Is new law a property `tax cap’ or `gimmick?’ Madison County candidates debate the issue

One issue that has come up time and again throughout Kurt Prenzler’s tenure as chairman of the Madison County Board is being debated again in advance of the March 19 Republican primary election — PTELL.

The Property Tax Extension Limitation Law limits the amount that taxing districts can increase their levy each year. PTELL is active in 39 Illinois counties, but has been rejected in at least 10, including Madison and Jersey counties. Any proposed increases beyond the cap have to be approved by voters.

Madison County voters turned down PTELL in 1999, but Prenzler has reintroduced it to the county board four times over the last six years. Each time, both Republican and Democrat members of the board turned him down.

Chris Slusser, the Madison County treasurer who is running against Prenzler in next week’s Republican primary, is among PTELL’s opponents and has referred to it as a “gimmick.” He said he wants to support anything that would lower the property tax burden, but says data shows that PTELL would likely result in a 15-18 percent increase in its first year.

Why? Because he and other opponents of PTELL say taxing districts currently levy according to their needs, but with caps imposed by measures like PTELL, they will levy for the maximum each year to create a stockpile when they need more funding.

“”Even if it were to work to absolute perfection and all of the taxing districts behaved themselves every year, it would at best nibble around the edges of our property tax bills,” Slusser said. “And we all know that nothing that government ever does works to perfection. Not even close.”

According to the statute, PTELL limits increases in property tax levies to either 5% or the increase in the national Consumer Price Index for the preceding year, whichever is lowest. A taxing body can still levy a higher amount, but only with voter approval.

When originally enacted into law in 1991, PTELL was limited to the collar counties surrounding Chicago: DuPage, Kane, Lake, McHenry and Will. After expansion to the rest of the state, it still does not affect districts with home rule, such as Edwardsville and Collinsville, but primarily smaller districts like that have fewer than 25,000 people.

In 2022, the county board approved a subcommittee to study PTELL, chaired by board member Mike Babcock (R-Bethalto). A year later, the subcommittee recommended against proceeding with a PTELL referendum, and the board voted by its widest margin: 19-4 with one abstention and two absent.

Babcock said they could not find anyone in favor of it, including those who had been levying under PTELL for years. There were multiple meetings and public hearings and studies examined before issuing their recommendation, he said. The subcommittee’s vote was unanimous against it.

“Placing this initiative on the ballot may very well have the effect of tricking our voters into thinking we’re lowering taxes for them if they vote for this, while they end up actually raising their own taxes,” Babcock said at the time. “It would be irresponsible for the county board to place this initiative on the ballot again.”

Babcock said that their research included studies throughout the state that found taxing districts under PTELL found their rates have actually been higher because it forced school districts to take on the maximum rate they can - PTELL vs. non-PTELL districts were higher by about a percentage point each year, he said.

“They want to cap the rates, and it sounds like a fun thing to do until you look at the numbers,” Babcock said.

But Prenzler disagrees.

“That’s not true,” he said. “Government officials don’t like PTELL because it restricts their ability to raise taxes.”

Prenzler said there’s an easier way for school districts, which are by far the largest portion of property tax bills: run a referendum when you need to raise taxes more than the cap.

“When you put it on the ballot and you are polite with people, they will say yes,” he said. “That’s the solution when people say it’s making it hard to raise taxes: take it to the voters.”

However, the rest of the subcommittee, including several Republicans, disagreed when the subcommittee issued its verdict.

“I was hoping it would lower taxes,” said Mick Madison, who assumed the role of chairman pro tem after the county board voted in July of 2022 to strip Prenzler of some of his powers. “I have vowed, as have many of my fellow board members, to never vote to raise taxes in Madison County. I haven’t for 10 years, and I am not about to start now.

“I’m not sure why Chairman Prenzler wants to trick the voters into raising their own taxes, but that may very well happen if this is placed on the ballot and the voters vote yes thinking it will help them. And boy will they be mad. So will I, because I don’t want my taxes to go up either.”

Keith Staats, executive director of the Illinois Chamber Tax Institute, says calling PTELL a tax cap is misleading. Property taxes still go up under PTELL, since often there are some taxing districts not subject to the limits such as home-rule municipalities.

“Despite the law’s intention to moderate the amount of property tax increases, the true outcome is still dictated by a complex computation,” he wrote.

For example, when some properties in a district decline in their assessed value, the overall tax base is reduced. Then the amount of tax billed to the other properties increases proportionally, he said.

Without PTELL, districts choosing to increase their tax levy more than 5% still must hold a public hearing announced in local media.

A manual published by the Illinois Department of Revenue and posted on its website states that it is “misleading” to refer to PTELL as a property tax cap.

“Referring to it this way misleads the voters and gives them a false hope that will never come to fruition,” Slusser said. “I think anyone who voted for it would have immediate buyer’s remorse.”

In 2019, a proposal was floated at the state level to combine PTELL with a boost in state funding for schools. Frank Manzo, policy director at the Illinois Economic Policy Institute, and Robert Bruno, director of the Project of Middle Class Renewal at the University of Illinois at Urbana-Champaign, argued that time after time, in four separate state commissions since the 1980s, any meaningful property tax relief in Illinois would require more state funding for public education and local government consolidation should also be significantly considered.

In Illinois, local property taxes account for two-thirds of school funding, while the state pays about 27% – half the national average, according to Manzo and Bruno.

They proposed raising $5 billion over four years with Gov. JB Pritzker’s graduated income tax proposal to be distributed to school districts, enabling them to hold property taxes flat for four years. However, the graduated income tax amendment failed in 2020 with 45 percent yes votes and 55 percent no votes.

Slusser, however, said Indiana has made the recommended change that shifted school funding away from local property taxes to a sales tax in 2009, and property tax bills were “cut in half overnight.”

“The only way to see any meaningful relief on our property tax bills is to change the way we fund schools. Period. End of story,” Slusser said. “And that requires action by the legislature. I’ve been lobbying legislators on this issue, and we need a full-throated effort from more elected officials to make this change.”

Despite its repeated failure, Prenzler said he absolutely intends to bring it back again.

“I think the voters should have the opportunity to decide instead of the county board members deciding for (them),” he said.

Babcock called it Prenzler’s “bizarre crusade” to keep bringing it back again.

“It’s what he ran on, it’s his whole mantra,” he said.”He wants to use PTELL to crush our school districts. I’m not saying he’s against our school districts, but he wants them to submit to PTELL and every government that operates in PTELL is hurt by this law. That’s why nobody has added PTELL in the last 21 years - they realized it’s causing people problems.”

But Prenzler also predicted more chances of success after the election. There are five candidates running who Prenzler predicts will win election and who would support PTELL.

“It’s about policy,” he said. “People want to be able to decide this for themselves.”