Pritzker wants local governments to use COVID-19 money for property tax relief

The federal government is handing Illinois schools and local government a “boatload” of money for COVID-19 relief, and Gov. J.B. Pritzker said the money should go to property tax relief.

“This is a great year for local communities to consider freezing or lowering their property taxes,” Pritzker said Aug. 17. “Why is this a good year to do that? Schools received not only increased funding from the state of Illinois but received a boatload of support from the federal government as well. And they also received a lot of support for local infrastructure … Those are things that take local properties taxes, typically, to pay for them.”

Federal relief funds include about $5 billion for the state’s schools. Schools account for about two-thirds of the average property tax bill. Local governments will receive about $5.9 billion and public transit, including airports, will see nearly $1.9 billion.

The state is getting $8.1 billion, some of which Pritzker intended to use to pay off the short-term loan Illinois obtained from the Federal Reserve – the only state to use the emergency lending. When federal regulators said the pandemic money could not be used for debt, Pritzker switched almost exactly the debt amount to infrastructure spending, which freed other state funds to repay the Fed.

Republicans blasted the infrastructure plan as riddled with pork projects.

Illinoisans pay the nation’s second-highest property taxes, according to a 2021 ranking by WalletHub. In 2021, Illinois homeowners averaged $4,942 in property taxes for the U.S. median valued home of $217,500, double the national average property tax bill.

While Pritzker may want the influx of federal funds to give temporary relief from high property taxes, the state is to blame for decades of underfunding education and for setting pension rules that give local governments almost no flexibility to control mushrooming public pension costs. Local governments in Illinois hold a combined $63 billion in pension debt. Pensions eat the bulk of many Illinois cities’ property tax revenues, and almost 40% of education spending goes to pensions.

Pension debt, unless reformed, will lead to more tax hikes that in turn cause residents to leave the state. An Illinoisan with a $217,500 home would save $3,089 per year in property taxes by moving to Indiana, a state unplagued by high pension debt.

The long-term solution to high property taxes is pension reform, which is only possible if Illinois amends its constitution. If lawmakers can pass a pension reform amendment, then they will give property taxpayers some real and lasting relief.