RECENT AMENDMENTS TO THE TRUTH IN TAXATION ACT

By Earl L. Hoover, Attorney at Law

Public Act 86-957, applicable to levy ordinances in 1990 and subsequent years, amends the publication, disclosure and procedural requirements of the Truth in Taxation Act, §861 et seq. of Chapter 120, Illinois Revised Statutes (the "Act"). This article sets forth the forms and procedures to be followed in complying with the Act, as amended; changes to prior law resulting from Public Act 86-957 are highlighted.

Procedure: Not less than 20 days prior to the adoption of its levy ordinance, each taxing district must determine whether this year's proposed levy (not anticipated extension) exceeds last year's extension or anticipated extension (not last year's levy) by more than 105%. Whether or not the amount as so determined exceeds 105% of last year's extension, the amount should be recited in the minutes of the meeting at which the determination was made. In computing the percentage increase, those portions of this year's levy and last year's extension attributable to debt service and election costs, if any, are to be excluded. If the percent increase is greater than 105%:

(1) the taxing district must publish notice of the percentage increase and call for a public hearing using the form prescribed by statute;

(2) the notice must be published in an English language newspaper of general circulation published in the taxing district, of if none, in a newspaper of general circulation published in the county and having circulation in the taxing district;

(3) the notice must appear no more than 14 nor less than 7 days prior to the date of the public hearing;

(4) the notice must be no less than one/eighth page in size, type no smaller than 12 point, enclosed in a black border no less than 1/4 inch wide and not placed in the area of the newspaper having notices or classified advertisements.

Contrary to prior law, the public hearing required by the amended Act must not coincide with the hearing on the proposed budget of the taxing district.

At the time the tax levy ordinances is filed with the County Clerk's office it must be accompanied by a certification by the presiding officer of the taxing district certifying compliance with or inapplicability of sections 4 through 7 of the Act.

Calculations: The Act now requires that debt service and total levy calculations be made and compared to the prior year's extensions as part of the notice requirements. However, it is important to note that these calculations are not to be considered in determining whether this year's corporate and special purpose levies exceed last year's extension for these items by more than 105%. Thus, any increase or decrease in the current year's debt service levy or the total levies over last year's debt service extension or total extensions will have no effect on the calculation to determine whether the 105% standard has been exceeded for the corporate and special purpose levies. The calculations for debt service and total levy are purely informational.

Definitions: The Act now provides definitions for certain of the terms, as follows:

(a) "taxing district" means any unit of local government, school district, or community college district, including home rule units, authorized to levy ad valorem taxes;

(b) "aggregate levy" means the annual corporate levy of the taxing district and those special purpose levies which are made annually (other than debt service levies and levies made for the purpose of paying amounts due under public building commission leases);

(c) "special purpose levies" include, but are not limited to, levies made on an annual basis for contributions to pension plans, unemployment and worker's compensation, or self-insurance;

(d) "debt service" means levies made by any taxing district pursuant to home rule authority, statute, referendum, ordinance, resolution, indenture, agreement, or contract to retire the principal or pay interest on bonds, notes, debentures or other financial instruments which evidence indebtedness.

Notice of Proposed Property Tax Increase for . . . (commonly known name of taxing district).

I. A public hearing to approve a proposed property tax levy increase for . . . (legal name of the taxing district) . . . for . . . (year) . . . will be held on ... (date) ... at ... (time) ... at . . . (location).

Any person desiring to appear at the public hearing and present testimony to the taxing district may contact . . . (name, title, address and telephone number of an appropriate official).

II. The corporate and special purpose property taxes extended for . . . (preceding year) . . .

were . . . (dollar amount of the final aggregate levy as extended).

The proposed corporate and special purpose property taxes to be levied for . . . (current year). . . are . . .(dollar amount of the proposed aggregate levy). This represents a ... (percentage) . . . increase over the previous year.

III. The property taxes extended for debt service and public building commission leases for . . . (preceding year) . . . were . . . (dollar amount).

The estimated property taxes to be levied for debt service and public building commission leases for a ... (percentage increase or decrease) . . . over the previous year.

IV. The total property taxes extended for . . . (preceding year) . . . were . . . (dollar amount).

The estimated total property taxes to be levied for . . . (current year) . . . are . . .(dollar amount). This represents a ... (percentage increase or decrease) . . . over the previous year.

As with the Act prior to amendment, a new notice must be published if either (1) there is an increase in the levy over the amount stated in the original notice; or (2) no notice was given originally and the levy as finally adopted exceeds the 105% limit. The notice to be used for either of these circumstances is also now set forth in the statute:

Notice of Adopted Property Tax Increase for . . . (commonly known name of taxing district).

I. The corporate and special purpose property taxes extended for . . . (preceding year) . . . were . . . (dollar amount of the final aggregate levy as extended).

The adopted corporate and special purpose property taxes to be levied for . . . (current year) . . . are . . . (dollar amount of the proposed aggregate levy). This represents a ... (percentage) . . . increase over the previous year.

II. The property taxes extended for debt service and public building commission leases for ... (preceding year . . . were . . . (dollar amount).

The estimated property taxes to be levied tor debt service and public building commission leases for . . . are . . . (dollar amount). This represents a ... (percentage increase or decrease) . . . over the previous year.

III. The total property taxes to be levied for . . . (preceding year) . . . were . . . (dollar amount).

The estimated total property taxes to be levied for . . . (current year). . . are . . .(dollar amount). This represents a ... (percentage increase or decrease) . . . over the previous year.

As with the Act prior to amendment, in order to obtain a tax extension more than 105% in excess of the prior year's extension, the levy ordinance must be filed with a certificate of compliance attached. The following form is suggested for the certificate:

CERTIFICATE

The undersigned, President of (name of public body) hereby certifies that I am the presiding officer of (name of public body), and as such presiding officer, I hereby certify that the levy ordinance, a certified copy of which is appended hereto, was adopted pursuant to, and in all respects in compliance with, the provisions of Section 4 through 7 of "The Truth in Taxation Act."

Dated: _______________

___________________
President
(Name of public body)

Conclusion. The recent amendment to the Act has added a measure of clarity in providing the form to be used for giving notice and broadens disclosure in requiring debt service calculations. However, fundamental flaws remain. It would be a shrewd member of the public indeed who could obtain an accurate understanding of the financial position of a public body by attending the hearing or reviewing the data required in order to comply with the Act. Perhaps it is time to consolidate the Act requirements, budget and appropriation ordinance requirements, and levy ordinance into one hearing and one document. It appears unlikely that anything less will produce meaningful public financial disclosure.

* * * *

The opinions expressed in this article are those of the author alone; anyone undertaking the computations or completing the forms set forth in this article should consult an attorney to verify compliance with the Act.