- Associated Press - Thursday, April 21, 2016

SPRINGFIELD, Ill. (AP) - An error by the Illinois Department of Revenue means hundreds of local taxing districts, which receive disbursements from a personal property-tax replacement fund, must repay an estimated $168 million to the state.

The misallocation was identified when the department implemented its new general ledger system, according to a statement from the department. The misallocation began in 2014 under former Gov. Pat Quinn’s administration following an amendment to the Illinois Income Tax Act, the department said.

About 6,500 Illinois taxing districts are impacted by the misallocation. Roughly 5,300 of those districts received overpayment amounts totaling less than $10,000. But 10 of them, including the city of Chicago and its school district, were overpaid $1 million or more.

In the Quad Cities area, schools, cities, townships and other governmental units were overpaid by more than $4.6 million total.

In Springfield, the school district was overpaid by $804,530, the largest amount of personal property replacement tax funds, and the city itself was overpaid by $352,914, according to the Department of Revenue.

Springfield School District Superintendent Jennifer Gill said Wednesday that she’s not too worried about having to pay back the money over time, but she’s frustrated that it took the state two years to catch the mistake. She suggested that the school district’s funding loss should equal an increase in general state aid, because the two revenue sources “balance each other out.”

“It’s just ridiculous that we have to think about it in the terms that we’re not being adequately funded to begin with,” Gill said.

Department director Connie Beard said in the statement that the department will work with the effected districts to recover the money.

“We are certainly sensitive to the impact recouping these funds will have on some of our taxing districts,” she said. “We will be working with the impacted taxing districts to establish a plan to recapture the funds over an extended period of time.”

A repayment plan has yet to be established, but taxing districts likely will be asked for smaller reductions in tax replacement allocations over a period of years, Department of Revenue spokesman Terry Horstman said Wednesday.

The department has begun contacting the taxing districts, as well as organizations such as the Illinois Municipal League and the Illinois County Treasurers’ Association, Horstman said. The Auditor General’s Office also has been notified of the mistake, Beard said in the statement.

Personal property replacement taxes are revenues collected by the state and paid to municipalities to replace money lost by municipalities after their powers to impose personal property taxes on corporations, partnerships and other business entities was abolished in 1970.

The total amount of personal property-tax replacement funds distributed to taxing districts was $1.37 billion in 2014 and $1.43 billion in 2015.


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