McHenry County – With a stroke of the pen, governor JB Pritzker will change the property tax assessment landscape in the state of Illinois.
A vocal opponent to Senate Bill 508, Andrea Raila, a long-time property tax appeals specialist, said in an interview, “If this bill is signed by the governor, it will be the worst property tax shift in decades.”
The new legislation addresses the property assessment appeals process. Opponents don’t believe it needs changing. Proponents believe that the old law penalizes local taxing districts. Taxing districts include fire departments, libraries, schools and local governments.
Under the old law, property assessments can be challenged and, if the challenge is successful, any excess taxes paid are refunded to the property owner. Those refunded taxes are then deducted from the amounts collected by a county. In turn, the refunded amounts are then not available to the individual taxing districts.
Under the current law, according to Mark Altmayer, Chief Financial Officer of School District 158, “no taxing district ever receives 100% of their budgeted estimated revenue.” He continued, “this creates a shortfall in revenue to each district.
The new legislation still allows assessment challenges. In addition, it now allows counties to recover the refunded revenue, in the year following the refunds, by adding the refunded amounts to the total tax bill collected in the county. This addition is not subject to the state’s Property Tax Extension Limitations Act which limits new property taxes to 3% or the Consumer Price Index rate of inflation.
Opponents to the new law believe that the real problem with the new legislation exists, according to Raila, “because assessments were erroneous” while the new law “shifts the burden onto the taxing district’s other taxpayers to make up for the assessments mistakes.”
“The new law,” says Raila, “allows taxing districts to collect money that never truly existed because the assessments were wrong.”
Altmayer believes that “there are 3 basic reasons for a taxing district’s revenue shortfall.”
He continued, “the first reason is that assessors do make mistakes on estimating a property’s value. The second is that property owners can and do file for exemptions.” The Homestead, Veterans and Senior Citizen exemptions are examples.
“The third, and biggest reason,” said Altmayer, who was a vocal proponent of the legislation, “are each county’s Property Tax Appeals Boards.”
In Altmayer’s opinion, the McHenry County Property Tax Appeals Board does a good job and has a very low number of adjustments. On the other hand, according to Altmayer, “the Kane County appeals board has difficulty making decisions.”
If a county’s appeal board cannot reach a decision, the assessment challenge goes to the Property Tax Appeals Board in Springfield who then makes a ruling. The Springfield board tends to rule in favor of the property owners.
A prime example of how an incorrect property value evaluation can affect a community’s property taxes can be found at Alden of Huntley. A search of property records shows Alden has an assessed value of $3 million. The facility reportedly cost $30 million to construct. That under-valuation has cost Kane County thousands of dollars in property tax revenue.
Opponents to the legislation claim that since most of the property valuation appeals are from commercial property owners, that the recovery of the property tax refunds would be an unfair burden on residential property owners.
Proponents argue that the new law would mean that a taxing district would actually receive the budgeted amounts requested and approved.
The new law would go into effect in 2022 and the refund reclamations and redistributions would be seen in the 2022 property tax bills.
Editor’s Note: SB508 was sent to Governor Pritzker on June 29. As of July 6, he had not signed it.
