Introduction
In the 1990s, counties in Illinois began implementing tax caps, also known as Property Tax Extension Limitation Law (PTL) or tax caps. These tax caps limit property tax increases to either the rate of inflation or 5%, whichever is less. While many counties implemented PTL in the 1990s, it still has a significant impact on counties like Tazewell and Logan. This article will discuss the effects of PTL on these counties and the future implications it may have.
Understanding PTL
PTL, or tax caps, is a law that restricts counties from raising their levy greater than the rate of inflation or 5%. This means that property tax increases are limited, providing a break for taxpayers. However, this limitation does not consider new construction. Instead, it focuses on existing structures and levies. The goal is to control growth and prevent expenses from exceeding a 2% growth rate.
Impact on Tazewell County
Tazewell County has been fortunate as its Equalized Assessed Value (EAV) has been increasing since 1982. This growth has allowed Tazewell County to delay the consequences of PTL. However, with state revenues declining and costs increasing, the county is facing a referendum in March. The referendum aims to raise property taxes by 15 cents, resulting in an increase of around $50 for a $100,000 home. Currently, Tazewell County has one of the lowest property tax rates in the state. However, with the referendum’s approval, it would become the fifth lowest in the state.
The necessity for this increase arises from the rising costs of maintenance and building needs. Tazewell County has identified $5.5 million in repairs that are crucial for the county’s buildings. These repairs include replacing rooftop units, fixing drafty windows, and upgrading the chiller system at the Mackenzie building. Additionally, there is a need to replace election equipment. Without the property tax increase, Tazewell County would face a situation where expenditures exceed revenues due to increasing costs and declining state revenues.
Logan County’s Capital Expenses
Logan County also faces capital expenses that have been put off for a long time. For instance, the county’s courthouse, a historic building used by multiple governmental offices and the courts, requires repairs. Depending on the extent of the repairs, costs could range from $250,000 to $4 million if the exterior dome is preserved. Another significant expense for Logan County is the potential expansion of the Logan County Jail, estimated to cost between $5 and $6 million. By being proactive, Logan County aims to include these costs in its budget and avoid reactive situations where immediate needs lead to sole source purchases without proper planning and competitive bidding.
Evaluating the Impact of PTL
David Hepler and Dave Zimmerman, representatives from Logan and Tazewell counties, respectively, share their perspectives on PTL. In Logan County, PTL has been beneficial as it prompted the pursuit of projects like wind farms and a medical cannabis facility. These projects have brought in significant revenue, job opportunities, and additional tax revenue for various areas, including school districts and emergency service districts. Tazewell County also believes that PTL has been overall beneficial, considering the slight increase in property taxes. However, the impact reaches beyond county government, affecting all other units of government within the county boundaries.
Wind Farms as a Revenue Source
Logan County’s proactive approach towards wind farms has proved favorable. The county positioned itself to become the wind farm capital of the state, leveraging its north-south transmission lines and favorable wind conditions at higher heights. Currently, Logan County has two approved wind farm projects, with discussions about a potential third project by a Chicago-based company. These wind farms have the potential to bring in approximately $250,000 in recurring tax revenue and between $750,000 to $1 million in permit fees per project. Moreover, the benefits extend to other areas like Park Districts and emergency service districts. For example, the New Holland Middletown Fire Protection District would receive an additional $71,000 annually, while the Mount Pulaski-Elkhart School District could gain an extra $1 million per year.
Conclusion
In conclusion, PTL has had a significant impact on counties like Tazewell and Logan. While it has helped control property tax increases, it has also posed challenges in addressing necessary maintenance and infrastructure needs. Both counties are now facing referendums to increase property taxes to bridge the gap between rising costs and declining revenues. Logan County has leveraged wind farms as a revenue source, bringing in substantial income and benefiting the community as a whole. The effects of PTL differ from county to county, depending on various factors such as economic conditions and existing revenue sources. However, it is essential to evaluate the long-term implications of PTL and make informed decisions regarding property tax increases to ensure the sustained development of counties across Illinois.