Evanston’s two school districts will need to forfeit roughly a quarter million dollars each back to the state due to a calculation error announced last month by the Illinois Department of Revenue.
The errors are part of a misallocation of $168 million worth of tax revenue dispersed by the state to local governments since 2014. About 6,500 taxing districts throughout Illinois were affected by the error and Chicago taxing districts were hit hardest. While Chicago Public Schools is on the hook for about $23.5 million worth of overpaid tax revenue, most taxing bodies affected by the error owe overpayments totaling less than $10,000. A majority of taxing bodies north of Chicago, however, owe between slightly and substantially more than that figure. Personal property replacement taxes (PPRT) are collected by the state and passed on to local governments to replace money that was lost to them when the 1970 Illinois Constitution barred their ability to impose personal property taxes on corporations, partnerships and other business entities.
The city of Evanston is also required to pay back roughly $181,000 in overpaid PPRT.
Martin Lyons, assistant manager and the city’s chief financial officer, said the city reduced its 2015 reported revenue as a result of the notification from the state.
He said officials “don’t anticipate any operating issues this year” in the city’s near $300 million budget as a result of the revenue change.
The city is enjoying a good year on sales tax, he noted, saying ”the state is stable even if the state budget is not.”
“I would say for us it’s a bigger deal,” said chief financial officer for Evanston Township High School District 202, Bill Stafford. District 202 will need to repay about $243,000 while Evanston/Skokie School District 65 is on the hook for $260,000 in PPRT as a result of the misallocation.
The error has a greater impact on school districts, Stafford said, because schools rely heavily on property tax revenue and that revenue is limited by a tax cap. That cap limits property tax increases to no more than the rate of inflation as detailed in the Consumer Price Index or 5 percent, whichever is less. For the past couple of years, CPI has hovered around .7 percent, Stafford said.
“We’re almost under a tax freeze as it is, we are getting such a small amount (in property tax revenue),” he said.
Any loss of revenue, even if it’s about a quarter million dollars in a district with a budget that totaled nearly $80 million in fiscal 2015, has an impact on the high school’s bottom line, Stafford said.
He said the district will have to tweak its budget to account for the lost funds.
“Any kind of money like that, when you’re living at the margin, it’s a big deal,” he said.
Lee V. Gaines is a freelance reporter for Pioneer Press.