The state of the State                                        

Stripping down the property tax's incomprehensible 'system' By CAROLINE A. GHERARDINI

The property tax has so many steps and stages and variations across the state that it is incomprehensible to the average taxpayer. But it is a local tax strongly defended by local officials as not needing any action from Springfield to fix it.

The Taxpayers' Federation of Illinois, nevertheless, is supporting a wholesale revamping of the system. It's all spelled out in detail in a report published by the federation, entitled Taxation Without Explanation. Not the usual dry, indecipherable tome, the report was written by Ronald D. Picur and Rowan A. Miranda, both experts on public finance. (Picur was comptroller to the city of Chicago from 1985-89 and now is on the faculty of the University of Illinois at Chicago. Miranda is on the faculty of the University of Pittsburgh and has worked on projects with Picur at the Office of Governmental Accounting, Research and Education at the University of Illinois, Chicago.)

At the extreme in their recommendations are a constitutional amendment guaranteeing "property taxpayers' rights" and legislation that would abolish elected township assessors. They also recommend a long list of information and notification requirements to keep the taxpayer informed at each step of the property tax process. The goal is to put the average property taxpayer into the loop of local government decision making, from its spending plans to its tax rates — even allowing recall of local officials if citizens aren't satisfied.

While the goal is laudable, this reform effort is probably doomed, considering two of the report's own conclusions on the state of the current property tax system:

• "The Illinois assessment system is largely based upon political rather than technical processes."

• "Legislative action by the Illinois General Assembly between 1981 and 1991 was predominately oriented toward 'fine tuning' the property tax system rather than pursuing substantive changes."

And, no group in the history of the state has successfully managed to abolish anything tied to township government.

Still, there is much in this report that does help explain a truly complicated system with all its variations in different parts of the state. The glossary of terms and comparisons to other states is probably worth the $30 to purchase the report.

For example, Texas completely revamped its property tax after voters approved a "tax relief" constitutional amendment in 1978. Among other things, Texas has since created a State Property Tax Board to assist local tax administration and has required professional certification of all tax appraisers and assessors. Motivation for change in Texas was due partly to legal challenges to its property tax system.

Florida has gone through a two-step reform of its property tax system. In 1973 it passed a Truth in Taxation law but in 1980 had to pass another law to remedy taxpayer confusion over some of the information. Since enacting the 1980 law, Florida has implemented a comprehensive taxpayer information program. The intent of Florida's changes, as explained by Picur and Miranda in their report, was "to shift taxpayer concern over the level of taxes away from the assessment process and toward the local budgetary process."

Property tax reform in Illinois, as suggested by Picur and Miranda, bor-

8/June 1993/Illinois Issues

rows ideas from both Texas and Florida. All the changes recommended for Illinois, the authors explain, are intended to "de-mystify" the system and to "move toward taxation with explanation and understanding." Whatever the motive, their wholesale changes stand little chance of passage in a legislature with a reputation for making no waves in the status quo — lest some group loses out while another gains.

For the record, here's a short list of some of the other property tax reforms backed by the Taxpayers' Federation:

• Create an Illinois property tax court to handle all tax appeals.

• Change to a property appraisal system to establish the value of property to be taxed.

• Eliminate the property classification system whereby Cook County taxes residential, commercial and industrial property at different rates.

• Consolidate township assessment districts into county appraisal districts, thus reducing the number to only 102.

• Require an annual appraisal cycle statewide, instead of the four-year cycle.

The authors of this report are correct that compared to the local property tax, the state income tax and the sales tax are much simpler to comprehend by almost all taxpayers. For example, exemptions for the income or sales taxes will help some group with tax relief but reduce revenue to government for spending; increased rates, on the other hand, will generate more money for government to spend but will be fought by everyone that would be taxed at the higher rate.

The property tax is just not as simple. Whether rates are high or low, the tax is applied to property valuation, which is subjective. On the other hand, the statewide income tax is applied to an individual's income (presumably not subjective to the individual) and the sales tax is a set percentage of the known prices of goods.

In sum, however noble the efforts of the Taxpayers' Federation, its vision of wholesale changes in the property tax system is unlikely unless it is prepared to educate all the taxpayers in some grass-roots effort so they can challenge all the interests now rooted in the current system. 

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