CHICAGO – Illinois homeowners could get $500 checks this year under a provision of Gov. Pat Quinn’s state budget he claims will ease the burden of an unfair property tax system.
However, the refund plan also comes as the Chicago Democrat wants to make Illinois’ temporary income tax increase permanent in the same proposed budget and he faces a fierce re-election challenge from Republican businessman Bruce Rauner.
The plan has come under scrutiny from Republicans, who said Quinn hasn’t provided enough specifics and should be focused on cutting costs, and some homeowners who say they’ll lose money.
Still, Quinn says most homeowners will benefit from what he’s deemed a historic property tax relief plan.
“It’s fair, it’s substantial,” he said this week in Chicago. “It is guaranteed and permanent.”
Here’s a closer look at Quinn’s plan:
Currently, Illinois homeowners get a tax credit, which is 5 percent of property taxes paid. About 2.3 million Illinois tax filers requested the credit in 2012 and it cost the state about $563 million in lost revenue, according to the Illinois Department of Revenue.
The newly proposed refund of $500 would replace the credit, and homeowners would get the same amount regardless of where they live or how much they pay in property taxes. If lawmakers in the Democrat-controlled House and Senate approve the plan soon, state officials hope to be able to issue checks by as early as this summer.
The idea is to ease the burden of property tax bills later in the year. This year, homeowners would likely have to apply for the refund, but the process could change in the future.
The idea has raised eyebrows, particularly with checks possibly arriving ahead of the November election.
Quinn is locked in what’s anticipated to be one of the most difficult and expensive campaigns nationwide.
Rauner, who’s seeking public office for the first time, claims the refund is easing the tough-to-swallow news of extending the income tax increase. Lawmakers approved a roughly 67 percent increase in 2011 to help fill a budget hole.
When it starts to roll back in January, there’ll be a $1.6 billion revenue dip that Quinn says will lead to deep cuts.
Quinn wants to “maintain” current income tax rates to keep from cutting school funds and says his property tax plan will help everyday people, one of his re-election themes. He’s seeking a second full term.
But Rauner, a Winnetka venture capitalist, disagrees.
“In an effort to soften the blow of his broken promise to keep the income tax hike temporary, Pat Quinn tore a page from his old failed playbook by proposing a $500 property tax rebate for homeowners, but even that promise is already being exposed as insufficient,” Rauner’s campaign said in a statement.
The majority of Illinois homeowners – more than 90 percent – would get more money as the median property tax credit is $204, according to Quinn.
His administration is billing the idea as the “most significant property tax relief in Illinois history.” It would cost the state about $1.3 billion.
That means the average homeowner would benefit and, possibly, the housing market in general.
“It’s psychological. When there’s positive news on the market, it gets a lot of bang for the buck,” said Jim Pomposelli of The Federal Savings Bank. He’s worked in finance for more than two decades and hosts workshops for prospective homebuyers. “It does get people to take a look who hadn’t looked before. ... It isn’t necessarily the real true cash value of the incentive, as much as it’s going to create a good buzz around the market.”
Top Democrats say they support the plan as a way to provide “targeted tax relief.”
However, those who pay especially high property taxes already – in some of Chicago’s suburbs, for example – could see less money than under the credit and say it’s unfair.
Republicans say they want to see the details of the proposal, but many object to the idea outright. Some GOP lawmakers say it’ll cost too much at a time when Illinois has billions of dollars in unpaid bills, a low credit rating, high unemployment and mounds of pension debt.