With billions in federal COVID-19 aid earmarked for schools in Illinois and the local government, Governor JB Pritzker urged them to use the money to lower or freeze property taxes. He didn’t mention the role of the state in raising property taxes to the second highest in the US
The federal government is giving schools and Illinois local governments a “boatload” of money for COVID-19 relief, and Governor JB Pritzker said the money should be used to relieve property taxes.
“This is a great year for local communities to consider freezing or lowering their property taxes,” said Pritzker on Aug. 17. “Why is this a good year for this? Not only did the schools get more funding from the state of Illinois, but they also received a shipload of funding from the federal government. And they have also received a lot of support for local infrastructure … These are things that typically require local property taxes to be paid. “
Federal relief funds total approximately $ 5 billion for the state’s schools. Schools account for around two thirds of the average property tax. Local governments will receive about $ 5.9 billion and local public transport, including airports, will receive nearly $ 1.9 billion.
The state will receive $ 8.1 billion, some of which Pritzker wanted to use to pay off the short-term loan Illinois received from the Federal Reserve – the only state using the emergency loans. When federal regulators said the pandemic couldn’t be used on debt, Pritzker shifted almost exactly the amount of debt to infrastructure spending, freeing up other government funds to repay the Fed.
The Republicans blew up the infrastructure plan as riddled with pork projects.
Illinois residents pay the second highest property taxes in the country, according to a ranking by WalletHub in 2021. In 2021, Illinois homeowners paid an average of $ 4,942 in property tax on the average U.S. home of $ 217,500, double the statewide average property tax.
While Pritzker wants the inflow of federal funds to provide temporary relief from high property taxes, the state is to blame for decades of underfunding education and for setting pension rules that give local governments almost no flexibility to control skyrocketing public pension costs. Illinois local governments collectively hold $ 63 billion in pension debt. Pensions devour most of the real estate tax revenue of many Illinois cities, and nearly 40% of education spending goes into pensions.
Pension debt, unless reformed, will lead to further tax hikes, which in turn will drive residents out of the state. An Illinois man with a $ 217,500 home would save $ 3,089 a year in property taxes moving to Indiana, a state with no high pension debt.
The long-term solution to high property taxes is pension reform, which will only be possible if Illinois changes its constitution. If the legislature can pass an amendment to the pension reform, it will provide real and permanent relief for property taxpayers.