Illinois Supreme Court Rules on the Reach of the Property Tax Extension Limitation Law (PTELL)
June 2, 2011
In a recently released decision, the Illinois Supreme Court addressed a unique factual situation that touches on several hot button topics, including consolidation, the tax base of a multi-county school district, and the Property Tax Extension Limitation Law (PTELL). In 2007, Divernon Community Unit School District No. 13 was dissolved and nearly all its territory attached to Auburn Community Unit School District No. 10. The voters of Sangamon County, where all of Auburn School District’s territory was located prior to the annexation, had already adopted PTELL. But, a small portion of the territory annexed to Auburn School District was in Montgomery County, which is not subject to PTELL. The question before the Court in Board of Education of Auburn Community Unit School District No. 10 v. Department of Revenue was whether PTELL still applies to Auburn School District after acquiring territory not subject to PTELL.
As we discussed in last year’s FR Alert on the Appellate Court decision in this case, the lower Court held that the portion of Auburn School District in Sangamon County remained subject to tax caps and the portion in Montgomery County remained free from tax caps. The Illinois Supreme Court rejected this approach. The Court read PTELL as treating taxing districts as single entities that are either subject to PTELL or not subject to PTELL. In addition, the Court noted that splitting a taxing district and applying PTELL to only one portion of that taxing district would create serious implementation problems for the county clerks charged with extending property tax levies.
The Court also agreed with the Department of Revenue that once PTELL becomes applicable to a taxing district through the referendum process, the only way to remove PTELL is through a statutorily prescribed referendum. Auburn School District had argued that PTELL no longer applied after the annexation because, in counties other than Cook County and the surrounding counties, the statute requires each of the counties in which a taxing district is located to have held a referendum, and Montgomery County had not held a PTELL referendum. The Court rejected this argument, relying on the nature of the annexation of the Divernon School District territory. The Court pointed out that the Regional Board of Education had not created a new school district when it dissolved the Divernon School District and attached most of its territory to Auburn School District. Because Auburn School District is not a new school district after the annexation, and PTELL became applicable to Auburn School District in 1997, PTELL remained applicable to Auburn School District after the annexation.
Beyond the relatively narrow scope of the decision, the Court’s opinion is instructive on how the Court views property tax matters. The plain language of PTELL was foremost in the Court’s analysis. This is also another in a line of recent decisions in which the Court recognized the practical realities of the property tax system. Going forward these are positive trends in the assessment and tax rate litigation context.