Illinois Lawmakers Approve Legislation to Make Taxing Districts Whole For Property Tax Refunds

Late last night, while you were sleeping, the Illinois Senate and House of Representatives quietly passed House Floor Amendment # 5 to Senate Bill 508 (“SB 508”), which would create a new Section 18-233 of the Illinois Property Tax Code.  Section 18-233 automatically increases taxing district levies to make taxing districts whole for all refunds that result from Property Tax Appeal Board (“PTAB”) reductions, Circuit Court Orders in assessment cases, and Certificates of Error resulting from assessment mistakes.   If signed by the Governor, the new law will require county tax officials, beginning with the 2021 Levy, to increase each taxing district’s levy by the total amount that the taxing district lost due to refunds from the prior year.  This supplement to the levy will take place every year, and the additional taxing district revenue will not be included in the district’s aggregate extension base so it will not be subject to limitations under the Property Tax Extension Limitation Law (“PTELL”). 

SB 508 provides a short-term benefit for taxing districts that annually lose thousands of tax dollars to taxpayers in assessment challenges.  Currently, revenue that has been budgeted for services, supplies and staff is too often lost to taxpayers that appeal for refunds.  If enacted, SB 508 will allow taxing districts to receive their full extensions without concern that large refunds will interfere with planned expenditures. 

The long-term impact that unchecked assessment reductions can have on taxing districts and communities should not be overlooked.  Most notably, the new law shifts the refund burden directly to the taxpayers themselves.  Thus, every refund will now result in a tax increase for every taxpayer including homeowners.  Also, the property tax is, and will remain, the steadiest and most reliable source of revenue for nearly all Illinois taxing districts.  Unchallenged assessment reductions granted by the PTAB, the Circuit Court and Boards of Review result in shrinking tax bases and ultimately reduced total revenues.   Finally, the Illinois Property Tax Code has evolved to anticipate and incorporate active participation by taxing districts.  Without taxing districts standing in the way, taxpayers will be able to reduce their assessments with little or no opposition.  Taxing districts will therefore need to consider what level of participation will be necessary to defend their tax base, protect their taxpayers and maintain the integrity of the process. 

SB 508, which passed both the House and Senate with nearly unanimous approval, is currently on Governor Pritzker’s desk and we will be watching closely.  Please contact your Robbins Schwartz attorney with any questions. 

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