State Representative Allen Skillicorn (R-East Dundee) is sponsoring legislation in the House of Representatives to end the use of a loophole that allows school districts to levy taxes beyond the tax cap. House Bill 773 prevents school districts from levying higher property taxes in a particular fund and then transfer the additional tax revenue to a tax capped fund.
“The Tax Foundation just reported that Illinois has the third highest property taxes in the nation,” said Skillicorn. “In 2015 alone, the Illinois Department of Revenue reported that property owners paid over $28 billion in taxes on property. It is because of loopholes that allow taxing bodies to side-step tax caps by transferring between funds that we have communities that are paying five or six times the national average in property taxes. We have to stop this because property taxes are driving people out of Illinois every day.”
Under current law, Illinois school districts are able to transfer surplus taxes and interest from specific funds or make loans from one fund to another. This process allows districts to circumvent the levy caps under PTELL by levy more than needed in one fund and transferring it to another. An example of this abuse occurred in McHenry County in 2014 when Harrison School District 36 had amassed more than $3 million in its transportation budget that only had annual expenses of roughly $337,000. The district was sued. To avoid future lawsuits, the district transferred more than $3 million from is transportation fund to its education, operations and maintenance funds.