MORRIS – A possible rewrite of Illinois tax code could provide Grundy County a chance to address the often-begrudged machinery and equipment tax, state Sen. Sue Rezin said this week.
Rezin, R-Morris, told the Grundy County Tax Committee on Wednesday that the Illinois tax code could be revamped within the next five years, which would give Grundy County an opportunity to possibly eliminate the machinery tax.
“If that window opens, then that might be the window of opportunity for Grundy County if they want to look at and address the M&E tax,” Rezin told the committee.
Grundy is the only county in Illinois that taxes industrial machinery and equipment as real property. All other counties classify heavy machinery and equipment as personal property, which is not taxed in Illinois.
The unique tax structure has deterred some companies from building new industrial plants within Grundy County, said Nancy Norton Ammer, CEO of the Grundy Economic Development Council.
“Don’t think you aren’t losing projects because of our method of assessment, because I believe that you are,” Ammer told the committee Wednesday.
“The people that are already here, they’ve built [the M&E tax] into their model because they have to,” she continued.
With the M&E tax, Grundy is not eligible for the state’s Personal Property Replacement Tax fund. The PPRT mitigates the loss of business personal property tax revenues for the remaining 101 counties in the state that do not tax a corporation’s personal property.
The PPRT fund is divided among the 101 counties and issued in quarterly payments from the state.
If the county wanted to get rid of the M&E tax, it would have to join the PPRT, meaning every other county’s share of the fund would decrease proportionally.
“We would have to ask everyone in that fund to take less, and it is my experience in Springfield that it would be a resounding no and would never make it out of assignments. Period. So that, in my opinion, is really not an option,” Rezin said.
With few options, a rewrite of the tax codes could provide a limited opportunity for Grundy to address the M&E tax, Rezin said.
“It will be a monumental task, but we’re willing to do it,” Rezin said.
In the meantime, the M&E tax is still generating about $37 million in tax revenue for the county, thanks in large part to Dresden, which accounts for $15 million in M&E revenue.
The county created Economic Development Project Areas as a work-around for the M&E tax. Through the EDPA zones, the county can offer large tax breaks to new companies to help offset the M&E tax.
The committee discussed possibly holding a meeting to start working on a M&E plan moving forward, but no official date was set.
“From the perspective of this group or the County Board, I think it’s worth having a discussion,” Rezin said.