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Tax Accountability Amendment

By CHARLES N. WHEELER III

In their zeal to place the Tax Accountability Amendment before the voters in November, its backers seem to have overlooked a chapter of Illinois history that might dampen their enthusiasm. The sobering tale begins in the state's early decades, when public officials eager to carve civilization out of wilderness embarked on ambitious, bond-financed public works programs that left the state threatened with bankruptcy and many counties and towns deep in debt for subscriptions to railroad stock.

Mindful of those excesses, the drafters of the 1870 Illinois Constitution tried to limit severely the ability of state and local governments to incur debt. Their good intentions proved futile, however; the strictures only made the inevitable borrowing more expensive and led to unforeseeable consequences, some of which plague Illinois taxpayers to this day and even helped fuel tax accountability fever.

That last ironic twist stems from the 1870 Constitution's ban on municipal debt in excess of 5 percent of a unit's assessed valuation, which for a century prompted creation of special districts to take over specific functions from a city or county nearing the lid. Today there are more than 3,500 special districts, each with its own taxing and borrowing powers, each formed to carry out a particular task fire protection, street lighting, mosquito abatement, park development, to name a few that could be done just as well by a city or a county.

The proliferation of overlapping special districts has made it difficult to deliver efficient, coordinated services, inevitably adding to the upward pressure on property taxes that is largely responsible for recent taxpayer unrest.

The parallels between this earlier tale and the Tax Accountability Amendment should not be overlooked. Like the framers of the 1870 Constitution, the amendment's proponents want to make it more difficult for government to exercise certain powers. And just as the earlier attempt failed, there's very good reason to suspect the current effort, too, is doomed.

The goals of the proposed amendment are simple: Require three-fifths legislative approval for tax increases. Prohibit votes on tax hikes without adequate notice and committee hearings. Limit special interests' ability to influence tax bills by mandating more frequent turnover on the revenue committees.

Those aims are undercut, however, by the ambiguous, loophole-riddled phrasing of the proposal and by the faulty assumptions that underlie it. Consider its wording. Extraordinary majorities would be required to approve any "bill that would result in the increase of revenue" to the state. No doubt its authors wanted to be sure the language covered "surcharges," "user fees," "revenue enhancements" and other ways of parting a taxpayer from his money. But the blanket phrase might apply as well to a host of other measures that only incidentally increase state revenue. For example, a bill to raise an offense that's now a misdemeanor to a felony carries with it an automatic boost in the possible fine to $10,000 from $1,000. How about renewing the tailpipe testing program in the Chicago and East St. Louis areas, thereby keeping federal highway funds? Or allowing riverboat gambling, with the state sharing in the take? Would any or all of these need extraordinary majorities to pass?

While the three-fifths provision could be applied quite broadly, perhaps with unwanted results, the proposed amendment's other mandates are drawn so narrowly they miss the mark. Ordering revenue committees to hold public hearings with at least two weeks' notice before voting on "bills which would result in an increase or decrease of revenue to the state" may sound fine on paper, but ignores the real-life scenario in which successful tax hikes generally surface as amendments or conference committee reports that are grafted onto innocuous bills.

Moreover, such measures usually are bipartisan agreements for which legislative leaders construct "structured" roll calls. with each party providing a prearranged number of "yes" votes. Under those

6/June 1990/ Illinois Issues


conditions, reaching three-fifths is not very much harder than getting a simple majority. Indeed only 3 of 23 tax hikes between 1977 and 1988 failed to get 60 percent vote in both chambers, according to a legislative study.

But the provision could cost taxpayers more, because when taxes have to be raised again as inevitably they will -- there will be 17 more lawmakers expecting something tangible they can show the folks back home to justify their vote. Though obviously that's not what those touting the amendment have in mind, it illustrates a woeful ignorance of the realities of the legislative process that undermines their goals.

Similarly, in targeting tax increases, the proposed amendment seems to reflect a fundamental misconception of the dynamics of state finance, in which spending, not taxes, is the driving force. Simply put, legislators do not raise taxes, then try to figure out how to use the new money. On the contrary; the pattern in recent years has been for the legislature and the governor to have long since spent the money and then some, until the state's precarious fiscal condition finally compels an adjustment on the revenue side.

Moreover, the amendment is off base as a response to voter concerns about high taxes. While much of the uproar stemmed from skyrocketing real estate tax bills in some parts of Chicago and the suburbs, these are local taxes. The amendment covers state taxes, generally considered to be relatively low.

At the same time, its terms could stymie efforts to reduce property taxes, which experts suggest can be done most effectively by shifting more of the burden for financing local schools onto the state income tax, with correspondingly higher rates. The three-fifths rule for this or any other tax structure reform would be more difficult, thus tending to lock in the status quo and whatever provisions that may be inequitable.

Despite its superficial appeal, the Tax Accountability Amendment, like the 1870 Constitution's debt limits, would be at best a futile gesture and at worst an impediment to solving the vexing problem of adequately funding essential services.

Charles N. Wheeler III is a correspondent in the Springfield Bureau of the Chicago Sun-Times.

June 1990/Illinois Issues/7


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