session live.

I admit to being enamored with what I heard. I’m sure it inspired me to run for state representative in 1972.

In any event, the word “taxeater” was so descriptive that it entered my vocabulary.

Even though it has applied to me most of my working life.

And still does, since I receive a generous legislative pension.

I wonder if you are ready to adopt the description of those supporters of tax hikes I first heard from St. Rep. CL McCormick (Paul Powell’s Republican colleague in the old 3-member districts)?

He called them “taxeaters.”

Of course, as a public pensioner and an ex-st rep., I was, too.

But “taxeater” or “taxeater’s friend” certainly fits our local government officials.

They successfully lobbyed Illinois House members to kill Franks’ House Bill 3793.  (34-73-5 vote roll call here.)

State Rep. Jack Franks’ bill to freeze property tax extensions has proven local tax district officials are
“taxeaters” without a shadow of a doubt.

And perhaps most of our state legislators began as local officials.

SouthtownStar columnist Phil Kadner doesn’t use the term “taxeater,” but his piece on Franks’ bill has lots of sparks.

How about a short course in what Franks has proposed.

The key is to the property tax system is the extension.

Not the assessment.

Not the tax rate.

What’s important is the amount of taxes the County Clerk tells the County Treasurer to collect.  (Your share of the total assessment tells your share of that total.)

I’ll bet no one can find one tax district whose levy for this coming year is not at least as much more than last year’s extension, plus the increase allowed by the Real Estate Tax Cap law, that is, last year’s extension, plus the CPI.

Inflationary increases allowed by the Tax Cap bill since the bill took effect. Click to enlarge.

The inflationary increase allowed this year is 1.5%.

There will be a very, very short list of local governments who don’t grab for everything they can get.

Because real estate inflation greatly exceeded the increase in the CPI over the years since the Tax Cap took effect, tax rates were forced down.

(Remember all the self-laudatory press releases about how this district or that district lowered its tax rate? Meaningless, of course, since the taxes extended were what really mattered, and they kept going up, but a lot of reporters accepted the claims as being newsworthy.)

That means most, if not all, non-Home Rule tax districts have rates below their statutory minimum.

And, that, in turn, means when a tax district asks for last year’s tax extension (that is, pretty much the amount it received), plus the CPI increase allowed by PTELL (the name the technocrats give the Property Tax Cap), the County Clerk will just raise its rates to give the school or other tax district the extra money requested.

It matters not at all that assessments have decreased.

A bit complicated, but freezing the extension was what Jack’s bill was all about.

And, he has the right target.

The ignorant in the General Assembly claimed that the change would impede tax growth when the market turns around.

That is nonsense, of course.

When the real estate prices start climbing, taxes will be allowed to increase by as much as the Consumer Price Index goes up.

Related to this discussion is my advice to McHenry County Board members.  The Board seems poised to hike its taxes next year to the maximum amount allowed by law.

This article is about what Board members (and any other tax district officials who are really on the taxpayers’ side) could do to keep taxes pretty much constant:

No Financial Diet for McHenry County Next Year + The Tax Levy Game

Those that don’t deserve to be called “taxeaters” because their demonstrated goal will have been show to maximum the amount of money that can be extracted from homeowners’ pockets.

They are following the advice of Louis XIV’s Exchequer:

“The art of taxation is like plucking a goose: to get the most feathers with the least amount of hissing.”

Not the original “taxeater,” but certainly a role model.

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Some have suggested that Franks was just searching for headlines by promoting the bill.  I lean in that direction.

A lot of his colleagues apparently believe the same thing.  Consider this from the Daily Herald story on the bill’s defeat:

“Franks was ribbed by other lawmakers who accused him of grandstanding over the issue.

“’It was almost like a press conference you were holding,’ said Rep. Roger Eddy, a Republican from downstate Hutsonville.”

State Rep. Roger Eddy is a double-dipping taxeater. Not only is he a state representative. In his day job, he is a school superintendent.

Jack Franks turns out to have been blowing smoke with his tale about property tax relief

A press release from State Rep. Kent Gaffney reveals that State Rep. Jack Franks’ bill to rein in the taxeaters when down in flames today in the Illinois House.

So much for my predictive ability from 200 miles away.

I figured there were so many Democrats in so much trouble because of voting to hike the state income tax by 67% that they would vote for Franks’ bill to limit the amount tax districts could get in declining real estate markets to what they received the year before.

As you can see from the roll call below, it didn’t happen:

House Bill 3793 roll call on Jack Franks' Tax Cap limitation bill.

I think you would be safe in assuming that those not voting for Franks’ bill represent the wishes of tax districts more than they do of taxpayers. Since many are creatures of local government, including school boards and administration, their votes may be easily explainable.

Rep. Gaffney’s press release follows:

Gaffney votes for property tax relief for homeowners
HB 3793 fails in Illinois House on vote of 34-73-5

Springfield, IL… In response to rising property tax bills in the collar counties, State Representative Kent Gaffney (R-Lake Barrington) voted today for House Bill 3793, legislation that would offer relief to hard-pressed homeowners who are facing declining home values.

Kent Gaffney

“Since taking office, I have received many phone calls from homeowners upset that their property tax bills increased despite the fact that their home values decreased,” said Gaffney.

“Some of my constituents had their property tax bills go up as much as 15 or 20%. To me, it is completely unfair for people to be paying higher property taxes when their property values are declining.”

The Property Tax Extension Limitation Law (PTELL) limits local taxing bodies’ property tax extensions to the lesser of 5% or the rate of inflation. However, in 2008 when the housing market crashed and assessments went down, taxing bodies began increasing their levies at the rate of inflation, increasing most homeowners’ overall tax bill. HB 3793 would prohibit taxing bodies from increasing their levies in years that property assessments decrease.

House Bill 3793 failed in the Illinois House on a vote of 34-73-5. Representative Gaffney, a cosponsor of HB 3793, was disappointed in the bill’s failure.

“This was a common sense measure to provide real property tax relief to Illinois homeowners,” said Gaffney. “With the housing market struggling and many homeowners seeing their largest asset decline in value, we need to update Illinois’ tax code to reflect economic reality. I am disappointed in today’s vote but I will continue to push for property tax relief for our homeowners.”