What About Renters?

Since tax year 1983, the state of Illinois has offered individual income tax filers property tax relief for real estate taxes paid on a principal residence. Currently, single filing taxpayers with incomes up to $250,000 (and $500,000 for taxpayers married filing jointly) can receive a credit on their income taxes worth 5% of real estate taxes paid for the tax year. For tax year 2018, just over 2 million tax filers took the property tax credit for an amount totaling nearly $513 million dollars.

In this proposed budget for Fiscal Year 2023, Governor J.B. Pritzker proposed a one-time additional property tax rebate of up to $300. This rebate is estimated to cost the state $475 million.

Yet, according to 2019 census data of Illinois occupied housing units, one-third of occupied housing units are rental-occupied units versus owner-occupied units. Furthermore, 73% of white non-Latinx residents in occupied housing units lived in owner-occupied units versus just 34% of African-Americans living in owner-occupied units.

housing-occupancy

 

Individuals in rental units do not benefit directly from the tax relief provided to homeowners through the property tax credit. While it is possible a building owner receiving some property tax relief may pass it on to renting tenants, there is no guarantee of that.

Twenty-three states and Washington, D.C., address similar situations with some form of a renter’s credit or deduction. Some apply the credit to just seniors or the disabled, but others provide a credit that may be based on a percentage of rent paid or the actual rent paid up to a maximum level. For example, Wisconsin allows qualifying renters (those with household income less than $24,680 for 2021) a credit that can reach a maximum value of $1,168. Indiana allows qualifying tax filers to deduct up to $3,000 or the amount of rent paid, whichever is less, on the state’s income tax form.

Midwestern states and renter’s credits*

IndianaRenters whose unit is subject to property taxes can deduct up to $3,000.
IowaRent reimbursement program for those 65 or older or at least 18 with a disability, with a household income less than $24,354. Reimbursement varies by income.
MichiganA credit for qualifying households where the percentage of rent attributable to property taxes (determined to be 23%) exceeds 3.2% of total household resources ($60,600 or less to qualify). Sixty percent of determined value. Higher rates for seniors and the disabled. Maximum value $1,500.
MinnesotaApplies to renters whose income is less than $64,920. Refund based on 17% of rent paid. Maximum refund amount $2,210. Unit subject ot property taxes.
MissouriApplies to individuals 65 or older, or disabled, with household income $27,500 (single filers) or less. Unit must be subject to property taxes. Value varies by income. Maximum credit value of $750.
WisconsinIncome less than $24,680. Unit subject to property taxes. Value varies on income. Maximum credit is $1,168.

*Additional conditions may apply.

These provisions allow many renters in those states to deal with housing cost burdens – which depending on your income level can be very high. Usually, lower-income households face the greater housing burden. For Illinois households with incomes between $10,000 and $20,000 in 2019, 80% spent 30% or more of their income on rent. That compares to just 4.3% of Illinois residents with incomes of $75,000 or more spending 30% or more of their income on rent. Furthermore, when an examination is of pre-pandemic data of all renters by race and ethnicity, a far greater percentage of African-American and Latinx low-income renters are paying more than 30% of their income in rent.

 

High housing costs can lead to housing instability. A study by Boston Medical Center found three forms of housing instability (being behind on rent, multiple moves, and a history of being homeless) were associated with adverse caregiver and child health among low-income renter households[1].

If Illinois offered a housing tax credit, similar to the property tax credit, to individuals at or below 200% of the Federal Poverty Level, who have lived in Illinois for at least half the year and are paying more than 30% of their income towards rent – the Institute on Taxation and Economic Policy estimates it would cost the state $171 million annually -probably less depending on how many tax filers claim the credit.

illinois rent burden

 

Currently, Illinois offers a Rental Payment Program with financial assistance for rent to income-eligible Illinois renters and their landlords who have been impacted by the pandemic. It is not designed to assist with rental costs going forward. The Illinois Department of Human Services offers a homeless prevention program and emergency housing assistance to those at risk of becoming homeless. There are federal programs offering vouchers to eligible families, but the Center on Budget and Policy Priorities estimates just one in four potentially eligible families received any type of rental assistance before the pandemic[2].

As we emerge from the pandemic, a time that also saw a sharp increase in demand for home sales that has impacted the rental market, even more individuals will likely face challenges in meeting their rent payments. Across the United States, rents last month were 17.6% higher than they were in February 2021. That increase is the fastest growth rate in the past 20 years[3]. Given the stark difference by race in home ownership, with more than half of the Illinois African-American owner-occupied units rentals, it is important to provide a renter’s income tax credit if Illinois is going to address racial and ethnic economic inequities. A renter’s credit would help more individuals facing a rental cost burden, create greater equity with housing income tax credits, and create more housing stability for parents and children. It should be part of the final budget package the legislature approves for Fiscal Year 2023.

[1] Sandel M, Sheward R, Ettinger de Cuba S, et al.;Unstable Housing and Caregiver and Child Health in Renter Families. Pediatrics. 2018;141(2):e20172199

[2] Fischer, Will, Sonya Acosta, and Erik Gartland; “More Housing Voucers: Most Important Step to Help More People Afford Stable Homes”, Center on Budget and Policy Priorities, May 13, 2021.

[3] Hernandez, Kristian; “As Rents Soar, States Take Aim and Local Zoning Rules”; Stateline; March 15, 2022.

 

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Proposed Fiscal Year 2023 State Budget

Illinois Governor J.B. Pritzker has proposed a Fiscal Year 2023 (FY23) general funds state budget that provides tax relief; makes additional investments in education, health, and public safety; and shores up state finances. It directly appropriates for FY23 a small portion of remaining federal COVID-19 relief funds received by the state for general fiscal recovery, but it leaves open the question of how to appropriate several billion dollars more of such relief.

The proposed operating budget for FY23, which begins on July 1st, totals around $44 billion. However, that is before a set of transfers out of the general funds. Those transfers, along with anticipated unspent appropriations, bring the total expenditures proposed for the next fiscal year to approximately $45.4 billion.

Source: Governor’s Office of Management and Budget

In addition to the proposed spending for FY23, the Governor is proposing additional, or supplemental, appropriations for the current fiscal year (FY22) that ends June 30th. Those supplemental appropriations total just under $3 billion and include $898 million to pay a backlog of state employee and retiree health insurance bills, $230 million to address an unfunded liability in the College Illinois! 529 Prepaid Tuition program, and an additional $68 million for public universities and community colleges.

The Governor also proposes transferring an additional $300 million in FY22 for the state pension funds and $600 million into the Budget Stabilization Fund (or what is often referenced as the state’s “rainy day” fund)[1]. Further proposed FY22 transfers revolve around the Governor’s proposed tax relief package, which he is calling the “Illinois Family Relief Plan”[2]. Between FY22 and FY23, these expenditures would total just over $1 billion. Included is:

  • A one-year freeze on the scheduled cost of living increase to the state’s motor fuel tax (saving consumers an estimated 2.2 cents per gallon). Estimated cost is $153 million.
  • A one-year suspension of the state’s sales tax on groceries, which is 1% on qualifying foods. Totaling $360 million, these funds actually go to local governments (municipalities or, in the case of unincorporated areas, counties). The Governor proposes an appropriation to local governments to make up for the loss.
  • A one-time property tax rebate to Illinois homeowners (beginning in July) up to $300 based on the taxpayers 2021 state income tax return. (The rebate applies only to those currently eligible for the 5% income tax credit for property taxes paid – which is for individuals with adjusted gross incomes of less than $250,000 or $500,000 for married filing jointly taxpayers). This rebate is estimated to cost the state $475 million.
  • A one-year waiver of license fees for frontline healthcare workers as well as liquor license fees for bars and restaurants. Estimated cost is $38 million.

While the state, Illinois local governments, state healthcare providers, and Illinois institutions of higher learning will receive an estimated total of $51.9 billion from the the six federal COVID-19 relief packages passed since March 2020, about $8.1 billion is for the state to use on COVID-19 related expenditures and replacement of revenue lost as a result of the pandemic[3].

The FY22 budget includes $2.8 billion of that amount for government expenditures in infrastructure, violence prevention, education, health care, housing and economic recovery programs. The state also reserved about $1.5 billion to replace lost revenues. Of the remaining amount, the FY23 budget proposes use of $235 million for violence prevention grants and $200 million for COVID-19 related responses by the Illinois Department of Human Services, Illinois Department of Corrections and the Illinois Emergency Management Agency. (Expenditure of the $8.1 billion must occur before December 21, 2024).

Starting from the $8.1 billion in federal funds the state received for pandemic related expenditures and revenue replacement, that leaves an unspecified balance of just under $3.4 billion. While not designating the funds for an expressed purpose, the Governor does note in his budget that to pay pandemic related unemployment benefits the state had to borrow funds for the U.S. Department of Labor for the state’s Unemployment Trust Fund. Those borrowed funds, which the state needs to repay, currently total $4.5 billion with interest accruing on the amount. The Governor notes his administration has begun meetings with legislators, business leaders, and labor leaders to find “the most appropriate solution for repaying the federal government.[4]”

Below are some of the programs specific to children. These do not include the entire range of state programs serving residents 18 and under.

Education

Among the notable education expenditures in the proposed FY23 budget are:

  • Increased funding for the state’s evidence-based school funding formula of $350 million (for a total of $7.9 billion). This formula was revised in 2017 with the goal of adding $3.5 billion into state school funding over the next ten years to help reduce inequities in school funding.
  • Appropriation of remaining federal education funds received as part of the COVID-19 relief legislative measures. Illinois received $7.87 billion in COVID-19 federal Elementary and Secondary School Relief funds -most of which flows directly to school districts with high low-income populations. The state has already invested $1.82 billion of those funds.
  • Increased funding for the early Childhood Block Grant of $54.4 million. According to the Governor’s budget book, this will allow the state to service an additional 7,100 children.
  • An additional $68 million for public universities and community colleges (on top of the increase for FY22 noted above).
  • An increase of $122 million to the Monetary Award Program, which assists Illinois residents with tuition and fees at Illinois colleges and universities (including community colleges). According to the Governor’s office, this will allow the state to increase the maximum grant award to 50% of the average cost of tuition and fees at an Illinois public university.

Department of Children and Family Services

Prior to the pandemic, the Illinois Department of Children and Family Services was working to meet the provisions of a federal consent decree on cases per worker and dealing with a surging caseload. The FY19 agency headcount was 2,758. With increases since then, the FY23 budget requests places the proposed funded headcount at 3,416 with $15.5 million proposed to hire an additional 360 staff.


Source: Department of Children and Family Services
Overall, the proposed agency budget is $253.8 million higher than the FY22 expected expenditures with the following measures included:

  • $87.1 million to reform the rate structure for private sector providers to address staffing shortages.
  • A 3% cost-of-living adjustment for foster caregivers. (The proposed budget also includes a cost-of-living adjustment for DCFS staff and union step increase.)
  • $25 million to increase the capacity for youth placement in the most clinically appropriate settings.
  • $7 million for a redesigned independent living program to better support youth transitioning out of DCFS care.


Source: Department of Children and Family Services

Department of Human Services

Compared to the current fiscal year, child care funding remains consistent with the Department of Human Services indicating the funding will support increasing provider rates (includes Center rates) of 3.5% effective July 1, 2022, and another 4.5% on December 1, 2022.

Source: Governor’s Office of Management and Budget

 

  • During the last two years, the state awarded more than $750 million in Child Care Restoration Grants and Child Care Workforce Bonuses to over 11,000 providers. The FY23 budget, appropriates another $300 in childcare funding to continue what it calls restoration efforts.
  • Funding for the state’s early intervention program remains level compared to FY22.
  • General revenue funding for homeless youth services increases slightly from $6.28 million to $6.4 million.

Health Care

As with other states, the pandemic has strained Illinois’ healthcare system. Yet, even before the pandemic, legislators and others recognized existing racial and ethnic disparities regarding infant mortality, diabetes, strokes, and other health conditions. In April of 2021, the Governor signed legislation encompassing health care reforms put forward by the Illinois Legislative Black Caucus. Among the measures was language that creates a certification for community health workers to act as liaisons between communities and health care/social service programs. The FY23 proposed budget includes $2.5 million for the program.

The budget also has the Department of Healthcare and Family Services reinvesting $180 million to “preserve and grow the healthcare workforce, with a focus on Medicaid providers and providers in underserved areas.”[5] It notes the funding would be for recruitment, staff bonuses, and continuing education trainings.

The legislature will take up the budget with a scheduled adjournment date of April 8th. With appropriation hearings already scheduled, Children’s Advocates for Change will be following these proceedings and providing updates on committee reviews and further proposals.

[1] The proposed budget than calls for transferring an additional $200 million above the required pension contributions for FY23.

[2] Proposed transfers include $425 million to fund property tax rebates and $285 million to fund to address the suspension of the sales tax on groceries.

[3] Unlike money the state received from the federal government for specific purposes such as health care, child care or housing assistance, there is (within the general framework) more discretion in the use of these funds awarded under the federal Coronavirus State Fiscal Recovery Fund.

[4] Proposed FY23 budget p. 58

[5] Governor’s proposed FY23 budget, p. 30

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Statement on Killing of DCFS worker

Our condolences to the family of Illinois Department of Children and Family Services worker Deidre Silas who was stabbed to death Tuesday during a visit to a home in Thayer, Illinois.

Every child deserves to be raised in a safe and loving environment. Those who visit children’s homes to ensure their safety have a special place in our society and deserve all the protections we can provide so that they can help protect our children. Our organizations work every day to see that children have the resources they need to be safe, healthy, and educated. That includes adequate resources to provide for the proper number of caseworkers, home visitors, and others who help put them on a path to a successful life.

We urge Governor J.B. Pritzker and members of the General Assembly to take whatever steps are necessary to guarantee the safety of our children and DCFS workers. We’re ready to work with our elected officials on all the proactive steps necessary to see that Illinois is the best place to raise a child.

Dr. Tasha Green Cruzat
President and Board Member
Children’s Advocates for Change

Dara Munson
President and CEO
Family Focus

Children’s Advocates for Change is an independent advocacy organization committed to the well-being of every Illinois child. We champion those policies and investments children need to be educated, healthy, and prosper.

Family Focus invests in strengthening families and their children in Chicago and NE Illinois, so they build social capital and achieve upward economic mobility through high-quality innovative programs and services, grounded in anti-racism and social justice.

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Welcome to Children’s Advocates for Change

The Illinois landscape is filled with organizations that in some fashion may touch on the life of a young child. Our mission is to tie together all those aspects and more to see that every child – regardless of that child’s race, ethnicity, or zip code – has the resources to succeed in life. That means high-quality health care, a high-quality education, shelter, and a safe and loving environment. It means that child’s parent or guardian has the necessary economic resources to put food on the table and clothes on that child’s back. It means that child has access to lead-free water and recreational opportunities.

We look at the “whole child” and we do so by looking at the facts: census data, other federal agency statistics, and state program participation rates. We look at how Illinois and our nation invest in our children. How much do our public bodies spend on children, and how do those agencies distribute the funds? Who has access to the services that public monies fund? When racial and ethnic disparities appear, either in the conditions faced by our children or services provided to them, we ask why and examine the necessary policy steps to remove any barriers or obstacles.

At heart, as our name implies, we are advocates for our children. Advocating for their needs. Advocating for the elimination of inequities faced by them. Advocating for a state and a country where all children thrive. That means always maintaining an independent voice for them to raise awareness about their conditions and to move our elected officials to pass the necessary appropriations and policies for our children.

We also raise that awareness by amplifying the voices of our youth. We collect and publish their stories. We train them in communication skills and help lead them to the data to become even more effective advocates.

We look to build the strongest organization possible for our children undeterred in its commitment to our children. We look to build an organization committed to racial and ethnic justice. We look to build an organization looking to uplift our poorest families and put every child on the path to success.

We ask for your help in that effort. Whether you are a current child advocate or looking to become one, join us today. If you have the financial resources, please contribute to our organization. Every dollar helps. Together, we will have a more powerful voice and one that can do great things for our children.

The Children’s Advocates for Change Team

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Children’s Advocates for Change is not affiliated, associated, authorized, endorsed by, or in any way connected with Voices for Illinois Children (“Voices”). Voices is an independent advocacy organization that is powered by YWCA Metropolitan Chicago.