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May 2018

Home rule

Illinois cities could lose broad home taxing powers as the state’s population shrinks

Some cities in Illinois could lose the broad taxing power of the inland state as the state’s population continues to decline, a possibility that could ease local taxes…

(INN) — Some Illinois cities could lose broad taxing authority under home rule as the state’s population continues to shrink, a possibility that could ease local taxes and further squeeze municipal budgets.

US Census figures released Thursday show the populations of Freeport, Collinsville and Harvey have fallen below 25,000. That is the threshold for automatic home rule status.

In 2010, Freeport had a population of 25,638. Now it has about 24,091 people. The city of Collinsville became self-governing through a special census in 2005. Its population fell to 24,703, according to new census estimates. Harvey had 25,282 residents within its borders in 2010. Now there are 24,908.

Self-governing authority gives local elected officials broad powers for self-government, including the ability to levy certain taxes and issue debt without voter approval.

“It’s a broad power,” said Citizen Advocacy Center attorney Ben Silver. “It gives them additional taxing powers and additional control over most areas that the state has not reserved for itself.”

Unless these cities persuade more people to move in by 2020, they will have to put a question on the ballot in November 2022 asking voters if they want to retain self-governing status.

“The big thing you lose is the ability to tax at rates above the tax cap,” said Stewart Diamond, a partner at Chicago-based law firm Ancel Glink and author of the illinois city handbookthe instruction manual for running a town in illinois.

Taxes and fees collected by the city under the self-governing authority would be canceled en masse as soon as the referendum saying so was certified, Diamond said. The exception would be taxes collected to pay obligations, such as those reference in a recent court ruling over Harvey’s debt.

Harvey would be in a particularly precarious position if he lost future taxability, Diamond said. That’s because Harvey is essentially insolvent and Illinois offers no way for municipalities to restructure their debt.

Harvey wavers on insolvency since state comptroller garnished income tax funds on behalf of city pension boards who claim the city owes them millions of dollars. As a result, the city has laid off dozens of police officers and firefighters. The middle house is there tax more than 10% of its value.

“Undermining what has been a source of revenue for a municipality could have dire fiscal consequences,” said attorney and municipal law expert Brad Stewart of the Crystal Lake law firm Zukowski, Rogers, Flood & McArdle.

Just because a municipality would lose its autonomous status does not mean that taxes would drop instantly and stay lower.

“Most of the autonomous communities I work with haven’t had a rate increase for several years,” Stewart said. “It is easy to say that autonomy has a negative impact on local taxes, but a deeper exploration of the operations of any local government would show that there is no correlation between higher taxes and autonomy. .”

Six cities, including these three, are within 1,000 people of falling below the home rule threshold. A notable population shift towards the threshold is Kankakee, which has lost more than 1,300 people since 2010 and now has a population of 26,216.

This story originally appeared on the Illinois News Network.

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