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Legal and financial consequences of home rule in Rockford

Home rule, created by the Illinois Constitution in 1970, allows municipalities to raise taxes, pass ordinances to address local problems, and do just about anything not prohibited by state law. Non-home-rule communities can do only what the state law stipulates.

Proponents of home rule always opine that the issue appears to boil down to a lack of trust in our elected officials not to excessively raise taxes without voter approval.

In 1983, after two consecutive years of excessive tax increases, home rule opponents obtained 10,800 signatures on petitions for a referendum and eliminated home rule in Rockford.

One reason for the removal of home rule is that Illinois has no recall provisions for the mayor or aldermen who voted for the tax increases and with their terms of office being 4 years, additional taxes and fees could have been raised in the interim.

Also, bonds that are passed without voter approval under home rule provisions take decades to pay off, and are even allowed to exceed the statutory limits as a percentage of Equalized Assessed Valuation.

Rockford, during this current recession, has voted to raise property taxes to the maximum allowed under tax caps while home values were decreasing by over 20%. With home rule, the city would have had no tax cap limitations.

Proponents have frequently stated in the media that in home rule cities the property taxes have been decreased and have been more equitably dispersed.

More equitably dispersed means that other taxes and fees have gone up substantially in those cities. The total tax burden must be considered when discussing home rule.

Simply trusting our elected city officials isn’t the major problem. Since 80% of the city’s budget is spent on public safety and those contracts are typically resolved through binding arbitration, the decision to raise taxes is effectively taken out of city officials hands!

Under home rule, an unelected arbitrator would have few financial restrictions negotiating labor contract expenditures that could force the city to raise taxes to whatever level would be necessary to meet the salary and benefit schedules of comparable Illinois municipalities despite the city’s current tax revenue.

Even if city officials attempted to restrict the tax provisions of home rule in order to pass a referendum, the Illinois State Supreme Court has ruled in Rolling Meadows and Oak Terrace that future city officials may rescind any past city council resolutions, thus nullifying any restrictions attached to the referendum.

It would require a state-wide constitutional amendment to allow the unlimited tax provisions to be removed from any proposed home rule referendum.

Proponents remind us that only five out of 209 municipalities have rescinded home rule in the past three decades, therefore, it necessarily follows that it must be a success.

What proponents neglect to tell us is that it takes a huge campaign to obtain thousands of petition signatures required (10% of the registered voters), to even place a referendum on the ballot to remove home rule.

One must conclude that most residents would be in favor of the city cracking down on absentee landlords that allow their property to decay, or to condemn vacant drug houses, and rightfully so.

However, one must also consider that the city council, under home rule, could just as easily pass regulations regarding occupancy permits, real estate transfer taxes and final inspections, which could prevent homeowners from selling their properties until that property meets whatever code requirements the city council deems necessary.

Proponents also advocate the economic development that would be possible with home rule, but fail to exactly describe what the Return on Investment would be for those who foot the bill through their increased taxation, whatever form it takes. But that is a topic for another day.

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16 Comments

  1. Scott Anderson

    Ted, I always appreciate your objective analyses. You have raised some good questions and I am wondering if you have more in-depth insight:

    You mention that the total tax burden must be considered when discussing home rule. With a large data set available (~200 Home Rule communities in Illinois) do you find that the total tax burden is more or less in home rule communities versus non-home rule communities and what correlations if any exist between the total tax burden and the socio-economic health of those communities?

    While the issue of an un-elected arbitrator determining community funding requirements is a significant one, doesn’t it apply equally in Illinois to home rule and non-home rule communities? Do home rule communities have more or less flexibility in determining how to deal with this issue?

    Doesn’t it take a significant campaign for a community like Rockford to re-enact or remove home rule and thus is a moot point to the issue of whether home rule may be a benefit?

    Is it found that the regulations that may have been enacted in the ~200 home rule communities have lead to a healthier or unhealthier real estate markets and associated EVA impacts?

    • Ted Biondo

      Scott – the one issue I can answer without more research, which I will be doing anyway, because this issue isn’t going to disappear, is that cities with home rule do not have the limit of tax caps. So, when an arbitrator decides the provisions dealing with salary and benefits, in a non-home rule city with tax cap restrictions, the city must cut something else in their budget to meet the arbitrator’s demands.

      In a home rule city, the council is allowed to raise taxes to pay the increases demanded by the arbitrator even above the tax caps and that’s what they will do and have done. Or they will increase sales taxes as they have done all over the state.

      In Rockford’s case, they already have opened a line of credit which they have increased in the past few years to $15M, so they must have a cash flow issue. Their General Fund balance the last I looked, when Andre Samuels was there, was decreasing each year. TIFs that aren’t working takes $2 to $3M out of the General Fund and they are thinking of a 33rd TIF. At least they are starting to do Pay-as-you-Go TIFs, where the money isn’t borrowed up front and Auburn seems to be a blighted area, which is how TIFs are supposed to be set up.

      I have a Home Rule in Illinois Guide, which is 60 pages long that I have read in the past and need to review. I had planned to do so as the various issues arrived in Rockford concerning home rule. You can’t imagine the various taxes and fees that home rule cities can devise and I will be writing about those in the near future.

      The last issue which I need to do more research is the value to existing taxpayers of economic development, (a panacea of home rule?) to reduce their existing taxes – what is their ROI and all I see is increasing taxes regardless of what economic growth is doing. The municipalities don’t seem to share their success (by lowering taxes) when economic growth increases their revenue, because their excuse is that they have more expenses, more fire, more police, more maintenance, etc. as the community grows – Really, then what advantage to existing taxpayers is economic growth since taxpayers are the ones primarily funding it?

  2. With me, it’s all about trust, or lack thereof. I used to trust politicians until they proved themselves untrustworthy. Now, I look at it differently. After too any lies, too any broken promises, I don’t trust politicians to not abuse Home Rule Authority. If it cones to a referendum, I will vote NO!

  3. AmazingScott

    I’m with you on this one, Ted. Home rule in Rockford is a bad idea that transcends party politics. I personally support tarring and feathering any elected official who attempts to push the idea.

  4. Steverino

    There is no evidence that municipalities with home rule have higher or faster growing property taxes than comparable non home rule municipalities. In fact many are able to shift property tax burden to other resources.

    • Ted Biondo

      The other resources, Steverino, is sales taxes, fees on everything from selling your home, to charging you for anything they can think of. Show me the data that proves what you just wrote – I’m open to criticism that’s based on facts. I’m certainly going to investigate further.

      The cities have all the money they need if they just get their costs under control, if it wasn’t for lawyers in Springfield dreaming up more ways for public employees to get more money at the taxpayers expense. Property taxes are one source of revenue without home rule, but with home rule even the state legislators in Springfield can’t dream up the varied ways municipalities can charge their residents more taxes and fees for everything – I’ll post more about some of the ways later.

  5. monkey

    For me, it’s about control. I would rather have home rule and have our local officials control what taxes, fees, etc, that we need to run our city, rather than going to Springfield hat in hand begging them to pass laws to help Rockford. Saying “we don’t trust our local elected officials” is a cop out intended to remove responsiblity from the voters. We need a more involved citizenry that will hold our local elected officials accountable and give us local control over our destiny. That’s part of what home rule does.

    • Ted Biondo

      I explained the trust issue in the post, monkey – four year terms, no recall for spenders like the two former mayors in the early 1980’s which led to the removal of home rule, which proves some cannot be trusted – arbitrators using the unlimited taxes to give out even more pay and benefits, and other things that take control totally out of the locals hands – do some investigation before posting your feelings – get some data – I’m open to more facts!

  6. AmazingScott

    You’re confused monkey- taking away home rule is the control; home rule allows them to do whatever they want no matter what the voters think. They don’t have to ask Springfield, they have to ask us, the voters, when they want to do something. Saying ‘we don’t trust our elected officials’ isn’t a cop out, it’s based on long experience of them acting in their own self-interest and not the best interests of We The People, to the point that they’re now exerting influence over the local media (which itself is desperate enough to let them do it) in an attempt to spin public opinion in their direction. Don’t fall for the propaganda, taking away home rule was (and still is) the citizenry’s way of getting involved, holding our officials accountable and giving us local control over our destiny.

  7. Brian Opsahl

    If remember correct home rule was taken away when the metro center was built after the voters turned it down and they went ahead and built it anyway..?

    • Ted Biondo

      Brian, that may have had something to do with the anger in 1983, but taxes being raised by Robert McGaw and John McNamara in two consecutive years around that time, without a voter approval, was what triggered the home rule petitions and the revoking of home rule – but then I’m not a tax guy. Either way, our local elected officials weren’t representing the majority of taxpayers on these issues, were they?

      They couldn’t be recalled in Illinois, so the people removed the unrestricted tax tool they were utilizing.

  8. monkey

    It’s always interesting to me that the home rule opponents (I’m still about 50/50 on this issue in general) seem to think that “well, if we have home rule, taxes will just spin out of control.” Wow, could it get any worse than it is now?

    I’d rather my sales tax or hotel tax or some other arbitrary tax over which I may have some control (I don’t stay in local hotels so let’s let out-of-towners pay for Reclaiming First, for example) get raised for something worthwhile than the unending property tax increases that we’ve seen over the last 25 years and over which I have little control. Reclaiming First is an example; if we’d had home rule, we wouldn’t have had to go begging in Springfield to allow us to raise the hotel tax. We could have just raised it and not necessarily been held hostage by the unions.

    Look around; is Rockford booming? Would local control of our destiny allow us to get more creative in improving our infrastructure; getting control of crime; improving the schools; designing more innovative incentives for companies to bring jobs here? It might. I’m just as frustrated with my property tax bill as anyone who opens it twice a year. It’s maddening. But, I’m more frustrated with the attitude of many citizens in this town who simply want to complain but not actually do anything different. That’s what’s driving a lot of good people out of this community.

    AmazingScott: your comment made little to no sense. I’m not sure how having to ask permission from Springfield to do many things we should do ourselves is having “local control.” As for asking “us,” the voters, people in Rockford don’t vote. So, if we’re unhappy with our elected officials, that’s not their fault, it’s OUR fault. We don’t govern by referendum. We elect people to do a job. When they don’t do that job, we need to vote them out. Saying “we don’t trust them” is absolutely a cop out and a way to stay uninvolved and retain your right to complain endlessly.

    • Ted Biondo

      I wrote how it can get worse – when there are no limits on an arbitrator forcing the city to meet salary and benefit schedules of collar county municipalities that some bureaucrats deems comparable to Rockford and it’s binding arbitration. That’s just one.

      In St. Louis County and cities in Illinois, municipalities use home rule to control the sale of your house until you meet their new regulations, including reroofing your house, putting in more bathrooms and charging real estate transfer taxes to sell your home with the city netting $1000 or more. Oh, it can get much worse, Monkey.

      Also, if Rockford was booming would you see your taxes go down with new economic growth – that’s the last paragraph of the post asking the question?

  9. Scott Anderson

    Thanks Ted. I think I am reading that you agree that there are issues to research and that with a large data set of about 200 Home Rule communities in Illinois we should be able to determine if Home Rule communities fare better or worse in socio-economic indicators, EVA growth, and arbitration ruling impacts. That would allow an objective, data based discussion on the subject and issues versus subjective conjecture.

    The trust comments are not logical to the issue; unless someone believes they can trust state politicians and political influences more than local which would be hard to comprehend. Give your local leaders the power to do what you want and vote them out if they don’t. Our town, our rules.

  10. Well said, Ted. I’ll be creating a home rule page to clarify for Scott Anderson and others the even-deeper problems caused by the twisted Illinois version of so-called home rule. It’s a politicians’ delight and a citizens’ nightmare. In Illinois, so-called home rule is a system of government that denies citizens timely and effective control over their local government units and gives local politicians virtually unlimited power to tax, to regulate, and to incur debt. It stands in stark contrast to our American system of empowering citizens with constitutional controls over government and denies Illinois citizens basic rights enjoyed by citizens of home rule communities in other states. Calling the Illinois version “home rule” is an egregious misnomer. There are reasons — too many to post on facebook — why politicians, lawyers, developers, and their groupies love it and why citizens who have a chance to vote on it keep it out. I will let you known when the web page is ready — and, of course, I stand ready to debate the subject with anyone, anywhere, anytime.

  11. AmazingScott

    I’ll look forward to reading that John- Scott A. is clearly confused on some very basic components and I haven’t had the time to explain it to him…

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