Part two of two)
by Jim McMahon
In the last issue, we looked broadly at the
definition of Home Rule and its application in Home
Rule communities. In this article, I will try to give you
the pros and cons of "Home Rule" as it pertains
specifically to Prospect Heights. First, let’s look
again at what Home Rule is and what it’s not:
Home Rule
■ Council may take any action related to local
affairs
■ State must have 3/5 vote to pre-empt
actions of Council
■ Flexible borrowing powers
■ Non-resident revenue sources • Sales
tax equalization
• Hotel/motel licensing powers
• Financial flexibility (e.g. hotel/motel taxes
are available for almost any use)
Non-Home Rule
■ Council has very limited power granted
by state legislature
■ Most revenue matters must go through a
very rigorous and expensive referendum
■ Rigid borrowing rules
• Limited to 40 year borrowing
■ Leases and bank loans prohibited
■ No flexibility
• e.g. hotel/motel taxes available only
to promote tourism
Now, lets’s look at what are the most often
used arguments for and against Home Rule:
Arguments Made in Favor of Home Rule
Local government officials and reformers who
support home rule argue that local government officials are
better able to:
• Assess local needs and develop solutions to
local problems than are officials elected from all over the
state.
• Find the best solutions to local problems
because they have more familiarity with such problems and
with local residents’ preferences for how to solve them. •
Promote and protect the interests of local residents.
• Experiment with alternative solutions
to local problems.
• Promote civic education by encouraging local
citizens to study issues before decisions are made.
• Allocate scarce local resources to the
highest priority needs of each community.
• In addition, locally elected officials can be
more easily held democratically accountable to local voters for
the way in which they manage local affairs.
Arguments Made Against Home Rule
Persons who favor retaining state legislative
authority over the powers and functions of all local
governments argue that, with home rule powers, local officials
will: • Act in an arbitrary and capricious manner by favoring
political friends when making policy and budgetary decisions.
• Be deprived of the economies of scale
made possible by centralized control over and by the superior
expertise and technical resources available to state
government.
• Lead to a lack of uniformity with regard to
services, structures and actions taken by local
governments, causing inequities between and within communities.
• Result in some local governments with
fewer resources being unable to solve their own problems because of
such income inequities.
• Make it more difficult for state government
to address regional problems.
A study conducted by Professor Curtis Wood of the
enter for Governmental Studies at Northern Illinois University (NIU)
in 2010 found that cities and villages with home rule powers
have broader tax powers; have fewer restrictions on their
property tax powers; have broader powers to levy other taxes
(except income taxes); and broader power to incur debt. He
states that this leads to three consequences: First,
communities with broad taxing powers levy more different kinds
of taxes, but neither their property tax levies nor their total
tax revenues measured on a per person basis, are higher. Home
Rule communities are using their broader taxing powers, not to
raise more money, but to keep property taxes from going up even
faster. Second, the study showed that cities and villages
with broader powers have higher bond ratings, a key
indicator of sound and conservative financial management
that reflects positively on communities’ fiscal, economic
and managerial performance. The positive link between
more powers and better bond ratings is even stronger
for municipalities over 2,500 in population. Third, the
study results also suggest that municipalities with more power
are more likely to have lower deficits; lower borrowing costs;
and enjoy more financial, technical, managerial and political
assistance from state officials to combat local or regional
challenges. One of the primary concerns that voters have
when confronted with the issue of Home Rule is the
greater discretion of the municipality to raise property
taxes. However, based on the research of Professor
James Banovetz of the Center for Governmental Studies at
NIU, conducted in the mid 2000’s, there is no evidence
that Home Rule municipalities have higher or faster
growing property taxes than comparable non-Home
Rule municipalities. In fact, Home Rule status is often used
to shift the tax burden from property taxes to other
revenue sources, such as licensing fees, restaurant tax, real
estate transfer tax, etc. This would diversify the revenue
base and reduce the burden on property owners. His
study indicates that communities which have adopted Home Rule
status have seen their property taxes increase at a lower rate
than non-Home Rule communities. Lastly, this is what some of
your aldermen in Prospect Heights are saying about Home Rule:
• It will allow us to become a real community
instead of a fractured group of Special Service Areas (SSAs) as
we have become.
• It will give us the power to maximize the
NONRESIDENT sources of income (e.g. hotel/motel
and entertainment taxes, contracting licensing, etc.).
• It will allow us to implement community
services (e.g. multi-family inspections).
• It will improve rental properties through
strict inspection requirements, residential inspections, better
juvenile vandalism control, etc.
• It will help prevent annexing efforts on our
borders by neighboring communities.
• It will allow us to provide broader
economic development programs.
• It will allow us to improve our utilities and
services.
• It will reduce legal fees resulting from
constant financial and administrative issues. In
conclusion, while there appear to be many benefits to Home
Rule, like any power it can be misused and abused. The two most
powerful tools you have as voters if Prospect Heights adopts
Home Rule is your ability to elect the alderman and mayor of
your choice and, in the extreme, to rescind Home Rule by means
of a referendum. That is why it is so important for each of you
to become informed and to vote on March 20th.
