Property values dropped through-out the Midwest this year for the first time in many years, signaling that states and local governments could be on the verge of another fiscal crisis. As a result of the depressed housing market, assessed values in some Midwest counties dropped 1% to 3%. Local governments that have been accustomed to annual increases of 5 percent to 6 percent in the revenue raised by property taxes may now see no increase. This can lead to even more pressure on state government to support local government units. Without some adjustment, some cities will face cuts in essential services. Generally, about 50-60 percent of municipalities' operating budgets are bankrolled by property taxes. Communities know the hit is coming, and should be formulating financial contingency plans.
School districts, which get a share of their funding from property taxes, also will take some hits. Downturns in the usually stable property tax mean that the state will have to pick up the slack from other sources of school aid revenue, such as sales and income tax. But several Midwest states already have money troubles of their own and are in no shape to help out the locals. This adds one more thing to add to the school funding problem in Illinois and other states. This will make it even harder for Illinois to equalize state funding for school districts with disparate tax bases.
Illinois government units are already struggling to keep up with a lack of a statewide capital plan and missed promises for funding for select projects.
Some units of local government seem oblivious to the high local property tax burden already present in Macon County. Elected officials need to carefully scrutinize any spending plans and balance perceived needs with other tax increase pressures. Residents paying property taxes in Decatur already pay some of the highest aggregate property taxes in Illinois and the country.
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