NCPA - National Center for Policy Analysis


August 1, 2005

In some Illinois school districts, the amounts collected for the obscure "tort immunity fund" tax have skyrocketed several hundred percent over the past five years, with much of the money going to fund the salaries of teachers, administrators and other personnel, says John W. Skorburg (University of Illinois). Most local taxpayers are unaware of the increases, since the tax does not show up on property tax bills.

The Illinois Business Round Table (IBRT), a voluntary association of chief executive officers of the state's leading businesses, issued a special report examining 2002 and 2003 data from 836 schools. Among their findings:

  • Tort tax extensions, the total amount billed to property owners, increased more than 100 percent in 50 school districts and 52 districts increased their extensions between 50 and 100 percent.
  • One of the worst offenders, Waltham School District in LaSalle County, had an 899 percent increase in revenue from the tax, from $10,015 in 2002 to $100,021 in 2003.
  • Of the 836 districts, 158 received more than 10 percent of their total property tax levy from the tort immunity tax.

Unlike other local school taxes, whose minimum rates are limited, there is no limit on the tax rate for the tort immunity levy, explains Skorburg.

IBRT president Jeff Mays says some units of local government are clearly using the tax revenue to fund expenses more properly paid for from general operating funds.

Mays fears that with tort money paying for salaries, school districts will not have enough left over if they have to pay a legal judgment. At least four Illinois public school districts and a community college are being sued over their misuse of the tort tax.

Source: John W. Skorburg, "Illinois Schools Use Hidden Tax to Evade Property Tax Caps," Heartland Institute, Budget and Tax News, Volume 3, Number 6, July 2005.


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