Editorial: Suburbs deserve fair distribution of tax

As the Daily Herald's suburban tax watchdog, Jake Griffin was curious about a state tax that most people didn't know existed.

At first, he was interested in how much money the Personal Property Replacement Tax generated over the last few years. But when he started looking into it, what jumped out was the big discrepancies in how much money each community received.

In fact, certain suburban governmental agencies receive far less than they should while other governments throughout the state - especially those in Chicago and Cook County - receive far more than they should.

As Griffin explained in a story published Wednesday, the tax on business profits (which replaced a tax on business equipment) is distributed, in general, based on 1977 tax collections.

That's right. The tax, more than $1.3 billion, is distributed (in a complicated way) in 2014 based on taxes collected 37 years ago.

So, suburbs and school districts that were much smaller back then are not getting any benefit from their growth in the ensuing decades.

As one critic said: "There's no real connection to modern economy of the state."

A simple example is Naperville, which was but a small blip on the map in the 1970s, but now is the fifth largest city in Illinois. It receives less than a tenth of a percent of the total tax revenue collected, just under $437,000. Nearby Downers Grove receives roughly $60,000 more, even though it's one third of Naperville's population today.

And Chicago? The city receives 11.6 percent of the tax - or $158.6 million. And its schools receive 14 percent or nearly $192 million. And therein lies the rub in fixing this discrepancy and helps to explain why no one has raised this as an issue until now.

"There would be significant pushback from Chicago legislators because they're currently getting a better deal than they deserve," said Naperville City Manager Doug Krieger.

It also would cause some suburbs and school districts to get less money than they now get because of a shift in growth to other areas.

But suburban delegations in the House and Senate should be appalled - or at least embarrassed - that this tax has not changed with the times to be distributed in a fairer manner. We urge them to take Griffin's work and look to fix this moving forward.

"If we had more (replacement) tax money come back to us, would we have such high property taxes?" asked state Rep. Ed Sullivan of Mundelein.

"It's a little backward ... You should always have tax policy reviewed every decade."

He's advocating a fresh look. So are organizations that analyze government spending and policy.

After nearly four decades, it's about time.