by Michael J. Elliott and Joanne P. Elliott
Cook County recently announced that 2017 second installment tax bills have been mailed and will be due August 1, 2018. Here are the 3 main things you can expect and why:
1. Large tax increases as government takes a lot more from taxpayers. Cook County government bodies levied (took) $14,4 billion in property taxes in 2017. This was 5.1% higher than 2016 and much higher than recent prior years when levies increased 1% to 2%. In the meantime, inflation was only up 2.1%. That means government took a whole lot more from Cook County taxpayers: almost 2-1/2 times the rate of inflation. That’s a big part of the problem.
2. The magnitude of the tax increases are not the same across Cook County. The south suburbs will see significant tax increases in 2017 mostly because 2017 was their re-assessment year. The north suburbs will see modest increases as 2017 was not a re-assessment year for them. Chicago will see large tax increases even though 2017 was not their re-assessment year.
Why were Chicago’s increases so large? The City of Chicago and Chicago Public Schools intentionally increased their levies by $900 Million dollars over the last 3 years as part of a 4-year plan to shore up under-funded pensions. About $700 Million was levied in 2015 and 2016 and an additional $200 Million in 2017. Tax bills in Chicago in 2017 have been inflated by almost 17% to pay for these pension costs.
3. The Illinois Legislature dramatically increased homeowner exemptions reducing taxes for qualifying homeowners and raising taxes for everyone else.
The general homeowner exemption was increased 42%
The senior exemption was increased 60%
The income eligibility requirement for the Senior Freeze increased 18%, allowing more people to benefit from that exemption.
When exemptions are increased, non-exempt taxpayers pay more as they subsidize the savings realized by exempt homeowners. This legislation quietly caused a tax shift from homeowners to non-exempt taxpayers such as commercial and industrial property owners, apartment building owners and homeowners who do not receive a homeowner exemption.
How much more will non-exempt taxpayers pay? In Chicago, tax bills for non-exempt property owners are going to be about 2% higher because of this tax shift. In the suburbs, the increases are likely to be in the 2% to 3% range.
26,000 Cook County taxpayers will pay no tax at all. Cook County reports that over 26,000 Cook County homeowners will pay no tax at all in 2017 because of homeowner exemptions. In the meantime, non-exempt property owners are paying more to subsidize them.
Some good news
There is some good news for homeowners. As reported in Crain’s Chicago Business, Chicago’s cost of living, overall quality of life and home affordability remain among the best of any major U.S. city. Cook County homebuyers get more home for less money than other major U.S. cities. Even when higher taxes are factored in, overall cost of ownership is relatively low because Cook County home prices are affordable.
What can you do?
Cook County has a tradition of high government spending and using political gimmicks to mask the pain of high property taxes. These gimmicks often involve shifting taxes from people with much voting clout (homeowners) to people with less clout (commercial property owners and others) and were deployed once again this year. Gimmickry does nothing to solve the underlying spending problems and only puts off the day of reckoning, leaving taxpayers frustrated.
We believe you should understand how your tax dollars are spent and how the tax appeal process works. We also believe you should not pay more than your fair share of property taxes.
If you can’t rely on government to lower your taxes through reduced spending, you can reduce your taxes through continued, aggressive tax appeals. We’re here to help you.