Government doesn't "spend"; just moves money around

Patrick Robinson isn't a political analyst. He's a "pop" author in the Tom Clancy vein. Never-the-less, we were struck by one of his character's (from a 2004 novel) concise analysis of government spending.

And we paraphrase:

Do you know what brasses us off about government? It's what is never adequately explained to "the folks". The fact is that "government" doesn't have any money of its own. It creates nothing - no wealth. They only "have" what they can take from the American people and corporations. So when they say, for example, a counter insurgency program, or an aircraft carrier is "too expensive" they are talking nonsense. Government doesn't "spend" in the conventional sense. They take money from whatever source they can find with out inciting a revolt and they redistribute that money throughout the economy.

This applies at all levels of government. They don't really spend, they push everyone else's money around and take a cut for salaries, pensions, and benefits in the process.

Let's take a road initiative. Half of the labor cost goes to they guys building the roads - paychecks that go to people who immediately give one third of it back to the government in taxes. The rest gets spent in the communities, buying concrete, lunches, etc., which goes to other folks who immediately pay one third back to the government. Some goes to corporations like Cat, Mitsubishi, etc., who pay corporate taxes. The whole thing is just a round-about.

The road isn't expensive - it's free! It's not the government's money anyway. They're just moving it around and taking their cut.

We get so amused by these people that want new benefits, new parks, want to force a "green" society via taxes; Where does the money come from? These folks aren't creating any new money. They are just taking from one area and moving it to another while taking a salary for their supposed "wisdom".

Next time something is called "expensive" or "no-cost" by your taxing authorities - STOP - and think - where is the money coming from and who is it going to?

Live web casts of County and City Council meetings good for transparency

If you want a democracy to work, the people have to know what their leaders are up to. And, conspiracy theories aside, technology has greatly improved public access and transparency -- from C-SPAN to YouTube.

More than 250 cities/counties nationwide have chosen to make their meetings available online. The services can be expensive, but not prohibitively so. Recent costs have averaged $30,000 for the initial setup and $15,000 per year to create and maintain searchable archives of the meetings. The public boards often contract with outside vendors who store the video and integrate it with agendas, minutes and other public documents.

In addition to Internet video streaming, many boards broadcast their meetings live on area cable television systems.

All it would take for, say, Woodford County to broadcast its Board and Committee meetings live is a flick of the switch and some pocket change. Board members and the County Administrator have talked a good game for months now about a new website which may or may not already include some of these costs. Hopefully, regional peer pressure will make it act sooner rather than later to enhance transparency in this fashion.

Of course, all of the video in the world, streaming or otherwise, won't make a difference if local residents don't actually tune in or log on to see their local governments in action, and, after watching, participate in the political process. But it does give voters one less excuse for not being informed and involved.

Hello iphono!

Sent from my IPhone
Congerville, IL 61729

Latest Census Estimates for Woodford County

Not sure how this will render on screen:













(click to enlarge)

The philosophy of Philosophy

Ludwig Wittgenstein

from Quotes of the Day

"Philosophy is a battle against the bewitchment of our intelligence by means of language."

Property Taxes As Cultural Extermination

from The Entrepreneurial Mind by Jeff Cornwall

Rising property taxes can often squeeze homeowners out of neighborhoods that they have lived in for years. And they can also force small business owners to sell their businesses. Such is the case of a 117 year old family owned amusement park outside of Washington, DC. From the Washington Post via Cato-at-Liberty:

For 117 summers, generations of children have frolicked through Trimper's Rides on this beach resort town's signature boardwalk. But this Memorial Day weekend might begin the last summer they circle the antique wooden carousel, fling around the Tilt-a-Whirl and loop through the Tidal Wave roller coaster.

The Trimpers say they are considering closing the amusement park and arcade this year.

As Ocean City has exploded into a megaresort, property taxes have soared for Trimper's, which operates on the last chunk of undeveloped land on the town's three-mile boardwalk. In the past three years, family members said, their assessed property value has tripled, from $21 million to $65 million.

So the family is now torn over the possibility of having to sell the business because they just can't generate enough revenue to pay for the property taxes. I know, I know. Don't cry for them -- after all they now own land that is worth $65 million. But, if you read the rest of the story, you will hear a message that I hear over and over -- it just isn't all about the money. This is a century old family business. They take joy and pride in providing good family entertainment and good jobs.

Yet another example of public policy that is blind to our entrepreneurial economy.

(Thanks to Bill Hobbs for passing this along).

We've been barking up the wrong tree.

We want to officially acknowledge that we have been wrong.

Well, not wrong, exactly. We once thought we'd been wrong about something but we were mistaken.

We have revised our position on PTELL (property tax extension limitation law in Illinois).

You may take out your frustrations on us here.

We are now proponents of TELs - tax and expenditures limitations in Illinois.

TELs are tax caps, and spending caps. Seen most often at the local level, sometimes mandated by state governments, TELs force local governments to put all real growth in spending and all tax and fee increases to a vote. Capping spending at the local level would be by far the most effective means of providing long term property tax relief.

This is why Illinois HB 750 does not pass the smell test. As Mike Van Winkle and Colin Hitt argued earlier this month in the State Journal-Register, "any attempt by the state to relieve property taxes through an 'abatement fund' scheme - which is what HB 750 proposes - would lead to permanent tax and spending increases at both the state and local levels, unless that 'tax abatement' is accompanied by a TEL."

Mr. Hitt says,

Without a check on local government spending, any property tax relief will instantly be capitalized by local governments in the form of higher taxes. And the abatement fund in Springfield will be raided for new spending, therefore de-funding property tax relief and forcing property taxes to rise.

Realistically, there is no way to guarantee protection of relief funds, should an abatement fund ever be established. However, there is a way...In fact there is only one way in which Springfield can deliver relief to taxpayers - through mandated local TELs.

TELs may be terrible for gamblers, but they may be property tax payers' salvation.

It Ain't the Rates, It's the SPENDING!

Once in a while the Bloomington Pantagraph editorial folks hit one out of the park and this is one of those instances:

Despite your elected officials bragging about keeping your tax rates unchanged or even lowering them, most likely your latest tax bill is larger than your last bill.

That’s because a steady tax rate means little if the assessed value of your property has gone up — and most property in this area has steadily increased in value.

We've harped on this over and over.

If public officials really want credit for being fiscal watchdogs, they should be telling us more about how they are holding the line on spending rather than how they are keeping tax rates down.

Tax rates might be relatively steady, but the levies — the revenue that taxing bodies seek from property taxes — are going up.

And finally . . .

If increased spending is justified, just say so. But public officials shouldn’t repeat the mantra “we haven’t increased your tax rate” unless they give equal billing to what they have done with the levy.

"It's the spending, stupid."

CNN's Freudian Slip is showing

As much as Wolf Blitzer may have wanted it to be true, the caption was not accurate.

Instead, Prime Minister Tony Blair of the UK had announced he was retiring.

Property Tax Cap with Bite!

The county of Honolulu in Hawaii has a new property tax cap law due to go into effect on July 1.

The law will limit the residential real property tax for an owner whose income is $50,000 or less per year at 4 percent of the income. The salary ceiling applies to combined incomes if there is more than one titleholder.

While we'd like to see the income level a bit higher and indexed in some fashion, we think this at least addresses the regressive nature and the "ability to pay" issues which make property taxes inherently unfair. In fact, why limit the income at all? It is sort of self limiting anyway in that at a certain point your taxes would NEVER be more that 4 percent of your income.

Property Tax Bills On The Way . . .

Neither Woodford nor Tazewell counties met the state's deadline to mail tax bills May 1, but then not many counties do, and there is no penalty for not meeting the "deadline".

Besides, when's the last time the State of Illinois paid a bill by a deadline anyway? Oh sure, they may bill on time, but what about the other side of the equation?

Busy, Busy, Busy

We've been busy trying to earn money to pay our soon-to-be due property taxes and thus the paucity of posts.

At this time of year, we are always reminded of how inherently unfair property taxes really are. As a single example, take for instance the following scenario:

Let's say that we "own" a $150,000 home. Let's also assume that our neighbor has a nearly identical piece of property valued the same at $150,000. We "own" our home outright. He holds a $100,000 mortgage on his. Now, why on God's green earth do we both pay the same tax?

The property tax is not even a good tax on assets like the death tax!

A Call For Referendum

The Heartland Community College Board's plan to double the campus size, at a cost of $60 million, is going full-speed ahead without public input. This underhanded property tax increase will pay for a project that includes extracurricular buildings and facilities. Homeowners in Heartland's district - which includes parts of McLean, Livingston, Logan, DeWitt and Ford counties - will be footing the whole bill for many years to come.

Our own Unit 5 public school system is bursting at the seams and will soon be asking for more building funds. But Heartland does not have to ask. They can ignore other community needs and blithely sell bonds for an expansion that has little to do with education.

Heartland's rush to provide superfluous amenities can be stopped by referendum.

Voters' only recourse is to mount a petition for a ``back-door referendum.''

The petition requires 12,600 signatures by about May 17. That number is 10 percent of district voters. We need your help. Call (309) 452-2690 to volunteer.

We have one month from the time when the public notice is printed to submit signed petitions to the Heartland board secretary. He will pass them on to the county clerks, who will put the referendum on the ballot for the next election.

In the meantime the projected bond sale would be moot. The board would be forced to justify their plan to the public, which they did not do.

Heartland should withdraw its $60 million plan and give the voters a proposal that reflects its mission to provide affordable education to a growing population of students.

If you agree, please join this grass-roots endeavor. Let the voters decide this most important fiscal question.

Sandra Jesse

Normal

Yep. Here Comes The Eureka Park District Director

These folks have to understand that a "Greater Eureka Park District" will be fought tooth and nail by property tax payers. Certainly the programs and activities which have gone on (Football, Soccer, etc) have been wonderful; BUT, creating another property taxing district is not the answer to retiring volunteers, Eureka budget concerns, and the desire to create a jobs program over there. No one would impugn the good intentions of those involved here, we just think their solution is flawed.

Once a new district is created is there really any question that it will get bigger every year and pay out pensions, health insurance benefits, etc.? We have a sneaking suspicion that this new district's boundaries might just be drawn around a Wind Farm or Ethanol Plant. Why not? It's a plum waiting to be plucked, right?

Let's create a real solution to the "problem" of families participating in the sponsored activities facing increased fees. Let's create a non-profit foundation and keep it off the property tax bills. We believe "the folks" will flock to support such an alternative. Let's give "the folks" the pleasure of supporting the endeavors by not forcing them to contribute.

Let's stop this nonsense right now.

Best Kept Tech Secret in Woodford County.

Selvey's Busy Corner restaurant in Goodfield had a wonderful surprise for us the other day when we popped in for lunch.

They have a free wireless internet connection available for their patrons. Randy and Peg, the owners, said it was their son's idea and that they've had the service ever since the new building opened two years ago!

If you see some folks having breakfast with a laptop on their table, come on over and say, "Hi". It might be a writer for Woodford Tax Facts.Org.

"No New Taxes" wiped from history?

Quote of the Week:

"The rhetoric of 'No New Taxes' will not be recorded in our history books and if by chance it is marked at all, it will be by the dead end milepost!" – Education Minnesota President Judy Schaubach, in her farewell speech to the union's representative convention.

courtesy of and hat tip to Education Intelligence Agency

Where's The (Community College) Outrage?

Under the Governor’s Fiscal Year 2008 budget proposal, the Chicago City Colleges would again receive a special grant for $15 million above their base funding. First implemented in 2004, this grant provides five times the amount needed to fill the gap created by the City’s property tax cap. If approved by the legislature, the City Colleges will see a nearly 36% increase in their funding while other community colleges see cuts or virtually no increase.

Since 2004, the City Colleges have received nearly 40% more funding from the Illinois Community College Board while downstate colleges have seen up to a 23% reduction in State funding over that same period of time.

Additionally, in this same timeframe, funding for the City Colleges has captured 93% of the total increase to all community colleges.

The Press Speaks To The Gov.

From Around the State: What People are Saying about Blagojevich's Massive Tax & Spending Plan

Gov. Rod is grossing us out Editorial March 15, 2007 "Gov. Rod Blagojevich wants to make sure he has enough money to pay his backlog of bills and for his ambitious social agenda. "Too bad he isn't as concerned about whether his gross receipts tax will put your salary, benefits or job in peril. Too bad he isn't as concerned about whether your employer might move to Missouri or new businesses choose to avoid Illinos." Blagojevich sets too high a price Editorial March 7, 2007 "Gov. Rod Blagojevich never met a big government program he didn't like." "Let's hope lawmakers put the breaks on the governor's grandiose plans. Economic growth, and not more government spending, is what Illlinois needs."

Tax Proposal is Too Flawed Editorial "Businesses are the backbone of this state, not the villian."

Get Ready, the Deal-Making Begins Today Editorial March 7, 2007 "This state continues to carry a huge debt on its shoulders, estimated at $2 billion last summer, and we continue to see Blagojevich and our elected leaders settle on short-term financial fixes that lack long-term structure and stability. "Adding new programs, as wanted as they may be, and paying for them with money that could instead be used to get us out of debt makes little sense to us."

Smaller Companies Oppose Tax Plan Editorial March 9, 2007 "It hurts the small guy that might be a high-profit company. Under this proposal, it not only taxes my business but my subcontractors," he said. "I think (the proposed tax) is an awful thing. It was used in the 1800s and found to be regressive and anti-business. It was phased out in the 20th century." Big Dreams, Taxpayers Beware Editorial March 8, 2007 "Blagojevich frames the choice here as between big, bad business and the long-suffering middle class, but that's simplistic. Corporations also employ Illinoisans who might lose jobs if this passes. These tax increases will be passed on to consumers. The governor says, "I will not raise taxes on people," but in fact he would be, through the back door."

The Blagojevich Legacy Editorial March 8, 2007 "This constant quest for new hills to climb conveys the governor's eagerness to solve problems and be noticed. Unfortunately, at a moment when he wanted to sell his state on some controversial concepts, he delivered a divisive populist rant ("middle-class families," good--"corporations," bad, bad, bad) that only confirms the perception of him in some quarters as a lightweight. Illinois citizens might have been swayed Wednesday by the bring-us-together touch of Barack Obama. Instead they got Hugo Chavez." Paying for Pensions Letter to Editor March 9, 2007 "The State of Illinois is going down a frightening road with a gross receipts tax. To my knowledge, Michigan is the only state with a gross receipts tax. Michigan is also the only state to lose jobs over the last five years. Michigan is the only state currently in a recession, despite the decent economy nationwide."

Gross-Receipts Tax Would be Harmful to Illiniois Editorial March 2, 2007 "Illinois has enough trouble trying to overcome its image of a bad business climate. But there will be real stormy weather ahead if the state enacts a gross-receipts tax. "It's not just because that will be hurt. Consumers will be hurt, too."

Woodford Unemployed Ranks Shrink Again

Woodford County unemployment decreased from 3.7 percent in 2005 to 3.1 percent in 2006 — the second-lowest in the state, according to statistics from the Illinois Department of Employment Security. The lowest rate in the state was in Brown County in western part of the state.

McLean County came in third with average annual jobless rate of 3.4 percent, down from 4 percent in 2005.

Tazewell County’s rate decreased from 4.6 percent in 2005 to 3.8 percent in 2006.

Is it SAFE? IS it safe?

Remember the famous Marathon Man movie sequence where Olivier interrogates Hoffman?

Seth Godin (Seth's Blog) speaks today about "thrill seekers" versus "fear avoiders" in business. He summarizes by stating that "thrill seekers" love growth and change,

They most enjoy a day where they try something that was difficult, or--even better--said to be impossible, and then pull it off

and "fear avoiders" loathe change,

They want the world to stay just the way it is. They're happy being mediocre, because being mediocre means less threat/fear/change. They resent being pushed into the unknown, because the unknown is a scary place.

It hit us like a stone between the eyes that this seems to apply to public education in a big way too. Seth explains that in business:

. . . why not call them risk seekers and risk avoiders? Well, it used to be true. Seeking thrills was risky. But no longer. Now, of course, safe is risky. The horrible irony is that the fear avoiders are setting themselves up for big changes because they're confused. The safest thing they can do now, it turns out, is become a thrill seeker.

The "Big Education" folks are longer taking care of their own by eschewing creative educational solutions. The safest thing they can possibly do is, it now turns out, become thrill seekers.

It's time to step outside tenure schemes, accountability avoidance, non-performance based reviews, and unsustainable pensions. It's time to take some "risks".

Abuse Charges Against Illinois Teachers; Epidemic?

Does it seem to you that there have been an awfully lot of Illinois primary and secondary education teachers arrested for sexual abuse lately? It seemed that way to us. Here is a listing for the last THREE MONTHS:

Ian M. McDonald, 31, of 103 N. Walnut, Apt. 5, Glasford, was being held overnight at the Peoria County Jail.

Jodi E. Church, 26, a Manual High School special education teacher, is accused of having sex with a 16-year-old male student on several occasions. She also faces federal charges for allegedly using the Internet to try to lure another 16-year-old to have sex with her.

Jon Andrew White, 26, in McLean County, former Unit 5 teacher faces two counts of predatory criminal sexual assault and two counts of aggravated criminal sexual abuse. He is accused of sexually abusing two first-grade students in Normal. He also faces similar charges in Champaign County for allegedly molesting nine second-grade girls at Thomas Paine Elementary School in Urbana.

Michael Vonderohe, 29, who pleaded guilty three years ago to molesting a 16-year-old student while he was a high school teacher, denied violating his probation during a brief interview after his appearance in Madison County, Illinois Circuit Court.

Jason Krigas, 36, of Fox River Grove was convicted in September of one count of aggravated criminal sexual abuse.

Robert Sperlik Jr., 45, was still teaching last month when the parents of a 15-year-old girl contacted police with her story of abuse and he was arrested. The band teacher was arrested here and charged with sexually abusing 16 students, jaws dropped at the allegations: Police said the teacher had tied young girls to chairs with duct tape and rope and then re-enacted bondage scenes from his porn collection.

Randy DeJaynes, 56, a DeLand-Weldon High School English teacher was charged in Piatt County Circuit Court on Wednesday with three counts of aggravated battery and two counts of aggravated criminal sexual abuse.

Please let us know if we've missed any.

Sure Fire, Drug-Free, Low-Fat Cure For Depression

Here's the top three things you can do to feel better about yourself and your life:

1. Get in touch with God. Whatever your beliefs, revisit them, study about your faith, rediscover the divine, and pray; not for yourself, but for the Divine plan for your life.

2. Serve someone else. Volunteer or just get in touch with someone who needs help. Concentrating on others will take your mind off of yourself, your troubles, and perhaps show you that you have it better than you ever imagined.

3. Turn off the tv, radio, and stop reading magazines. The nature of television and radio is the imposition of an artificial rhythm upon human lives. This is neither healthy nor relaxing. Recognize that these media are not out to help you, regardless of what they say, they are out to sell you something.

Try these remedies for at least three weeks and you will feel so much better you will start getting better sleep which will also help tremendously.

District Report Cards

Finally! The Illinois State Board of Education "School Report" cards are available for last year.

Visit here, for information on your district and/or your local school.

Stick It To "the man"

Want to get your revenge on all of those "rich white guys"? Here's one sure fire way:

That's right, get a degree in physics! Even though your financial gratification may be somewhat deferred, you may just want to go whole hog and pick up an advanced degree as well:


Ahhh, yes; revenge is best when served at -18 degrees Celsius.

A Free Society Is . . .

Adlai E. Stevenson Jr.

from Quotes of the Day

"My definition of a free society is a society where it is safe to be unpopular."

IEA: It's all about the Money, errhh, Kids.

Anyone still thinking that the Illinois Education Association believes "it's all about the kids" or their focus-grouped-to-death "Education is a Basic Right" slogan need only read this letter to the Bloomington Pantagraph.

Ken Swanson, IEA President, states among other things that they are "unalterably opposed" to tinkering with tenure, tying teacher pay to standardized test scores, and are "are unalterably opposed to “merit pay” schemes".

Schemes? Man, most of us have been "schemed" our whole lives. We're surprised he didn't use the phrase "risky schemes" in there someplace.

The Sun Times said the other day, "People who would never endorse the idea that businesses should be granted local monopolies, offer workers lifetime tenure, or pay employees based solely on seniority, embrace a status quo public [education] system that has all of these features."

After reading this, is there anyone left that believes these people have any interest whatsoever in "the children"? Let's recap; you MUST hire more teachers; you MUST not pay on performance; you MUST retain tenure (job for life); you MUST not hold us accountable (unless you lump together yourself, the money, the state, local, and feds). You MUST dump in more money into a dysfunctional system regardless of the results.

Mr. Swanson left unsaid on thing which has been uttered to the General Assembly more and more in the A+ Illinois circles: "We funded and voted you guys in for the last two elections and it's payback time - now!"

Fathers Against Distracted Driving

You've seen the news pieces. Cell phones, fast food, sleepy drivers, stereos, children, makeup, worriers, pets - they're all bad and need to be banned from cars!

To further this cause, we proudly announce our new activist group - Fathers Against Distracted Driving! That's right, we've decided to railroad legislators with FADD based issues.

We feel with the current Illinois General Assembly, the time couldn't be more ripe.

Woodford County Web Site (coming soon?)

No, now, we really, really, mean it this time. The County of Woodford IS going to have a web site soon.

We think.

The email addressing scheme for the County will be First Initial; Last Name@woodford-county.org. For example, the County Administrator - Greg Jackson's new email address will be gjackson@woodford-county.org.

E-mail should already be in force for departments under this scheme.

What's Our Gross Margin On That?

Is it just us or does it seem a bit disturbing that we're selling nearly half of all the arms on the world market?

Listen, we're as much for reducing our trade deficits as anyone, but is this really the way to do it?

Folks used to be shocked when we pointed out that arms sales during the Clinton administration increased faster than than any previous administration. For some reason they (particularly the supporters of said administration) thought that was just impossible.

Since 911 the Bush administration has made those guys look like pikers. We believe it's time to reaccess our arms sales, particularly those to the "developing" nations, and most particularly, those classified as "conventional arms".

For two interesting pieces on the state of the world market (white market, that is) see:

this Nov., 2006 Boston Globe article

and this congressional summary report.

McCain Saddling Up

Peoria Pundit Gets It!

Commenting on a Peoria Journal Star article, the Peoria Pundit reminds us of a few facts about our property taxes (emphases are our own):

. . . Time and again, I hear elected officials brag about how they’ve voted to maintain or even lower the property tax rate. They do this even though their consistently vote to raise the property tax levy as much as possible without trigging a dreaded increase in the property tax rate. The reason people get property tax bills that go up is because property is constantly being re-assessed at higher values.

It’s such a con job. Were someone to sit down and devise a means to tax real estate in a way that lets taxes go up, but lets politicians claim they didn’t raise taxes, it would look very much like what we have hear in Illinois.

Oops! Heartland's Building Scheme Pops Above The Radar.

Could a property taxpayer revolt be brewing in Heartland Community College's heartland?

Bloomington-Normal voters, already anticipating a rather large increase in property taxes from a proposed Unit 5 school referendum (buildings and general funds) were stunned that Heartland's Board approved a $60 millions building plan without so much as a public input session at its last meeting.

The Bloomington Pantagraph courageously came out with an editorial slamming the plan, and the Pantagraph's editorial page has been flooded with letters to the editor.

Unit 5 Administration must be fuming at Heartland for raising the concrete pouring above the radar in this fashion.

Unfortunately, there has been no surge in candidates for the Heartland Board.

Note to Illinois Central College Board - beware public attention!

Here are some of the letters. So far there have been none supporting the building scheme:

Heartland tax hike unfair without vote

Public treated arrogantly by Heartland trustees

Heartland owes answers to taxpayers

Forget college frills; focus on education

Quote of the Day

Bertrand Russell

from Quotes of the Day

"There is no nonsense so errant that it cannot be made the creed of the vast majority by adequate governmental action."

Liberals Are Right! There ARE "two Americas".

From USA Today:

A typical full-time state or local government worker made $78,853 in wages and benefits in the third quarter of 2006, $25,771 more than a typical private-sector worker, the Bureau of Labor Statistics reports. The difference was $7,604 in 2000. The compensation advantage holds true for all types of public workers, from teachers to laborers and managers.

Jobs on Public Education

Well, we've waited and waited but it seems the only media coverage of Apple's Steve Jobs' bashing of teachers' unions and the textbook industry is that of the "tech" mags and sites.

To us it seemed like huge news, seeing that Education has been a big customer for Apple almost since it's beginning. There were a few union reps that started slinging mud at Jobs, but they were quickly reigned in by higher ups.

Counterfeit Currency and Education?

One of the reasons for the paucity of posts as of late around here is a re-emphasis on hyper-local issues. None-the-less, even with that goal in mind, it is nearly impossible to escape larger education issues as they impact so greatly on our local property taxes.

We are as enamored of "local control" over primary and secondary education as anyone else, however, we must admit to having been given pause by the following posted by M. Antonucci over at eiaonline.com

By John Stallcup

From the early days of the United States, with minimum regulation, over 1,600 state-chartered, private banks issued paper money. These bank notes, with over 30,000 varieties of color and design, were easily counterfeited, causing widespread confusion and mistrust. With no common national currency there was no confidence in the value of any given dollar.

After nearly 100 years the anti-federal-control politicians finally threw in the towel. Teetering on the brink of bankruptcy and pressed to finance the Civil War, the 37th Congress authorized the U.S. Treasury to issue paper money and the U.S. finally got what it desperately needed: a common currency.

What makes any currency (or diploma) valuable? The perception and confidence in it based on the belief that its exchange value is at parity at the time of the exchange. Today, one $10 bill has the exchange value of any other $10 bill – not so for a high school diploma.

In the United States, the power to define what standards a student must meet or exit exam they must pass in order to receive a high school diploma has been the responsibility of the states. With few exceptions the states have failed miserably. Until we have specific national content standards and a national high school exit exam the high school diploma will continue to be a counterfeit currency and an outright shame.

A History of Property Taxes in Illinois

The 1800’s
The ability to tax property in Illinois was included in the State of Illinois’ first constitution in 1818. The Illinois constitution of 1818 was unique in that it established: “…That the mode of levying a tax shall be by valuation so that every person shall pay a property tax in proportion to the value of the property he or she has in his or her possession.” Basically, this established an “ad valorem” tax, which in Latin means “according to value”. Thus, an ad valorem tax is a tax that varies with the value of the property. All property, personal and real, was taxed under this system.

When property tax began, land (and improvements) was the primary form of wealth, so it was much nearer to being a duty on prosperity than it is today. Many of the other federal taxes, such as taxes on electrical energy and telephone calls were for nominal amounts and often unknown to consumers.

Property taxes, on the other hand, required taxpayers to make an unequivocal tax payment of considerable size from which the taxpayer could not avoid without losing what was often their most significant piece of property and wealth.

Originally property taxes were collected and used only by the State government. The first significant change in property taxes came in 1839, when growth and political pressure broadened the definition of taxable property, narrowed the scope of exemptions, and identified personal property subject to taxation. In addition, counties were provided the ability to tax personal property.

The Revenue Code of 1853, also allowed for taxation by townships, eliminated double taxation, included stocks and bonds in the tax base, and established a system of utilizing local assessors and created oaths for assessors mandating true and accurate assessments at true full value in money. A State Board of Equalization was established in 1867 and additional provisions concerning assessment practices were established in the Illinois Constitution of 1870.

The 1900’s
The property tax system remained fundamentally the same until the Depression of the 1930’s. The first basic change came with the collapse of personal income during the Depression. The State last levied a property tax in 1932 and replaced the loss in revenue with a State sales tax the next year. Local governments continued to levy and collect tax on property as their main source of revenue. This transition was brought about in large part due to a loose knit but national property taxpayer revolt.

Chicago assumed a leadership role in this revolt. Its citizens, enraged over corrupt practices in property tax assessments discovered before the Depression, and stressed in their ability to pay the toll joined together and refused to pay taxes.

An amendment to the 1870 Constitution, following the passage of the Illinois Income Tax of 1968, eliminated taxes on personal property for individuals and as provided by the 1970 Constitution, corporate personal property taxes were eliminated in 1979. They were replaced by a corporate income tax and a tax on the invested capital of public utilities.

Over time many local governmental units also reduced their reliance on the property tax share in total revenue as they increased user fees, licensing fees and local sales taxes. Dependence on state and federal aid also increased.

But in the 1950s and 1960s the role of property tax expanded dramatically at the local level as it became the major source of school funding during a period when education spending was increasing to meet the demands of the baby boomers.

Later in the 1970’s, due to inflation, prices of homes accelerated faster than other types of property. As a result, residential homes comprised a large proportion of the total assessed value of real property in Illinois. The State then enacted homestead exemptions for owner occupied residential properties, and in Cook County allowed for the institution of a system of property classification.

By the 1980's the baby boomers had passed through the public school system. Rural communities began losing their schools due to declining or stagnating population and tax bases. Property values would often decline with the loss of schools. Rising property values in the large cities led to suburban sprawl as parents became willing to commute to work in exchange for lower housing costs and better funded schools. Property tax rates are usually lower in urban cities but the out-of-pocket taxes are generally higher than in rural communities with lower property values. Moving to adjacent communities meant bigger homes for less money and even if taxed at a higher rate they felt their children received a bigger bang, in terms of quality education, for their property tax dollars.

Soon the rural school districts began crying foul because of the mounting funding inequities. State governments, including Illinois, tried to balance the gap by reducing the amount of state aid to the wealthier (in property value) school districts.

The state governments simply could not keep up with the rate property taxes was increasing. The percentage of overall school revenues from the state dwindled lower and lower.

Because funding inequities exist both within and between states and because many rural communities felt shortchanged by legislators their arguments were brought to the courts. After all, doesn’t the Constitution guaranty equal rights for education?

In 1981, the State changed the basis of assessing farmland from that of the actual market value of the land to the farmland’s agricultural economic value. Basically, the land was valued at its’ ability to produce, which was based upon its’ soil type, drainage and other agricultural economic factors. The need for this change was due to the conversion of farmland for development, which was artificially inflating the value of the land and placing an unfair tax burden on the owners of land still being used for strictly agricultural purposes.

In 1991, the Property Tax Extension Limitation Law (PTELL) provided that non-home rule taxing districts in the collar counties were restricted from increasing property tax extensions by more than 5% or the change in the Consumer Price Index, whichever is less, when property values and assessments increase at a rate that exceeds the rate of inflation. As of 2000, 34 counties were subject to PTELL.

We are funding increases every year on a system built for a babyboomer "surge" which ended long ago, simply because it's perceived as easy to tax property!

The 2000’s
Finally, in 2004, Public Act 93-715 amends the tax code to provide a residential property tax assessment cap and a variety of increased exemptions. The new law provides that counties may opt to provide a 7% cap on assessment increases on owner-occupied residential property up to a total of $20,000 in assessed valuation. The Homestead Exemption for owner-occupied residential property was increased to $5,000 statewide. The Senior Citizens Homestead Exemption was increased to $3,000 statewide and removes the requirement (except for Cook County) for the homeowner to annually re-apply for the exemption. The Senior Citizens Assessment Freeze Exemption income threshold was increased from $40,000 to $45,000 statewide. The Homestead Improvement Exemption limit was increased from $45,000 in improvements to $75,000 in improvements.

Who Collects and Uses Property Tax?
Since 1932, Illinois does not have a State property tax. Local government taxing bodies, such as counties, cities, townships, schools, park districts, fire districts, library districts and hospitals, administer and use property tax revenues. Illinois has more local taxing districts than any other state. There are over 6,000 such local taxing bodies.

According to the Illinois Department of Revenue, the following is a breakdown of property tax extensions in Illinois for the year 2000:

Taxing Body % of Total Revenue ($ in millions)
Schools 58.0% $9,271
Cities 12.7% $2,021
Counties 8.9% $1,420
Parks 4.2% $ 673
Community Colleges 3.9% $ 624
Townships 2.7% $ 436
TIF Districts 2.7% $ 430
Other Special Districts 4.4% $ 708

Who Pays Property Tax?
Basically anyone who owns real property in Illinois pays property tax. There are a number of exemptions, which include, The United States, the State of Illinois, schools, religious institutions, most charitable organizations and governmental subdivisions. According to the Illinois Department of Revenue, the following is a breakdown of who pays property taxes:

Property Type % of Total
Residential 55.61%
Commercial 27.76%
Industrial 12.28%
Farm 3.89%
Railroads .40%

It is generally recognized that any tax should have a basis in an "ability to pay". The property tax has little or no relationship to "ability to pay".

Real estate ownership is a measurement of wealth as an asset. It is also a primary source of debt for most homeowners. Failure to pay property tax, voluntary or involuntary, results in the loss of all money invested. A decline in income due to loss of job or spouse can result in the loss of a home for someone who cannot afford their property tax bill.

Rising property values increases long term wealth and shorter term borrowing power. It can also increase out-of-pocket property taxes even if taxing bodies reduce their tax rate. The damaging results are families and seniors stressed to meet housing costs in mortgages, rents and taxes.

One reason school officials are reluctant to their funding shifting from property tax to income tax is that the former offers a much more stable source of revenue than the latter. What is good for the goose is a burden to the gander.

Perhaps those who truly want education finance reform would be served well by studying the tax revolts of the 1930s.

Sources and additional resources:
• Illinois Economic and Fiscal Commission
Property Taxes in Illinois, January 2001 Update
http://www.ilga.gov/commission/cgfa/cgfa_home.html

• Illinois Department of Revenue
A General Guide to the Local Property Tax Cycle
http://www.revenue.state.il.us/Publications/LocalGovernment/PTAX1004.pdf

• Illinois Association of Realtors® & Taxpayers’ Federation of Illinois
Practical Guide to Illinois Property Taxes, 2004 Edition
http://www.taxpayfedil.org/