The Elmhurst Chamber of Commerce & Industry Board of Directors, in consultation with its Governmental Affairs Committee, is announcing its opposition to a property tax freeze, as proposed by Illinois Governor Bruce Rauner and the Illinois General Assembly.
Property tax is an essential revenue source for our local governmental bodies—including the City of Elmhurst, Elmhurst Community Unit School District 205 and Elmhurst Park District—and a state-mandated freeze could result in millions of dollars in cutbacks and service losses.
By state law since 1991, Elmhurst’s governmental bodies already have been limited to a property tax increase to the lesser of five percent (5%) or the Consumer Price Index (CPI), which has hit three percent (3%) or greater only six times in 27 years and only once since 2006.
To the extent that high quality local government services are critical to a thrive community, our Chamber considers these services essential to maintaining both resident and daytime population, land values and community investment.
Our Chamber, therefore, views a property tax freeze as a threat not only to those government agencies, but also to Elmhurst’s residents and businesses.
By state law (Property Tax Extension Law Limit or “PTELL) since 1991, Elmhurst’s governmental bodies already have been limited to a property tax increase to the lesser of five percent (5%) or the Consumer Price Index (CPI), which has hit three percent (3%) or greater only six times in 27 years and only once since 2006, wreaking havoc on their budgets.
“Given that the State of Illinois failed to adopt an operating budget for nearly three years and doubled the debt to some $15 billion, state elected officials should not be sticking their hands into any part of the municipal pie,” stated John R. Quigley, ECCI President and CEO since 1999.
While deliberating this position, our Chamber considered the responsibility elected officials at our local level—City of Elmhurst, Elmhurst Community Unit School District 205, Elmhurst Park District and Elmhurst Public Library—and serving DuPage County have shown in budgeting and maintaining accountable fiscal positions.
Our Chamber believes that public participation and the ballot box are proper forums to respond to elected officials who depart from the paths expected by their constituents.
Also, we believe there is no cause to impose an additionally-burdensome referendum process on local agencies providing essential and valuable services benefitting residents and businesses alike.
Finally, our Chamber believes any loss in government services will adversely affect perceptions of value—in owning a home, residing and working in Elmhurst.
City of Elmhurst
Elmhurst City Manager Jim Grabowski reported that, even with a more diverse revenue stream than Elmhurst’s other taxing bodies, the City could suffer “very negative effects,” depending on how any legislation is written, and growing tax-free internet sales continue to threaten retail sales taxes generated by brick-and-mortar retailers.
“Our first concern is the State taking away local control from municipal organizations,” stated Grabowski. “We all know that local governments (city, park, school) have the most direct influence/results for our residents. Constituents can very easily contact the locally elected officials to voice opinions on the property tax levy.”
Two other City concerns include potential restrictions on bond indebtedness and payments, and public safety pension obligations.
If the City is not allowed to increase the tax levy for bond payments (obligations made many years ago), that would further impair the municipality’s general fund, forcing service level drops.
The City’s obligations to police officers and firefighters for their future pensions are at stake, especially when the General Assembly continues to enhance and/or compound every year.
Without the ability to increase revenues for this obligation, the City might have no choice but to reduce the level of service, resulting in less public safety officers on Elmhurst’s streets.
Elmhurst Public Schools
Public Schools Superintendent Dr. David Moyer reported that District 205, which generates 89 percent of its revenue locally, stands to lose $4 million in funding with a property tax freeze.
A two-year property tax freeze will cost District 205 an estimated $1.04 million in Year 1—nearly equal to the annual athletic budget ($1.46 million) adjusted for student fees and revenue—and another $3.17 million in Year 2.
The Year 1 impact equates to 13 full-time equivalent teachers. If the loss in revenue is accounted for through reconsideration of elementary level staffing, average class sizes will increase by nearly two students (24.2 from 22.3). If programs are cut at the high school level to account for the shortfall, one may see the elimination of 65 year-long or 130 semester elective courses.
According to Dr. Brent Clack, Executive Director for the Illinois Association of School Administrators, the Year 1 impact statewide will be a net reduction of $450 million or $100 million more than the state’s 2018 public education funding increase of $350 million.
Owners of a $750,000 home in Chicago six collar counties can expect to save only $750 over two years, while their public school systems will lose some $600 million in property tax revenue.
Elmhurst Park District
Public parks and recreational facilities improve communities across Illinois, and attract new businesses and employees while helping to retain existing businesses and residents.
Elmhurst Park District Director Jim Rogers reported that freezing property taxes will prevent tax revenues from simply keep pace with the cost of inflation, likely resulting in service cuts.
The minimal CPI‐increase permitted by PTELL merely allows the Park District to cover inflationary increases in expenses—such as utility costs, supplies, materials and equipment—and does not increase revenues after expenses are paid.
Service cuts could include, but are not limited to, affordable afterschool and summer school programs, and programs for senior citizens and those with disabilities.
According to the EPD, national and regional studies show that park and recreation services increase property values and the vast majority of Illinois citizens (9 out of 10) agree with those studies.
While a loss of educational opportunity can be viewed by many as a direct result of the property tax freeze, the same, conclusion can be reached with respect to park programs.
Ultimately, a property tax freeze could suppress home values if home buyers notice cuts in valuable services and change their perception of our community.
The Elmhurst Chamber of Commerce and Industry respectfully opposes the property tax freeze.