Page 11 - Superintendents Toolkit 2013
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PTELL
Background:
The Property Tax Extension Limitation Law (PTELL), which was
implemented in 1991, limits the amount that local taxing bodies
in tax-capped counties can increase their tax levies each year to
5 percent or the rate of inflation as defined by the Consumer
Price Index (CPI), whichever is less.
When the law was implemented, its intent was to protect
landowners at a time when property values were increasing. Now, with Equalized Assessed Valuation (EAV)
falling in many places, the ability to increase the tax levies is one of the only ways school districts can maintain
their local tax revenues.
Issue:
House Bills 89 (Rep. Jack Franks, D-Woodstock) and 95 (Rep. David
McSweeney, R-Barrington Hills) are slightly different versions, but both are
designed to prevent local taxing bodies from increasing their tax levies when
property values fall. Both proposals would eliminate the authority of school
boards to increase local revenue to keep pace with inflation or to maintain
local revenue when the EAV drops.
HB 89 states that in tax-capped communities where the total taxable EAV is
less than the previous year, the allowable increase in a district’s tax extension
would be 0 (zero) percent or the rate approved by voters.
HB 95 would automatically freeze a district’s tax extension for three years
unless local voters approve a different rate through referendum.
1. Because each year’s levy is based upon the
previous year’s levy, reductions would become
permanent, continuous and compounding.
2. The provisions of PTELL already limit a school
district’s ability to increase its tax levy to the
lesser of the CPI or 5 percent. The average annual
increase of the CPI since PTELL was created is 2.4
percent; it was 1.5 percent in 2011.
3. Because the State of Illinois ranks last in the
nation in the percentage of financial support of
public education, school districts rely heavily on
local property taxes.
4. Freezing local resources results in an increase in
the amount of General State Aid for which a
school district qualifies. However, GSA was cut by
5 percent in FY12 and by 11 percent in FY13 –
and some are estimating a 20 percent cut in
FY14.
5. This issue is not about school districts wanting
more money; it is about staying even with
inflation and keeping the local revenue stable.
6. The bottom line given the drastic cuts in state
funding for public education coupled with
freezing a school district’s ability to increase the
tax levy is that school districts will have to lay off
teachers and cut programs.
Resources:
Talking points:
