The fund all Illinois real estate licensees pay into for industry regulation has been targeted by state lawmakers seeking a short-term fix to the state’s budget crisis.
The Illinois House voted 69-48 on Tuesday to pass a broad measure that takes $1.3 billion from a multitude of special funds including the Real Estate License Administration Fund. The measure was part of a package that seeks to resolve an immediate $1.6 billion budget deficit for the current fiscal year.
The fund had about $35 million. Under HB318, about 87 percent of the money, or $30 million, would be used to help close the budget gap for the current fiscal year.
The measure passed in the House on Tuesday was substantially more severe than a Senate bill that came out of committee. The Senate bill called for $7 million to be taken out of the fund. That bill is still pending.
The money paid by licensees is the sole source for administration and regulation of real estate laws in the state.
“Taking these funds greatly minimizes the opportunity for industry regulation and more importantly, consumer protection,” said Gary L. Clayton, CEO of the Illinois Association of REALTORS®
Clayton said taking the real estate funds doesn’t solve a much deeper issue of addressing systemic budget shortfalls faced by the state. While IAR’s members understand the state’s budget dilemma, he said taking the funds is a one-time solution to a much larger problem.
The real estate fund is at the core of the Real Estate License Act which governs how property transactions are handled in Illinois.
“If the money is diverted for other uses, it leaves a very open question as to how this vital part of the state’s economy will be adequately policed for consumers,” Clayton said. “The fund has a very specific purpose, and that’s to make sure the real estate industry is operated in the most professional manner possible. That benefits everyone.”
The fund has grown to $35 million because the state has not appropriated the staffing to expand services and regulation, as was the intent of the Real Estate License Act, Clayton said.
IAR has long pushed state officials to use the fund to better regulate the industry.