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A Plan to Simplify Tax Referendums Legislation Would Make Real Cost of Tax-Hike Requests Clearer to Voters

Posted on: Thursday, 27 October 2005, 21:00 CDT

By Jeffrey Gaunt Daily Herald Staff Writer

When suburban school officials ask voters for tax-rate increases, they typically use a simple formula.

The assessed value of your house, multiplied by their proposed rate increase, equals how much more you'll pay.

For years, voters have headed to the polls with those numbers in mind - and they've paid the price.

This year alone, 14 suburban school districts collected $59 million more than most voters would have expected, based on that simple calculation.

That's $59 million on top of the extra voters agreed to pay through the increase.

In the past five years, those districts, and 11 others like them, have collected a total of $263 million more than the standard calculation suggests.

Lawmakers now have four more working days to agree on a solution - or in the spring taxpayers again will vote on increases costing far more than they might expect.

A legislative plan, which lawmakers failed to approve in the spring, would do more than save homeowners a lot of money.

The proposal from state Sen. Don Harmon, an Oak Park Democrat, and state Rep. Mike Tryon, a Crystal Lake Republican, would also make the real cost of future tax requests more obvious when voters head to the polls.

And school officials - whether or not voters have approved a tax hike - would all get more flexibility in deciding how to spend their money each year.

"We're very satisfied," said Daniel Johnson, one of the authors of the proposal and head of the public finance department for the law firm Chapman and Cutler.

"We've really had an opportunity to help a bipartisan group ... who have had an interest in this," Johnson said.

School officials now work under restrictions on where they can allocate money - say, between the fund used to pay teacher salaries and the fund used to pay for heating and cooling costs. Those restrictions would be lifted.

In other words, officials in many districts would have more control over how they divide often limited resources.

That's good news for business officials who can't always use the money where they feel it would best be spent.

"Anything that provides flexibility to the fund that most needs it ... that's good," said Rebecca Allard, Geneva Unit District 304's assistant superintendent of finance.

At the same time, the new legislation would significantly decrease the amount of money school districts would receive from voter-approved tax hikes.

If approved, the new law would mean a 10-cent tax increase, for instance, would cost homeowners roughly 10 cents per $100 equalized assessed valuation - which is how most people thought the current law worked anyway.

"That's easier for everybody to grasp," said Allen Albus, Naperville Unit District 203's assistant superintendent of finance. "It's very difficult to communicate the intricacies of how the various laws work, so anything to simplify that I think is in everybody's interest."

Under the current law, tax-rate increases are applied over five years, not one. And a 10-cent increase could mean an increase of 10 cents per year each of those five years.

Most voters, however, and many school officials didn't understand that the law worked that way.

As a result, homeowners paid more than they anticipated after approving tax-rate increases, as shown in a Daily Herald analysis published earlier this year.

Under the new legislation, "it should be easier, I think, to get the message out," said Yasmine Dada, assistant superintendent of business in Libertyville-Vernon Hills High School District 128.

"It just depends how thoroughly you make the effort to get the information to the public," Dada said.

The new legislation would also clear up some of the confusion over the wording of tax requests.

When voters head to the polls - as early as March in some cases - they wouldn't be asked to approve, for instance, an increase in a school district's education fund tax rate.

Rather, school officials would simply ask for a tax increase, without specifying a fund. The officials would then have the option of including, or leaving out, exactly where the money would be spent.

That's because previous voter-approved tax rates on individual funds - say, the education fund or operations and maintenance fund - would no longer apply like they once did.

And to make the ballot questions even more understandable, school officials would have to estimate how much the proposed tax increase would cost homeowners, and include the figure on the ballot.

Under the current law, Chapman and Cutler attorney Johnson said, ballot questions "didn't seem to provide either the taxing district or the voter a rational proposition."

Tax requests under the new proposal would be easier for voters to understand, Johnson said, and easier for school officials to explain.

- Daily Herald staff writer Emily Krone contributed to this report.

Source: Daily Herald; Arlington Heights, Ill.

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