November 04, 2022
In the State of Illinois, non-home rule units of government located in counties subject to the Property Tax Extension Limitation Law (PTELL) are limited in the size of their annual property tax extension to 5% or the increase in the Consumer Price Index (CPI), whichever is less. However, the limitation is subject to some exceptions and can be increased by referendum. The Forest Preserve District of Cook County is asking taxpayers for a larger levy to pay for pensions and a large backlog of land restoration and maintenance needs in the upcoming general election on November 8, 2022.
PTELL referenda are fairly common in Cook County and the Collar Counties, especially for school districts. However, the countywide referendum for the Forest Preserve District is a first for City of Chicago voters. This blog will explain what a PTELL referendum is using the specific example of the Forest Preserve District. The Civic Federation has taken a position in favor of the Forest Preserve District’s referendum.
What is PTELL?
The Property Tax Extension Limitation Law (PTELL) was passed in reaction to rapid growth in property taxes in the collar counties and was applied to those counties beginning with tax year 1991. When PTELL is applied to a county, all non-home rule taxing districts in that county are subject to it. Cook County was made subject to PTELL beginning in tax year 1994.
PTELL is intended to limit the growth of an overall taxing district levy to 5.0% or the rate of inflation, whichever is less. The rate of inflation used to calculate the PTELL limit is the national CPI for all urban consumers for the year preceding the tax year published by the United States Bureau of Labor Statistics in January of each year. For example, the tax year 2022 (payable in 2023) CPI was 7.0%, so the PTELL limit is 5.0%, the first time the cap has been hit. This limit can be raised by voters through a local referendum, which is what the Forest Preserve District has asked.
The intention of tax caps is to limit the increase in the dollar amount of property tax revenue that a taxing district may receive. However, the dollar limit must be converted into a tax rate in order to be billed to taxpayers. The PTELL tax rate for a district is called the “limiting rate.” Additionally, it is important to note that the term “tax cap” can be misleading because the PTELL limiting rate does not “cap” taxable value of property or property tax bills and there are some exceptions to the limit, such as levies for some types of bonds.
The limiting rate is the highest aggregate rate at which the county clerk can extend taxes for the portions of a government’s property tax levy that are subject to PTELL. It is similar to a tax rate, which is calculated by dividing a government’s levy by the equalized assessed value of property in the district.
A limiting rate is the prior year’s levies for tax capped funds increased by the lesser of 5% or the change in CPI divided by EAV in the district minus new property, expired TIF increment and other property value that is “outside the cap.”
This limiting rate is then the highest tax rate at which the government can extend property taxes for its capped funds. That is, the limiting rate prevents the government from increasing its levy by more than 5% or the rate of increase in CPI.
There is much more to PTELL than can be summarized here. To learn more, see the Civic Federation’s primer on property tax extension and publications by the Illinois Department of Revenue and Taxpayers’ Federation of Illinois.
What Is a PTELL Referendum and How Does It Work?
If a government decides it needs more property tax revenue than it can raise under PTELL, it has a few different options for referenda to ask voters’ permission for a larger increase:
- An inflationary increase that is greater than allowed by PTELL for one or more years, known as an extension limitation referendum;
- An increase to the limiting rate; and
- A new tax rate for a specific governmental fund.
The Forest Preserve District has placed the second of the three options, a limiting rate increase referendum, on the ballot in November 2022.
A PTELL referendum of any kind must be submitted by the governing body of the district via ordinance or resolution and conducted at a regularly scheduled election. It must follow the election code and use ballot language specified in statute. Extension limitation and limiting rate referenda also require supplemental ballot information on the additional tax the owner of a $100,000 home would have to pay if voters approve the increase.
The ballot question for a limiting rate increase asks,
“Shall the limiting rate under the Property Tax Extension Limitation Law for [name of government], Illinois, be increased by an additional amount equal to [ ]% above the limiting rate for the purpose of [ ] for levy year [ ] and be equal to [ ]% of the equalized assessed value of the taxable property therein for levy year(s) [list the levy years]?”
The following is the Forest Preserve District’s limiting rate referendum question:
Shall the limiting rate under the Property Tax Extension Limitation Law for the Forest Preserve District of Cook County, Illinois, be increased by an additional amount equal to 0.025% above the limiting rate for school purposes for levy year 2020 for the purposes of conserving and restoring land to good health, protecting the water quality of rivers, lakes, and streams, providing natural flood water storage, protecting wildlife habitat, protecting forests to improve air quality, improving and maintaining existing forest preserves and trails of said District, and other lawful purposes of the Forest Preserve District of Cook County, with public disclosure of expenditures, and be equal to the 0.076% of the equalized assessed value of the taxable property therein for levy year 2022? ___ Yes ___ No
This limiting rate increase is estimated to generate approximately $40 million in additional property tax revenue for the District annually if the referendum passes. The District’s total property tax revenue in FY2022 was just over $100 million.
The additional required information provided on the ballot for the referendum will be the following:
(1) The approximate amount of taxes extendable at the most recently extended limiting rate is $88,665,270 and the approximate amount of taxes extendable if the proposition is approved is $132,128,637.
(2) For the 2022 levy year the approximate amount of the additional tax extendable against property containing a single-family residence and having a fair market value at the time of the referendum of $100,000 is estimated to be $8.06.
(3) If the proposition is approved, the aggregate extension for 2022 will be determined by the limiting rate set forth in the proposition, rather than the otherwise applicable limiting rate calculated under the provisions of the Property Tax Extension Limitation Law (commonly known as the Property Tax Cap Law).
In order for the referendum to be approved, a majority of ballots cast on the proposition must vote yes.
If the Referendum is Approved, How Would the Increase Affect Future Years?
It is important to note that although the referendum only shows the limiting rate increase for one year, future levy years will be affected. This is because the one-time limiting rate increase also increases the tax base from which future increases will be calculated. So, for levy year 2023, the calculation for the PTELL limit will be based on what the Forest Preserve District levied for in FY2022, including the limiting rate increase, if approved by voters. In other words, the District keeps the approximate $40 million increase in revenues in future years and then calculates future increases from that higher level.
Using the numbers in the referendum question then, if the referendum is approved, the approximate amount of taxes extendable for the Forest Preserve District in 2022 and payable in 2023 will be $132,128,637. This number then becomes the basis for the 2023 limiting rate calculation for taxes payable in 2024.
 The limiting rate can be increased for up to four years.
 There is a fourth possible referendum, to increase a district’s debt service extension base.
 The following numbers are the ones that are on the physical ballot for voters in Cook County, according to the sample ballots available on the Chicago Board of Elections and Cook County Clerk’s websites.