Zionsville School Property Tax Increase Referendum Misleads Voters

We saw this last year in the referendum proposing a new $700 million county hospital to replace the existing Wishard Hospital. Now we're seeing it in a suburban school district seeking support for a major property tax rate increase. Clever referendum writers use vague and misleading language to give voters the impression they are voting on something other than the actual question they are deciding through the referendum process. WRTV's Kara Kenney picks up on this latest deceptive tactic in Zionsville where a property tax increase is written to appear as a tax-limiting question instead. Here's the language used to describe that property tax increase question:

For the seven calendar years immediately following the holding of the referendum, shall the school corporation impose a property tax rate that does not exceed twenty nine and one half cents on each $100 of assessed valuation and that is in addition to all other property tax levies imposed by the school corporation.

As Kenney explains, "The intent of the referendum is to add up to 29.5 cents to the current tax rate of $1.29 per $100 of assessed value." There is nothing in the referendum question, however, that puts the voter on notice he is voting for what amounts to a 23% increase in the school tax levy. That would equate to a $480 a year property tax increase for a person owning a home worth $300,000 Kenney notes. Keep in mind also that property tax levy increases approved by referendum allow property taxes collected by that unit of government to override the 1% property tax cap law on homes. The statute governing referendums doesn't require voters to be put on notice if a tax increase allows the property tax cap limit to be exceeded.

Illinois has a similar property tax limitation law. Here is the language used in a sample school referendum question that would allow the school district to exceed the state's property tax limitation law:

Shall the limiting rate under the Property Tax Extension Limitation Law for Oak Park School District Number 97, Cook County, Illinois, be increased by an additional amount equal to ____% above the limiting rate for levy year 2010 and be equal to ____% of the equalized assessed value of the taxable property therein for levy year 2010?

(1) The approximate amount of taxes extendable at the most recently extended limiting rate is $___________, and the approximate amount of taxes extendable if the proposition is approved is $_______________.

(2) For the 2010 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 $______.

(3)If the proposition is approved, the aggregate extension for 2010 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).

As you can see, the wording of the Illinois referendum question clearly puts a voter on notice as to the question the public is being asked to decide. What is disappointing is Gov. Mitch Daniels, a big proponent of the property tax cap law, has appointed people to run the Department of Local Government Finance who are interpreting the referendum law to allow units of government to deliberately mislead voters, and who have failed to draft regulations that protect the spirit of the property tax cap law and the purpose of subjecting property tax increases to referendum.

Mary Jane Michalak told Kenney the referendum language in question "follows the law." "Any changes to the statute would need to come through the General Assembly," Michalak said. It's interesting how our government imposes liability on the issuers of securities who mislead investors in this fashion in their offering statements, but if it's the government making the representations, it is free to mislead taxpayers at will. If the legislature doesn't act quickly to correct this abuse of the referendum law, then Mitch Daniels' property tax caps he has taken to the airwaves to promote are simply going to become a figment of our imaginations. Voters need to demand a commitment from their legislative candidate to clean up the law so it is not completely undermined by deceptive local government officials.