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player ready...An election-year proposal now before Gov. Jim Edgar could provide a huge property tax break for cash-strapped senior citizens, but it also could cost schools and local governments millions in potential lost revenue in future years.
As approved and sent to Edgar for his signature last week just before the General Assembly adjourned, the bill could spell relief for thousands of Illinois property owners 65 or older with an income of $35,000 a year or less.
Basically, it would freeze the value of a qualifying senior citizen’s home for tax purposes at its 1994 level, which would buffer the impact of any market-driven increases in property assessments. The bill wouldn’t freeze taxes at current levels.
But the high cost of managing the freeze has local assessing officials upset and local government officials worried. The former see additional costs in administering the law. The latter are worried that it will limit their ability to capture future revenue gains where spending already is capped and where tax rates are at their maximum.
Other critics also note that the bill merely shifts the tax burden onto other shoulders, of younger homeowners and businesses.
“It’s a politically popular concept that, in an election year, sailed through the General Assembly. . .irrespective of its fiscal implications,” said Roger Huebner, the director of legislative programs for the Illinois Municipal league, which is seeking a full veto of the freeze.
State Sen. Aldo DeAngelis (R-Olympia Fields), who began to push for the controversial freeze two years ago, called its passage “a triumph for Illinois senior citizens.”
A spokesman for Edgar said Monday that the bill, which passed both houses almost unanimously, hadn’t yet arrived at the governor’s desk and no formal position has been taken pending a formal review.
An amendatory veto of any part of the bill, such as its effective date, could defer final legislative action on the freeze, however, until after the Nov. 8 election.
Edgar is on record as saying he would veto any unfunded state mandate, which the assessment officials and local taxing bodies claim the freeze constitutes.
Under the bill, the Illinois Revenue Department estimates that $40 million in local property taxes would be shifted or uncaptured by taxing districts in the first year, and more than $80 million in the second year.
Although it recognizes the need for property tax relief for seniors, an alliance of Illinois’ major school management groups will lobby against the bill because it isn’t part of more comprehensive property tax reform.
William Farley, a lobbyist for the Illinois Statewide School Management Alliance, an umbrella agency made up of the various statewide associations that represent school boards, administrators, principals and business officials, said the tax rates that affect the operating levies of many school districts in Illinois already are at their maximum.
If property assessments rise, the school districts get more money. If part of those property assessments are frozen at a lower level, the school districts will still get more money, just not as much as they’d get without the tax freeze.
And, Farley said, “They won’t get that without going back to the voters and getting a higher rate where they can.”
And voters aren’t always receptive to increases in their tax rates.
“We just don’t know what the fiscal impact is going to be,” said Peter Weber, chief lobbyist for the Illinois Association of School Boards.
“The fiscal impact is going to be compounding. It’s going to get worse from year to year, because you get more senior citizens every year. And we’re still not sure that the income threshold. . .is truly representative of people in financial need.”
But for property owners like 84-year-old Louise Froderman of DuPage County, the freeze would come too late to be of help.
Froderman, of unincorporated York Township, is moving to a nearby retirement complex from the home that she and her late husband Ray built near Downers Grove more than 47 years ago. Then it was on the edge of a farm field. Today it’s part of the upscale Sterling Road neighborhood, where lots sell for $100,000 and $500,000 homes are being built.
The move won’t be solely because of escalating property taxes. But Froderman said the spiraling tax increases that began in the 1980s in DuPage, fueled in part by redevelopment of neighborhoods like hers, were a factor in her decision to call it quits.
And even though the Frodermans hadn’t been forced to decide between keeping their home or doing without necessities, other similarly situated seniors have.
“We hadn’t gotten to that yet, but it was in the offing, that’s for sure,” said Froderman. “I felt I could pay the taxes this year but. . .I can’t stay here another year.”
Helping the Frodermans of Illinois, at very little expense or losses statewide, is what the freeze is all about, according to DeAngelis, who disputes the alleged dire consequences of the bill. He also said he “didn’t see why he (Edgar) would veto this.”
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Based on the $35,000 income threshhold, as many as 80 percent of the tens of thousands of seniors who now qualify for the senior homestead exemption in Illinois could be eligible for the freeze, according to the Illinois Department of Revenue.
As many as 28,000 seniors in DuPage County and 11,000 in Will County could qualify. In Cook County, it could freeze the assessed value of more than 197,000 senior homeowners.
Kane County supervisor of assessments Sallie Huber had calculated the freeze’s tax impact in her county at more than $1 million in the first year, based on an average tax break of about $95 per home to an estimated 11,280 homes.
If it becomes law, program applications should be available to seniors for filing with county assessment officials by Dec. 1. Local costs of administering the program in DuPage were estimated to be about $500,000 in the first year.
The Taxpayers Federation of Illinois took a neutral position on the freeze. Its president, Tim Bramlet, said the break to seniors “is going to result in a shift in burden (to other taxpayers), there is no question.”
Bramlet also said taxing districts, which over time could see some erosion of their tax base, were reluctant to oppose the freeze for fear of appearing to be opposed to seniors.
Lake County Supervisor of Assessments Ken Larson said the new law is designed to disappoint.
“I believe it makes people angry when things like this are instituted and they don’t see their tax bills frozen,” Larson said.
“The tax cap did what it was intended to do, because it was a cap on spending. This just shifts the burden a little.”