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Cook County freeze:
a rhetorical flourish in place of reality

Paul M. Green


Senate Bill 1378, passed by the legislature in its 18th day of overtime, presents a smorgasbord of tasty morsels that includes: (1) extending the income tax surcharge for state and local government two years while making education's portion of the tax permanent; (2) limiting the increase of property taxes (capping increases) in the collar counties to 5 percent or the rate of inflation, whichever is less; (3) freezing property tax assessments for one year in Cook County by requiring all taxing districts to base their taxes on the prior year's Equalized Assessed Valuation (EAV).

A politician or professor or both could munch joyfully on any of the above treats, but it's the so-called freeze that I think deserves a great deal more attention than it has received. First, some basic facts about Cook County's freeze.

The term freeze is inappropriate. A better word choice would be delay or interruption or even a semi-chill because after one year assessments will resume their upward spiral.

Explaining how local governments levy taxes is like dipping one's hand in a giant bowl of oatmeal most of the substance slips through your fingers.

It's a two-step procedure. Local governments decide how much money they need and establish the levy. The money is raised by imposing a tax rate, so many cents per $100 of assessed valuation, against the Equalized Assessed Value (EAV) of property in the taxing district.

The freeze affects only the EAV aspect of the property tax equation. Local governments can still set their levy in an unfrozen manner. Only when a levy results in a tax rate that exceeds a statutory maximum, will there be a freeze. That cannot happen in home-rule governments Chicago, Cook County and others which have no maximum property tax rates.

The new law has no effect on the ongoing reassessment process of evaluating the market value of property. The Cook County assessor's procedures and timetables will remain exactly the same; the property values that he establishes will just be used a year later. And the Cook County multiplier, the formula by which the Illinois Department of Revenue equalizes Cook County property assessment with that of the other 101 counties, will also be unaffected.

When the one-year freeze thaws, local governments in Cook County will have the opportunity to catch up in real dollars the money denied during the freeze year. However, since they always will be a year behind due to the freeze taxpayers will receive an ongoing benefit of a year's delay in their EAV.

The critical part of S.B. 1378 is not the one-year freeze rather it is the tax reform that requires local governments to levy their budgetary dollars on the prior year's Equalized Assessed Valuation. This is no small matter, and it could give taxpayers a real understanding of their local governments' budgetary patterns and priorities.

In the past, local governments set their levies in the autumn but did not know their EAV until the following spring. The time lapse forced local budgeters to guess at their tax base, and often to guess high to be sure to capture all the revenue possible through inflated (balloon) levies.

S.B. 1378's requirement that the prior year's EAV be used to calculate tax bills ends that kind of guesswork. It should also end unpleasant surprises but not the tax increases for Cook County taxpayers who have been reassessed.

Still, tax reform is not tax relief. State

28/October 1991/Illinois Issues

Sen. Aldo DeAngelis (R-40, Olympia Fields) likened the effect of the freeze on his home south suburbs "to giving someone who has measles a vaccination." He is right, but it should be understood that no procedural changes automatically save taxpayers real dollars.

True property tax relief reduction of taxes paid can only come about in one of three ways.

New nonproperty tax dollars replace property tax revenues.

Existing dollars are better managed resulting in a better benefit/tax ratio and thereby reducing the total dollars needed to run government.

Services are cut, thereby cutting personnel, and the savings passed on to the taxpayer.

As Gov. Jim Edgar told the legislature in his budget address on March 6, "If you add a dollar somewhere, you have to take a dollar away somewhere else." So property taxpayers in Cook County must realize that reducing property taxes must be made up by one of the three alternatives above.

Thus suburban Cook has a freeze that, like the 5 percent tax cap in the collar counties, is nothing more than a piece of plywood covering a pothole. It will not do the job.

Nothing short of choosing one of the three alternatives will provide real property tax relief.

Outside funding is the most desirable since it does not hurt, but those dollars are getting scarce. Better management and higher productivity through means such as privatization are getting more popular because they cause little pain; evidence is unclear on whether such measures will save big dollars. Only when taxpayers decide what services they want cut or trimmed will true relief occur.

Until then political and governmental leaders will serve up words like "freeze," which are nothing more than rhetorical flourishes substituting for political and economic reality.

That is partly because of the voting proclivities of property owners. Voters too easily support candidates advocating policy fairy tales filled with easy, quick fixes over elected leaders who level with them and present true options many of which will cut services.

Paul M. Green is director of the Institute for Public Policy and Administration, Governors Slate University.

October 1991/Illinois Issues/29

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