IL Property Tax Credit Intact; Board of Review Window Now Open

Submitted by jeffpsmith on Wed, 01/12/2011 - 16:29

The revenue bill passed by the Illinois legislature early this morning, the most prominent feature of which is a temporary (four-year) increase in the tax rate on taxable income (from 3% to 5%), is reported to have kept intact the present credit by which homeowners get 5% of their property tax bill deducted from their income taxes, at the urging of unnamed suburban lawmakers. It appeared from one posted version of the text of the bill that this might only be temporary, applying the credit only to tax years ending on or before December 31, 2010; however, the enrolled version of the bill, SB 2505, as posted on the legislative website, makes no change to the credit.
 
Discussion earlier this week had floated substituting a flat $325 credit, meaning that for any Evanston taxpayer who pays more than $6,500 in 2011, there would have been an additional tax hit on the IL-1040 above and beyond the income rate hike (and for any homeowner who pays less than $6,500, somewhat of a softener).
 
Speaking of property taxes, while most attention was focused on Springfield, the Board of Review has finally "opened" Volumes 51-59 in Evanston Township, effective yesterday, January 11, and extending through February 10. Taxpayers dissatisfied with the Assessor's action, or those who did not appeal to the Assessor but still want review of their assessments, may file until then.

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jeffpsmith

Sat, 02/05/2011 - 12:06

State Senator Jeff Schoenberg was one of the unnamed legislators referred to in the main story above. This state senate district, of course, already pays some of the highest property taxes in Cook County, largely to support schools such as Evanston's and New Trier. Taking away, for many, the property tax credit at the same time that they were hit with an income tax increase would have increased the pain for some (including our elected officials, who have been getting an earful). Schoenberg by his own account pushed back hard and was successful in getting the tax credit change rolled back before final passage.
 
Speaking of ears, I had bent Robyn Gabel's for a few seconds on this topic when I ran into her at the state officer inauguration in Springfield the weekend before the bill passed, but am not sure what role if any she played on this.
 
It's a tough task to reconcile philosophy with fiscal reality. In theory, replacing the 5% credit for property taxes with a flat $325 for every property-owning taxpayer would be considered "progressive" since the greatest benefit is to those who own less expensive properties (those with tax bills less than $6,500), and the benefit of the flat credit is propertionally less, the greater one's land holdings. However, the juxtaposition with the income tax increase made such a move too politically charged.
 
In the primary election for state representative a year go, a number of us supported tax reform along the basic lines of HB 174. I felt, however, that any income tax increase needed to be accompanied by reform of the mechanism for school funding, which is overly dependent on property taxes, and that Illinois needs a progressive tax structure. That's the "other shoe." As necessary to address Illinois's fiscal crisis as an income tax increase might have been, a lot of folks expected that some reform would also be included to make the medicine go down a little easier. The fact that that didn't happen, and that we still have a basically regressive revenue mechanism in Illinois, is one of the reasons many taxpayers are howling.
 
Just an increase isn't enough. Common sense budgeting and the even more important task of tax fairness are just some of the work that remains undone in Springfield.