New Law Adds Levy to Recapture Property Tax Refunds

On August 20, Governor Pritzker signed Public Act 102-0519, which went into effect immediately. The Act amends the Property Tax Extension Limitation Law (PTELL) to provide that a taxing district’s levy will automatically be increased each year to recapture property tax refunds made in the prior 12 months arising from a PTAB appeal, tax objection suit, or certificate of error that reduced a property’s assessed value. Because this Act was placed in the PTELL section of the Property Tax Code, it appears to apply only to taxing districts covered by PTELL.  Under the new Act, on or before November 15 of each year, the county treasurer will certify each covered taxing district’s aggregate property tax refunds for the preceding 12 months.  The county treasurer will then extend the recapture levy based on the certified amounts of the property tax refunds. The Act specifically provides that, for purposes of PTELL, the taxing district’s most recent aggregate extension base shall not include the prior year’s recapture levy.  Thus, this recapture levy will not be included in the subsequent year’s tax cap calculation.

It is unclear how county clerks and treasurers will implement the recapture levies, both in terms of timing and characterization of the levies, and whether taxing district action will be required. It should also be noted that House Bill 4130, filed on August 19, if enacted, would significantly alter the recapture levy process set forth in Public Act 102-0519.  House Bill 4130 would, among other things, make the recapture levy optional in the discretion of the taxing district, limit the amount of the recapture levy to 5% of the taxing district’s aggregate levy excluding debt service, and allow all taxing districts (not just counties subject to PTELL) to implement the recapture levy.

We will continue to monitor the implementation of Public Act 102-0519 as well as the status of House Bill 4130 during the upcoming fall veto session to ascertain what, if any, modifications are passed that would affect the new levy recapture process. In the meantime, school boards should become acquainted with the recapture levy procedure and consider its potential impact on the budget and levy process and the structure and timing of settlements of pending assessment appeals. Should you have any questions regarding this topic, please do not hesitate to contact James Levi or Tony Senagore.

Source: P.A. 102-0159 (eff. Aug. 20, 2021); House Bill 4130 (filed Aug. 19, 2021)