Illinois.

The evidence is not conclusive that suburban Chicago governments rushed to the bond market earlier this year to avoid a new law that limits the ability of those issuers to raise revenues and sell bonds, a research arm of the Illinois General Assembly reported last week.

The General Assembly in July passed a law that limits annual property tax collection increases by non-home-rule governments in DuPage, Kane, Lake, McHenry, and Will counties to 5% or the rate of inflation, whichever is less. The law -- which took effect Oct. 1 -- also requires voter approval for any new bond issues back directly or indirectly by property taxes.

Public finance officials in the state have said they noticed a marked increase in the number of bond issues by the affected governments prior to the Oct. 1 deadline, leading to speculation that those issuers were attempting to avoid the new law's restrictions on bond sales. Published reports by Chicago newspapers in recent weeks also have described a "bond rush" by the suburban governments.

Those reports led the legislature's Economic and Fiscal Commission to research the issue. In the study released last week, the commission found an increased in the number of bond issues by those governments in the first nine months of this year, but said it could not necessarily attribute the increase to the tax cap law.

William Hall, the commission's executive director, said bond issues by suburban governments have been on the increase for at least three years, long before the property tax cap was even considered.

The study found local governments covered by the tax cap law issued $772.3 million of bonds from Jan. 1 until the law took effect Oct. 1, an increase of 39% from the $555.8 million of bonds those governments issued in all of 1990.

But the study also reported that bond sales by the governments had been increasing steadily in recent years. Last year's $555.8 million of issues, for example, compares with $383.3 million of sales in 1988.

Mr. Hall said an increased demand for services in the suburbs and attractive interest rates could account for the increase in bond issues.

The study was based on data derived from bond sale notices published in The Bond Buyer between Jan. 1, 1988 and Oct. 14, 1991.

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