This legislation is poised to significantly alter how revenue is generated at the local level, aiming to provide fiscal relief to communities facing declining populations. By adjusting tax rates and potentially preventing large tax increases, the bill intends to help stabilize taxing districts and promote fair tax practices. The immediate effect of the bill's enactment would be to shift the focus from population growth-driven tax revenue generation to a more cautious approach that accounts for population dynamics, thereby impacting how local services are funded in the future.
House Bill 4695, introduced by Rep. Tim Ozinga, seeks to amend the Property Tax Code of Illinois by establishing new procedures for calculating the maximum tax extensions for taxing districts experiencing a decrease in population. Specifically, the bill mandates that beginning with the tax year 2025, county clerks must assess any population changes in taxing districts compared to the previous year. If a decline in population is found, the aggregate extension for that taxing district will be calculated differently, using lower tax rates aimed at preventing excessive tax burdens despite the decline in taxable properties and revenue potential.
While the bill is likely to receive support from local governments and taxing districts that have been struggling with declining populations, there could be opposition from those who argue that this is a short-term solution that could undermine public services. Critics may express concern that limiting tax increases could hinder the ability of local governments to fund essential services and projects, leading to lower service quality and community dissatisfaction. Discussions around the bill may address these potential negative implications, balancing the need for fiscal responsibility with the obligation to provide supported public services.