Legislative scene - ip820722.html

Peter M. Murphy Director, Governmental Services

Tax reform proposals and tax limitation measures while approaching the topic of tax relief from different perspectives in most instances have the same end result, a curtailment of the revenue raising ability of local governments. While many legislators understand the problems that local governments have in struggling with inflation, decreased revenue from the federal level, and an increase in the demand for services, others do not and see a solution to taxpayer concern over taxes in quick fix methods of relief aimed solely at the local level. Many of these proposals also call for abrogating the effect of the State Mandates Act which was designed to prevent the State from passing through to local government mandated programs or services without the financial resources to pay for them or mandated tax exemptions such as removing privately owned property from the local tax base. The State Mandates Act would require 100% reimbursement from the State for a mandated loss in local revenue. While there were many pieces of legislation introduced which proposed tax relief few did so by initiating reforms in the tax cycle where resolution of current problems in assessment practices, timeliness of tax receipts, and budgeting in the blind due to uncertain future revenue, costs taxpayers millions of dollars primarily as the result of forced short term borrowing.

The following list sets forth a short synopsis of those bills introduced during the 82nd General Assembly which, if passed, would have impacted the tax base or revenue raising ability of local governments.

SENATE BILLS

S.B. 305-JOYCE, JEREMIAH - Amends the Revenue Act of 1939 to change the level of assessment of property from 33 1/3 % of actual value to 25% of actual value. Effective January 1, 1982. The reimbursement cost for local revenue loss is estimated to be $922 million or more in CY83.

SENATE AMENDMENT NO. 1, 5/20/81, changed the level of assessment of property from 25% of actual value to 30% of actual value.

LAST ACTION: June 10, 1981, Recommended Do Not Pass House Revenue Committee.

S.B. 665-GITZ - Limits property taxes to be extended in 1982 and subsequent years to those amounts established and extended to each purpose or fund in the immediately preceding calendar year plus the total percentage of increase in the consumer price index for the immediately preceding calendar year.

LAST ACTION: May 1, 1981, Senate Revenue Committee.

S.B. 718-BERNING, BECKER, GEO-KARIS, TOTTEN, RUPP & KENT - Provides that, beginning in 1982, real property shall have an assessed valuation equal to that established in 1975 until the zoning classification or use of the property changes or improvements which would increase the assessed valuation are added to the property. It is the opinion of the Department of Commerce and Community Affairs that S.B. 718 constitutes a reimbursable tax exemption mandate under the State Mandates Act. The cost of reimbursement is estimated to be in excess of $1 billion for the 1982 tax year.

LAST ACTION: May 1, 1981, Senate Revenue Committee.

S.B. 975-NIMROD, SHAPIRO, PHILIP, TOTTEN, BECKER, ET AL - Amends the Revenue Act of 1939 to freeze property tax extensions at the 1980 assessment year level for tax extensions from 1981 to 1986 in taxing districts outside Cook County and at the 1979 assessment year level plus the increase due to an increase in an assessment for 1980 in the first quadrant distributed evenly among all 4 quadrants for taxing districts located within Cook County. The voters may by referendum approve an increase in extensions beyond the freeze level. After the 1986 assessment year, the increase may be no greater than 3% more than the preceding year. Effective immediately.

LAST ACTION: May 5, 1981, Senate Revenue Committee.

S.B. 976-NIMROD, SHAPIRO, PHILIP, TOTTEN, BECKER, ET AL - Amends the Revenue Act of 1939 to freeze property tax extensions at the 2980 assessment year level for tax extensions from 1981 to 1986 in taxing districts outside Cook County and at the 1979 assessment year level plus the increase due to an increase in assessment for 1980 in the first quadrant distributed evenly among all 4 quadrants for taxing districts located within Cook County. The voters may by referendum approve an increase in extensions beyond the freeze level. After the 1986 assessment year, the increase may be no greater than 3% more than the preceding year. Provides for advisory public question, The limitations shall be applicable 30 days after the result of the advisory question has been certified. Effective immediately.

LAST ACTION: May 5, 1981, Senate Revenue Committee.

S.B. 1264-RHOADS, DEGNAN, NET-SCH - Amends the "Truth in Taxation Act" to provide that levies which are more than 110% of extensions for the prior year be approved by a 3/5ths majority of the governing authority of the taxing district and tax levies which are more than 120% of the extension for the prior year be approved by a referendum in the taxing district adopting the levy. Senate Amendment #1 deleted the referendum and 120% requirement.

LAST ACTION: May 26, 1982, Lost in Senate 25-26-4.

S.B. 1265-BUZBEE, NETSCH - Amends the Revenue Act of 1939 to provide that equalization factors issued by the Department of Revenue for assessment year 1981 and subsequent assessment years shall not exceed the equalization factor for assessment year 1980. Exempts from State Mandates Act. Effective immediately.

LAST ACTION: October 29, 1981, Assigned to Revenue Committee.

S.B. 1266-EGAN, JOYCE, JEREMIAH, DEGNAN, CARBOLL, NETSCH, DAWSON - Amends the Revenue Act of 1939 to increase the homestead exemption from $3,000 to $4,500 beginning with the assessment for 1981. Amends the State Mandates Act to exclude the homestead tax exemption mandate from the operation of that Act.

LAST ACTION: May 26, 1982, Lost in Senate 18-37-0.

S.B. 1273-PHILIP, WEAVER, GROT-BERG, DEANGELIS - Prohibits local governmental units including home rule units, from imposing taxes on services performed

Illinois Parks and Recreation 22 July/August 1982

outside the unit's corporate limits, unless such tax is specifically authorized by the law. LAST ACTION: October 30, 1981, Assigned to Local Government Committee.

S.B. 1281-OZINGA - An Act to encourage maximum use of public buildings and resources by enabling local governmental units and agencies to establish community education programs. Provides minimum program elements. Authorizes State Board of Education to administer grants for the State's share of funding within certain amount and time limitations.

LAST ACTION: March 31, 1982, Assigned to Education-Elementary and Secondary Committee.

S.B. 1333-EGAN - Amends the Revenue Act of 1939 to eliminate property tax equalization by the Department of Revenue. However, for purposes of apportionment of aid to public schools, the Department will continue to determine equalization factors. Effective immediately.

LAST ACTION: March 31, 1982, Assigned to Revenue Committee.

S.B. 1348-COFFEY - Amends "The Truth in Taxation Act" to provide that in addition to the notice and hearing provisions for tax levy increases over 150% a referendum also be held on the issue by the taxing district seeking the increase. Effective immediately. LAST ACTION: March 31, 1982, Assigned to Revenue Committee.

S.B. 1517-PHILIP, WEAVER, GROT-BERG, AND DEANGELIS - Amends the Revenue Act of 1939 to change the level of real property assessment from 33 1/3% to 30% . Also amends the State Mandates Act to exempt from the Mandates Act such changes in the level of assessment under the Revenue Act of 1939. Effective immediately and applicable to assessments made in 1982 and thereafter. The amount of local government revenue lost due to S.B. 1517 may be substantial, but the total cannot be estimated due to the lack of reliable data. Other factors are also uncertain, which means that additional assumptions would have to be made concerning such things as: the effect of the general homestead exemption; the growth of the value of farm versus non-farm assessed valuation; the rate of inflation; and the growth of extensions made for funds which are not subject to statutory rate limits.

LAST ACTION: May 13, 1982, Placed on Third Reading in Senate.

S.B. 1664-BLOOM, PHILIP, WEAVER, GROTBEBG, AND DEANGELIS - Amends the Revenue Act of 1939 to provide that beginning with the 1983 tax assessments extension of property taxes and tax lew limitation shall be based on local assessed valuations of real property (formerly equalized by the Department of Revenue). Effective immediately.

LAST ACTION: April 13, 1982, Assigned to Revenue Committee.

HOUSE BILLS

H.B. 58-KARPIEL, CAREY AND DANIELS - Amends the Revenue Act of 1939. Changes the amount of assessment from 33 1/3% of actual value to 25% of actual value. Effective January 1, 1982.

ANALYSIS: Based on an analysis by the State Mandates Review Office of data from the Department of Revenue, total statewide assessed valuation, (with property assessed at 33 1/3% of actual value) is estimated to be: $65.7 billion in 1978; $60.5 billion in 1979; $67.5 billion in 1980; $77.7 billion in 1981; and $83.8 billion in 1982. This indicates a growth rate of: -8.0% for 1979 (due to the abolition of the personal property tax); 11.6% for 1980; 15.0% for 1981; and 7.9% for 1982. However, if H.B. 58 became a law, the statewide total assessed valuation is estimated to be $62.9 billion for 1982, or a drop of 19.1% from the 1981 level. In general, as assessed valuation increases, so do extensions. This is particularly true for about three-fourths of total extensions which are now at a statutory limit. The remaining one-fourth of extensions are not subject to limits, and are expected to grow about 16% per year. If H.B. 58 became a law, the state wide total of extensions for the 1982 tax year would be expected to drop to $4.3 billion, for a decrease of $1.4 billion. LAST ACTION: May 4, 1982, Tabled pursuant House Rule 25.D.*

H.B. 122-BARTULIS - Amends revenue Act of 1939. Deletes provisions for equalization by Department of Local Government Affairs of property assessment and valuation. Effective immediately.

LAST ACTION: May 4, 1981, Tabled pur-

Illinois Parks and Recreation 23 July/August 1982

suant House Rule 25.D.

H.B. 151-SCHRAEDER - Amends various Acts to limit the revenue growth from personal property tax replacement taxes to 8% per calendar year. Provides for tax credits to payers of such taxes when amounts collected exceed the allowed 8% annual growth. Effective January 1, 1982.

LAST ACTION: May 4, 1981, Tabled pursuant House Rule 25. D.

H.B. 204-BRADLEY - Limits property taxes to be extended in 1981 and subsequent years to those amounts established and extended to each purpose or fund in 1978 multiplied by the total percentage of increase in the personal income of Illinois for the immediately preceding calendar year.

LAST ACTION: May 4, 1981, Tabled pursuant House Rule 25. D.

H.B. 206-PIERCE - Amends the "Revenue Act of 1939" to raise the general homestead exemption from $3,000 to $4,500. Effective immediately.

ANALYSIS: The estimated annual reimbursement cost, starting in CY 1982, could be as much as $180 million, although a lower actual cost may be the case, depending on certain conditions. The reimbursement cost estimate is a rough estimate of the maximum amount of reimbursement which the bill may require. The estimate assumes that 2 million homeowners qualify for the entire exemption the first year, with a tax rate of $6 ($1500 x $6 x 2 million homeowners = $180 million). The actual cost would be less than that amount to the extent that: the entire exemption is not used the first year, home-owners are not at the current maximum, or homeowners fail to apply or otherwise qualify for the exemption.

LAST ACTION: May 4, 1981, Tabled pursuant House Rule 25. D.

H.B. 207-PIERCE - Amends the Revenue Act of 1939. Changes the level of assessment of property from 33 1/3 % of actual value to 28% of actual value. Effective January 1, 1982.

LAST ACTION: May 4, 1981, Tabled pursuant House Rule 25.D.

H.B. 361-SCHRAEDER - Amends the "Revenue Act of 1939" to limit property taxes to those amounts extended in the immediately preceding calendar year plus the average percentage of increase for the last 5 years in Illinois Personal Income; provides for certain exceptions.

LAST ACTION: May 4, 1981, Tabled pursuant House Rule 25. D.

H.B. 820-McCORMICK - Adds Section 147 to the "Revenue Act of 1939" to provide that the equalization multiplier issued for each county by the Department for assessment years 1981 and 1982 shall not exceed the multiplier issued for each county for assessment year 1979.

ANALYSIS: The "multiplier" is a factor issued by the Dept. of Revenue which is multiplied against the assessed value of a county in order to promote intercounty equalization of assessments. Depending on the assessment practices of a given county, the multiplier can be greater than "1.0", which increases total assessed valuation, or it can be equal to or less than "1.0", which either reduces or makes no change in total assessed valuation. H.B. 820 provides that, for the 1980 and 1981 assessment years, each county's 1979 multiplier is an upper limit which cannot be exceeded. For counties whose assessment practices have improved since 1979, the multiplier is decreasing and H.B. 820 will have no effect. For counties whose assessment practices have not improved, the multiplier would normally be expected to remain the same or increase. To the extent that H.B. 820 restrains increases in the multiplier beyond the 1979 level the bill has a direct negative effect on the local tax base.

LAST ACTION: May 20, 1981, Third Reading - Lost 068-085-006.

H.B. 881-YOURELL - Amends the Revenue Act of 1939 to base the assessment of real property for the purposes of claiming the homestead exemption and homestead improvement exemptions for owners who purchase the property during the year of the quadrennial assessment on the previous assessment.

LAST ACTION: May 4, 1981, Interim Study Calendar - Revenue.

H.B. 1147-EWING, WOODYARD, and MILLER - Enacts the Property Tax Extension Act of 1981, defining Taxing District as meaning any unit of local government, school district or community college district, including home rule units, authorized to levy ad valorem property taxes. Provides that no county clerk shall extend, for the total of all ad valorem property taxes levied by a taxing district for 1981, an amount greater than 106% of the amount of taxes extended on real estate assessments in the preceding year. If no extension of taxes for 1980 was made, the amount shall not exceed 106% of the amount extended on real estate assessments by the county clerk in the last year in which an extension was made. In the event the total amount levied for any taxing district exceeds the maximum extension provided in this Section, the county clerk shall reduce the extension for each purpose or fund by an amount proportionate to the amount by which the total levy exceeds the maximum permissible total extension.

LAST ACTION: May 20, 1981, Third Reading - Lost 092-056-007.

H.B.1211-LEVIN- Amends the "Revenue Act of 1939" to increase the general exemption from $3,000 to $4,500 for the 1981 assessment year and thereafter. Effective immediately.

LAST ACTION: April 30, 1981, Interim Study Calendar - Revenue.

H.B. 1254-KEANE, EWING - Amends the Revenue Act increasing the homestead exemption from $3,000 to $3,500 beginning with assessment for 1982 and thereafter. Amends State Mandates Act to exclude homestead tax exemption mandate from operation of that Act. Provides for Act to take effect upon becoming a law.

LAST ACTION: June 23, 1982, Third Reading Senate - Passed 46-11-0; Speaker's Table, Concurrence ;1.

H.B. 1527-MILLER, WOODYARD, BRADLEY and SCHRAEDER - Provides that for levies made in 1981 no county clerk may extend for any tax levied by a unit of local government or school district for any purpose or for any fund in an amount greater than the amount legally extended for such unit, purpose or fund in the immediately preceding calendar year plus the product obtained by multiplying such amount by the total percentage of average increase for the past 5 years in the Illinois Personal Income from all sources including transfer payments as defined and officially reported by the U.S. Dept. of Commerce or its successor agency for the immediately preceding calendar year as certified to the county clerk by the Dept. Limitation does not apply to tax levies made pursuant to a referendum passed after the effective date of this Act authorizing new bonds, an increase in the present tax rate of a unit of local government or school district to a higher rate authorized by a referendum passed before the effective date of this Act, ad valorem property taxes levied to retire principal and pay interest on notes issued in anticipation of real property taxes, levies for contributions to pension plans, levies for payment of principal and interest of indebtedness, levies for unemployment compensation and increases in levies for general corporate purposes which do not result in a tax rate increase because they are offset by increases in the tax base resulting from new construction and improvements or from annexation. Act takes effect upon becoming a law.

LAST ACTION: May 20, 1981, Placed on Spring Calendar; April 22, 1982, Third Reading - Lost in House 71-86-3.

H.B. 1962-LEVIN, CULLERTON, MATIJEVICH AND REA - Amends the "Revenue Act of 1939" to provide that the equalization multiplier issued for each county by the Department for assessment year 1981 shall not exceed the multiplier issued for each county for assessment year 1980. Effective immediately.