Property Tax Freeze Vote More About Politics Than Policy

The Illinois House of Representatives recently took up a monumental public policy issue, but didn't really act on the measure in a manner befitting a monumental public policy issue.

All is forgiven if you are confused!

Sometimes a hot ticket item is voted on for political purposes instead of on its merits. That was the case with the May 15 vote on a bill to freeze residential and commercial property taxes.

HB 695 (Representative Franks, D-Woodstock) was amended to expand the existing property tax cap law (PTELL) to include every taxing district in the state that is reliant on property taxes. Under current law, only non-home rule taxing districts are subject to tax caps, and only if the taxing district imposes the cap on itself or is located within a county that has adopted tax caps.

The current law "caps" property taxes by limiting the extension rate to the lesser of 5 percent or inflation. This allows taxing districts to, at a minimum, automatically collect inflationary increases to keep up with the rising cost of goods and services.

This would change under HB 695. If enacted into law, the bill would cap the extension limitation of every taxing district in the state (including Chicago) at 0 percent. The only way to increase the extension limitation would be to get the approval of voters via referendum. Getting such approval is not always an easy thing to do.

The House opted to vote on the bill for two reasons, neither of which had anything to do with passing it.

First and foremost, the Democrats wanted to embarrass Governor Rauner with a roll call that demonstrated weak support for the bill. Only 37 votes were cast in support, and none of them were from Republicans. The Governor's Office urged the Republicans to vote "present" as a way to protest the theatrical nature of the vote and to underscore that the bill was not the Governor's exact property tax freeze proposal.

Secondly, the vote created an opportunity for the House Democrats to accuse the Republicans of not supporting property tax relief. It didn't take very long for the first negative mailer to hit following the vote. Most of the Democratic targets made sure to vote in favor of the bill.

Procedurally, the vote was only to adopt the amendment onto the bill. This only required a simple majority. Actually passing the bill over to the Senate would require a supermajority of 71 votes because the bill preempts home rule powers. There simply isn't enough support for HB 695 to attain this threshold.

The Governor filed his own property tax freeze proposal late last week. It remains to be seen if the General Assembly will hold a vote on the legislation next week. There may be plenty of time to consider the Governor's bill because all signs point to an overtime session.

Workers' Compensation Reform Being Teed-Up at the Statehouse

Bruce Rauner has been talking about the need for changes to Illinois' Workers' Compensation Act ever since he declared himself a candidate for Governor. Illinois has one of the most expensive comp systems in the nation, and the high costs impose significant barriers to recruiting businesses and job growth.

Even though the data is beyond dispute, organized labor and its allies in the General Assembly are pushing back by arguing that the comp reforms enacted in 2011 provided plenty of savings. The problem, they contend, is that insurance companies and doctors aren't passing the savings along to employers. But this argument ignores the fact that the 2011 reforms, while a step in the right direction, were never viewed by employers as substantial enough to really solve the problem of excessive comp costs.

Part of the problem was that the 2011 reforms were crafted based upon the realities of interest group politics. Savings can be wrung out of the comp system using different mechanisms. One way is by addressing benefit levels and eligibility. This approach is opposed by labor unions and trial lawyers. Both of these groups are supporters of the Illinois Democratic Party. Cost reductions can also be found by addressing medical costs and reimbursement rates. This approach is opposed by insurance companies, hospitals, and doctors. These groups typically support the Illinois Republican Party.

So when it was time to pass workers' compensation reform back in 2011, the majority-Democrats protected their supporters with a bill that squeezed some savings out of groups that support Republicans. The resultant reforms therefore fell short and left a great deal of savings on the table. This isn't intended to be a criticism of the Democrats as much as a lament about what can happen during periods of single party rule. 

Flash forward to 2015. Illinois still has high workers' compensation costs (one study ranks us as 7th highest in the nation) and a Republican Governor determined to extract savings with the passage of reforms that will rile traditional Democratic constituencies. Probably the most significant reform being sought is a change to the causation standard. The Governor and business community want to require that an injury actually occur on the job as a prerequisite for comp benefits. Under current law, someone can injure themselves playing softball on a weekend, and successfully file for comp benefits if they later aggravate the injury while at work. The Governor, Republican legislators, and employer groups want to change this policy. And this change needs to happen.

One might appropriately consider any enacted reforms in 2015 as "Workers' Compensation Reform 2.0," or a natural continuation of the 2011 reforms with Republicans having a much more prominent seat at the table. 

It's Already the Law

One of the bills that emerged from the House for Senate consideration involves a website posting mandate on local governments. 

HB 2717 would require that any public body with an annual budget of at least $1 million must maintain a website and include specific information on that website. Public bodies, represented by organizations like the Illinois Municipal League (my employer), contend that the bill represents another unfunded mandate imposed by the state onto local governments. Advocates of "open government" counter that the bill provides for much-needed transparency to insure that the public has essential information about their local governments. 

Most would agree that reducing unfunded mandates, or at least requiring the state to fund them, is good public policy. Most would probably also agree that transparency is a good thing. Reducing unfunded mandates and fostering transparency need not be mutually exclusive. The critical question for policymakers is how to best balance the public's "right to know" with the need to shield local governments from the annual accrual of one unfunded mandate after another.

The solution is to develop a singular and seamless mechanism for providing information. Transparency has become politically popular and legislators are looking to jump on board with transparency legislation of their own. Some of these bills have already become law. What we end up with is a mishmash of posting and reporting requirements. Local governments must abide by the posting requirements within the Open Meetings Act and are also subject to the Freedom of Information Act. Information also has to be printed in newspapers, provided to the State Comptroller, and forwarded to the Department of Central Management Services (CMS) for inclusion on the Illinois Transparency and Accountability Portal (ITAP). And now HB 2717 is proposing that information be included and updated on the website of the public body. The bill does allow for some of the ITAP postings to satisfy the requirements within the bill, but that still doesn't fully address the multiple existing reporting requirements. In fact, the bill specifically says that the posting requirements in the legislation are in addition to any other posting requirements established by law or ordinance. 

Somebody has to do all of this work, and some of it is unnecessarily duplicative. And somebody has to pay for it. This would be Illinois taxpayers. So the real public policy question shouldn't be "how can we make more information available to the public?" The better question is "how we can provide the information most efficiently and inexpensively?"

The primary advocate for HB 2717 is the Illinois Policy Institute (IPI). And the IPI appears to agree that reducing local government costs should be an objective of good transparency law. In fact, here's what the IPI offers as an argument for the passage of HB 2717:

This bill is also a big cost-saver for cash-strapped local governments, as it will save countless hours of paid staff time fulfilling Freedom of Information Act, or FOIA, requests. If this bill becomes law, an agency would be able to legally deny all FOIA requests asking for information already posted on the agency’s website. 

In addition to saving time, it would also limit costly lawsuits – paid for by taxpayers – arising from mishandled FOIA requests.

The IPI says that HB 2717 is terrific because it will ease the burden and expense of complying with FOIA requests since, under the bill, the information required to be posted on the internet will be exempt from FOIA. 

But this is a deeply flawed argument for advancing the bill. FOIA exemptions for information posted on local government websites is already the law in Illinois. Here's the relevant language from Public Act 98-1129, which became law in December of 2014:

Since website posting already exempts the information from FOIA unless a taxpayer can make the case that they don't have a way to access the information on the website (a rare occurrence in an era of computers and smartphones), the argument that HB 2717 would reduce taxpayer costs rings hollow. In the end, the bill only adds to the multifarious and inefficient web (pun intended) of reporting requirements on local governments. This costs taxpayers more. 

Rather than layer additional reporting requirements on local governments, transparency advocates should focus their efforts on the lack of transparency in the state legislative process. For example, local governments cannot take action on an item unless it was posted for a continuous 48 hour period. The General Assembly can vote on legislation after it has been posted for an hour.