The State of the State

The dreaded multiplier and the campaign

PITY the poor Illinois taxpayer. With the 1982 elections nearing, he had given up hope for any more relief from local property taxes. What he feared more than anything else was a raise in the state income tax. Suddenly, however, hopes for more relief from local property taxes perked up. Or so it seemed: Gov. James R. Thompson had resurrected his plan to neutralize the application of the numerical factor that is designed to equalize assessments.

The governor had unveiled the plan last January in his annual State of the State address. It never materialized in the legislature, so Thompson amendatorily vetoed H.B. 2485 on August 20, rewriting that assessment bill and tacking his plan onto it. (For other changes Thompson made in H.B. 2485, see "Legislative Action," p. 30.) On top of everything else, the tack-on raised the issue of whether the governor had gone beyond the amendatory veto power the Constitution grants him.

Technically, Thompson's amendatory veto sends H.B. 2485 back to the House, which, with the Senate, reconvenes for its annual fall veto session November 5. The House can override, which takes a three-fifths majority; the House can accept, which takes a simple majority; or the House can take no action at all.

Illinois law calls for property to be assessed at one-third of fair market value, with local government, usually townships, doing the assessing. (Assessors are generally township officials.) Assessments vary from county to county; most fall wide of the one-third mark. Because of this disparity, Illinois law also calls for the application of a numerical factor designed to equalize assessments from county to county. The state, actually the Illinois Department of Revenue, computes the numerical factors and assigns them to counties where assessments fall wide of the mark. (Technically, assessments are multiplied by the numerical factor to produce equalized assessments. The numerical factor, then, is the notorious "multiplier.") The intent is to achieve the ideal assessment of one-third of fair market value. When property is underassessed, however, and those counties are assigned multipliers, assessments go up. Tax bills to taxpayers go up; revenue that local government generates goes up, because the multiplier raises the base on which local government taxes.

Under Thompson's plan, assessments ' would still be multiplied by the equalizing factor, but tax rates would be divided by the same factor; i.e., the multiplier would also be used as a divider. The intent, again, is to achieve the ideal of one-third. When property is underassessed, counties would be issued the multiplier/divider and tax rates would go down. Tax bills to taxpayers would go down; the revenue that local government generates would go down, because the divider would lower the rates at which local government taxes.

It is unclear how the divider would affect Cook County, where property is assessed according to classification. It appears, however, the divider would not effect cities or counties that have home rule power, since their tax rates are not subject to statutory limitations. But it would cost tax districts without home rule power — small cities, villages, especially schools. They can't raise their tax rates without a referendum; even then there are limits.

The question, of course, is how to achieve equity in assessments, not how to provide the taxpayer with tax relief or prevent local government from making a windfall profit in tax revenues.

Does Thompson, with his multiplier/divider, have the answer to the equity question? Not necessarily. If property were assessed at one-third of fair market value, there would be no need for a multiplier, much less a divider. And though Thompson's divider might keep assessments from getting worse, it won't necessarily make them better.

Thompson's plan would accomplish one very important purpose, however: It would return the burden for achieving

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equity from the state to the local assessor. In an election year, of course, the multiplier/divider is pure politics.

The Chicago Democrats have tried to hold Thompson accountable for increases in the local property taxes. And they have succeeded to a certain extent, accusing the governor of manipulating the multiplier to his political advantage, arguing that it is no accident Cook County has the highest multiplier in the state. Accordingly, Chicago Democrats have tried to lead the movement to reform the state's property tax system, calling for the abolition of the multiplier. Adlai E. Stevenson III had made good use of the multiplier issue in his campaign against Thompson — until Thompson stole Stevenson's thunder with the amendatory veto.

With a single, shrewd stroke of the pen the governor killed the multiplier issue as far as the campaign is concerned. He's acted, and the legislature can't react until it convenes for the veto session three days after the election. Thompson can now turn the tables on the Chicago Democrats and campaign on the platform that his divider promises tax relief.

Suppose the legislature accepts the governor's plan. That still leaves local governments with a substantial loss in revenue. School boards and village boards could always gang up and pressure voters to throw assessors out of office — or take them to court.

Thompson's divider might be good practice for the new federalism, but it doesn't make much sense when the state wants to raise the income tax. When the Chicago Democrats called for the abolition of the multiplier, they never explained how local government would make up the money. And now they're demanding that Thompson do so. But that's just good politics.

This is no reflection on the problem-solving abilities of politicians. The truth is that only in the State of Utopia do assessments approach the ideal of one-third of fair market value. Illinois has been striving for perfection since the legislature first created state boards to equalize county assessments in 1872.

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