As Secretary of State George Ryan and U.S. Rep. Glenn Poshard head to the November 3 finish line in the Illinois governor's race, a group of their fellow citizens is quietly laying the groundwork for what could be the most significant achievement of the winner's administration.

Laboring well out of the campaign spotlight, a blue-ribbon panel has been striving to craft a plan that would provide significant tax relief for property owners by changing dramatically the way Illinois funds its public schools.

Gov. Jim Edgar appointed the Commission on Property Tax Reform in February, giving the panel a December 31 deadline to "identify ways to make the state's tax system fairer and less burdensome on property owners."

The problem is not new, nor is solving it a mystery. For decades, officials have known that Illinois relies more heavily on local property taxes than most other states, especially to fund public schools. Because of vast disparities in local tax bases, home- owners in some communities pay many times as much school property tax as owners of homes of equal market value in other towns. For years, task forces, blue-ribbon panels, study groups and others have been proposing pretty much the same solution: Shift some of the school funding burden off local property taxes and onto state resources, probably the income tax.

And for much of that time, the state's elected leaders —notably in the legislature — have lacked the courage and commitment to do right by the state's schoolchildren and property owners.

In 1996, for example, a panel headed by former University of Illinois President Stanley Ikenberry suggested a tax swap as part of a plan to assure adequate resources for a quality education for Illinois youngsters, wherever they lived. But the plan was dead on arrival in the Republican-controlled General Assembly, and a similar proposal Edgar offered last year was killed by Senate GOP leaders who were more interested in having an anti-tax campaign issue than in revamping school funding and providing property tax relief.

Members of the current commission are keenly aware of past history; indeed, two of its members served on Ikenberry's panel: Chairman Tim Bramlet, president of the Taxpayers' Federation of Illinois, and Ron Warfield, president of the Illinois Farm Bureau.

Early on, Bramlet says, his group agreed on several guiding principles. One is that whatever is proposed needs to be acceptable to the legislature and the new governor. At times, ideas have surfaced that "would be great if you're writing a college term paper on the way things ought to be, but we're actually trying to produce a document that we think can pass," Bramlet says. "If we lose sight of that, then we're wasting our time."

A second underlying principle is that the proposal should provide enough tax relief to make a difference for homeowners and in the state's overall tax structure. Thus, the panel decided to focus on local school districts, which levy some 60 percent of property taxes. The sentiment among members, Bramlet says, is: "Let's generate enough money to cut property taxes so people notice it... [so] that we're really shifting things, and not just trading nickels here."

In both areas, Bramlet believes the current panel enjoys advantages the Ikenberry commission lacked. For example, four legislators — one from each party caucus — serve on the panel, while the Ikenberry group had only one lawmaker as an advisory member. The legislators "are serving a very valuable purpose, kind of acting as sounding boards for the suggestions that come out," Bramlet says. "When somebody suggests something, we say, 'How's your caucus going to react to this?' And we hear about all kinds of political situations that wouldn't occur to those of us that aren't in the legislature."

The current commission also benefits from a narrower mission and the state's fiscal health, according to Bramlet. Past reform efforts, like Ikenberry's, attempted to provide both property tax relief and increased school funding, resulting in a higher aggregate tax level. Now, however, the panel's mandate focuses only on tax

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relief. Moreover, natural revenue growth of more than $1 billion a year can be tapped to help replace property tax dollars lost to schools. "Our plan is to present a document that will actually cut the overall tax burden," Bramlet says. "We actually may provide more property tax relief than we would require higher state taxes to replace. So I think that gives us a little bit of an advantage over what's been suggested in the past."

The commission is still weighing its options, but realistically the bulk of replacement dollars for any significant swap would have to come from an income tax increase, Bramlet says.

"If we do agree on recommending a swap, obviously the income tax has to be a part of it," Bramlet notes. "But there are other things we're looking at, like the sales tax on services, all sorts of things within our Revenue Code that may provide $50 million here or $100 million there, but you add three or four of them up and they kind of complete the puzzle."

That panel is still weighing its options, but realistically, the bulk of replacement dollars would have to come from an income tax increase, according to its chairman.

Besides determining where to find replacement dollars, the panel must decide how to cut property taxes and make the reductions stick. The most attractive option might be to slice an amount — $ 1, $ 1.50, whatever — from a school district's permissible tax rate, then replace the district's lost revenue with state dollars. Although a property owner's tax bill could increase in the future if the parcel's value were to go up, so would the tax relief afforded by the lower rate.

While the tax swap question is hardly a campaign issue, both Ryan and Poshard have said if elected they would review the panel's recommendations. That the ideas will be sound seems a given, so property owners can only hope the next governor will be courageous enough to seize the legacy he's being offered. 

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.

Illinois Issues November 1998 ¦ 39