Rep. Phillips: The Battle to Defend the Property Tax Extension Limitation Law Will Continue

Dear Constituents:

In reaching out to you in recent weeks, I have heard concerns from you about the County School Facility Occupation Tax supplemental sales-tax referendum. Some people are concerned that the debt authorization that would be created by the approval of this new tax could, in term, be used to break the PTELL property tax cap in Coles County.

These concerns are understandable. The PTELL property tax cap has been in place in Coles County since 2002. It has become an essential part of the battle that we continue to fight against out-of-control property tax extensions and property tax bills. Furthermore, because this is a very hard-fought battlefield, the sponsors of the original PTELL property tax cap law had to yield some ground to their adversaries when this law was first considered and passed into law. Some of the debt-service cash flows that were already in place in 1991 when this law was first being considered, and some strictly defined categories of future debt service cash flows, are specifically exempted by the PTELL tax cap.

The PTELL tax cap is a “hard cap” on the ability of a future property tax extension to cover most future debts issued by school districts. A new debt issuance will not break the cap unless there is specific language in the PTELL tax cap law exempting this cash flow and authorizing that this cap be broken for this category of debts. There is no such language that enumerates the County School Facility Occupation Tax, and its cash flows, in the current PTELL law.

The battle to defend PTELL, and to prevent future compound increases in property tax extensions, will continue. It will not end. It is possible that if Coles County voters adopt a supplemental school infrastructure sales tax, and if sales tax revenues then fall short, then there might be significant efforts to take another look at the existing language of this State law.

Based on the language of current State law, however, there is nothing in the commitments a school district or districts would make under a County School Facility Occupation Tax that would break or weaken Coles County’s PTELL tax caps.