Leg­isla­tive panel backs ex­pand­ing sales tax

Pritzker ad­vo­cates for an­other way to ease prop­erty taxes

Chicago Tribune (Sunday) - - CHICAGOLAN­D - By Jamie Munks and Dan Pe­trella

Gov. J.B. Pritzker, fo­cused on win­ning over vot­ers on a new grad­u­ated-rate in­come tax, is dis­miss­ing a pro­posal floated by a prop­erty tax re­lief task force that would ex­pand the Illi­nois sales tax base to help fund pub­lic schools.

“That’s not some­thing that I am sup­port­ive of; I think there are other ways for us to go about it,” Pritzker said of the idea, which was in­cluded in a draft re­port from the 88mem­ber panel. “But I think it’s wor­thy of peo­ple bring­ing up all of the ideas be­cause look — there are a lot of things we ought to con­sider and it’s not just one thing that’s go­ing to solve the prop­erty tax chal­lenge that we’ve got in the state.”

The fi­nal re­port from the leg­isla­tive panel was due Dec. 31, and both the missed dead­line and the con­tents of the 36-page draft — shared with mul­ti­ple news out­lets this week — set off par­ti­san squab­bling. The dif­fi­culty in reach­ing a con­sen­sus on rec­om­men­da­tions, even among Democrats, in­di­cates that the his­tor­i­cally thorny is­sue of sub­stan­tial prop­erty tax re­lief could once again vex law­mak­ers this spring.

Ex­pand­ing the reach of the sales tax while re­duc­ing the tax rate was a pro­posal backed by two task force sub­com­mit­tees, sig­nal­ing sig­nif­i­cant sup­port from some of Pritzker’s fel­low Democrats. Ad­di­tional rev­enues could be used to boost state fund­ing for schools and to stock a new prop­erty tax re­lief fund, said Rep. Sam Yin­gling, the Grayslake Demo­crat who is chair­ing the mas­sive task force.

“I don’t think we can have a re­al­is­tic con­ver­sa­tion about prop­erty tax re­lief with­out ad­dress­ing the need to di­ver­sify the ed­u­ca­tion fund­ing rev­enue stream,” Yin­gling said. “It’s just not pos­si­ble.”

An at­tempt to ex­pand the sales tax would come as Pritzker asks vot­ers in Novem­ber to change the state’s con­sti­tu­tion to im­pose a grad­u­ated-rate in­come tax to re­place the state’s cur­rent flat tax, to gen­er­ate an es­ti­mated $3.6 bil­lion.

Repub­li­cans have re­peat­edly at­tacked Democrats over push­ing tax in­creases rather than cuts, and a sales tax ex­pan­sion push cou­pled with the in­come tax over­haul could play into that Repub­li­can nar­ra­tive dur­ing a leg­isla­tive elec­tion year

Broad prop­erty tax re­lief has proved a dif­fi­cult is­sue to ad­dress in Illi­nois span­ning decades of lead­er­ship in the state. But some Demo­cratic law­mak­ers have been hes­i­tant to fully back Pritzker’s grad­u­ated in­come tax plan with­out a direct tie to prop­erty tax re­lief.

Last spring, law­mak­ers con­sid­ered a pro­posal that would have frozen prop­erty tax rates if vot­ers ap­proved the grad­u­ated in­come tax, and if the state took on a larger share of fund­ing ed­u­ca­tion. But that pro­posal didn’t ad­vance out of the House, and the mas­sive task force was cre­ated in­stead.

Pritzker has promised to de­liver tax re­lief to prop­erty own­ers and points to sev­eral pieces of leg­is­la­tion he’s signed since tak­ing of­fice as steps to­ward that goal. Those in­clude a con­sol­i­da­tion of down­state and sub­ur­ban po­lice and fire­fighter pen­sion funds, in­creased school fund­ing from the state, and his $45 bil­lion “Re­build Illi­nois” con­struc­tion pro­gram.

“Those all work to al­le­vi­ate lo­cal prop­erty tax need,” Pritzker said.

The idea of ex­pand­ing the sales tax to in­clude some ser­vices, such as hair­cuts, dry-clean­ing, and ac­count­ing and le­gal work, has long been dis­cussed and dis­carded.

Sen. Don DeWitte, a St. Charles Repub­li­can and a mem­ber of the task force, said new state rev­enue from le­gal adult-use cannabis and a recom­mit­ment of 100% of Illi­nois Lot­tery rev­enues to schools are other po­ten­tial streams to in­crease the state’s share of ed­u­ca­tion fund­ing.

If the task force’s fi­nal rec­om­men­da­tions in­clude the sales tax ex­pan­sion, that would touch off “a very long con­ver­sa­tion and dis­cus­sion,” DeWitte said.

“That one is go­ing to re­quire very care­ful anal­y­sis and con­struc­tion,” DeWitte said. “The first thing peo­ple will think is that it’s an in­crease in taxes, un­less we find a way to show it’s a shift and not an in­crease.”

That was the re­ac­tion of some top House Repub­li­cans, who de­nounced the draft re­port and said Democrats re­jected their ideas that in­cluded lim­it­ing the so-called un­funded man­dates on schools and lo­cal gov­ern­ments.

“For a state that is so in need of prop­erty tax re­form, the Democrats have in­stead pro­posed tax in­creases,” House Repub­li­can Leader Jim Durkin said at a news con­fer­ence this week. “Heaven help the mid­dle class.”

The Civic Fed­er­a­tion, a non­par­ti­san bud­get watch­dog, has ad­vo­cated for an ex­pan­sion of the sales tax to some ser­vices as part of a broad fis­cal over­haul that also would in­clude lim­it­ing state spend­ing and tax­ing re­tire­ment in­come.

Law­mak­ers’ “pri­or­ity should be a com­pre­hen­sive plan for what we’re do­ing to fund our gov­ern­ment,” Civic Fed­er­a­tion Pres­i­dent Lau­rence Msall said.

“Merely ex­pand­ing the sales tax base and then say­ing that the new ser­vices will go to re­lieve prop­erty taxes is not likely to have an im­pact un­less there is a com­pre­hen­sive plan for whether that amount of rev­enue will be suf­fi­cient for putting a freeze on school district prop­erty taxes or whether there’s go­ing to be some greater rev­enue shar­ing by the state,” Msall said.

Law­mak­ers have tried to over­haul the state’s prop­erty tax sys­tem through nearly a dozen task forces, spe­cial com­mis­sions and blue-rib­bon pan­els since the 1970s.

In the mid-1990s, Repub­li­can Gov. Jim Edgar cham­pi­oned a plan to raise state in­come taxes by more than $1 bil­lion, with a cor­re­spond­ing re­duc­tion in lo­cal prop­erty taxes and an in­fu­sion of new fund­ing for schools.

But the plan ran into staunch op­po­si­tion from Edgar’s fel­low Repub­li­cans in the Se­nate.

The lat­est draft re­port raises the prospects of such a tax swap, with one sub­com­mit­tee call­ing for “the re­moval of school dis­tricts from the prop­erty tax sys­tem so that the state of Illi­nois has sole fund­ing re­spon­si­bil­ity for K-12 schools.”

But a key Demo­cratic law­maker who was a mem­ber of the task force said the idea is “as­tro­nom­i­cally un­ten­able.”

Rep. Mike Zalewski, a River­side Demo­crat who chairs the House Rev­enue

Com­mit­tee, said the shift would re­quire bil­lions of dol­lars in new fund­ing be­yond the nearly $9 bil­lion in gen­eral rev­enue the state is spend­ing this year. Lo­cal school dis­tricts to­gether spent nearly $20 bil­lion dur­ing the 2017-18 school year, ac­cord­ing to the most re­cent fig­ures from the Illi­nois State Board of Ed­u­ca­tion

“Within the con­fines of the cur­rent bud­get and the cur­rent way we fund things, it doesn’t seem like it’s in the im­me­di­ate fu­ture,” Zalewski said.

The last ma­jor change the Gen­eral As­sem­bly ap­proved was a 1991 law that capped in­creases in prop­erty tax col­lec­tions in the col­lar coun­ties at 5% or the rate of in­fla­tion, which­ever is less.

The law was ex­tended to Cook County three years later, and other coun­ties were later al­lowed to adopt the caps by bal­lot ref­er­en­dum.

The draft re­port con­tem­plates a num­ber of changes to the tax caps, in­clud­ing elim­i­nat­ing them al­to­gether and leav­ing it up to lo­cal gov­ern­ments to de­cide how much rev­enue is needed to fund op­er­a­tions.

Yin­gling said he re­mains op­ti­mistic the Gen­eral As­sem­bly will act on a num­ber of the rec­om­men­da­tions the task force is putting forth.

“I think we’re at a very unique nexus at this point in time where the leg­is­la­ture un­der­stands and has the willpower to do some­thing about the prop­erty tax cri­sis,” Yin­gling said. “There is a de­fin­i­tive recog­ni­tion that some­thing has to be done and it has to be done now.”


Gov. J.B. Pritzker, seen speak­ing at Sol­dier Field in Chicago on Nov. 11, has promised to de­liver tax re­lief to prop­erty own­ers.


House Repub­li­can Leader Jim Durkin, seen at the Capi­tol in May, said, “For a state that is so in need of prop­erty tax re­form, the Democrats have in­stead pro­posed tax in­creases.”

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