Time runs out on tax relief for Cook County homeowners

A complicated Cook County property assessment cap enacted in 2004 has helped thousands of homeowners to keep their property taxes in check. But after a stalled attempt in the Illinois House to renew the cap, residents could see their property taxes skyrocket in 2007.

The 7 percent cap, which expires this year, was proposed by Cook County Assessor Jim Houlihan in 2003 in response to rapidly rising residential property values that were forcing some residents who could no longer afford their property taxes to sell their homes and move out of the area.

The legislation was aimed at ensuring that homeowners whose taxable home values rose by more than 7 percent were allowed to take a larger tax exemption – up to $20,000, depending on the prior value of the home – to try to keep the homes’ assessed values from rising more than 7 percent a year.

The renewal legislation that was proposed this year would allow for an even higher exemption – up to $60,000 – in response to assertions that the original bill did not go far enough toward countering the city’s property value surge of recent years. The measure passed in the Illinois Senate last spring but failed in the Illinois House by a vote of 37-69, with six votes of present.

“Since 1993 my assessments on my property alone have gone up over 400 percent,” said Barb Head, a Lakeview resident and president of the Tax Reform Action Coalition, an organization that has been lobbying hard for the 7 percent cap.

And Head is not alone. Residential reassessments in the City of Chicago increased a median of 41 percent this year, according to Maura Kownacki, the spokesperson for Houlihan.

Head says she currently pays about $9,000 in property taxes, but with the 2006 reassessment she will be forced to pay about $14,000 in taxes next year. “I have no idea where I’m getting the money from,” she said.

Houlihan’s office reassesses property on three-year cycles, and Chicago was due in 2006. The North suburbs are scheduled for 2007 and the South suburbs for 2008.

Advocates of the 7 percent cap are hoping the House will revisit the bill in its 2007 session – in time for the legislation to apply to 2007 property tax bills.

“The assessor feels it’s really critical to get this renewed until we can have long-term reform of the property tax system itself,” Kownacki said.

And long-term reform is exactly what many business organizations say is needed instead of the cap. Business owners often cite a study of the 7 percent cap done by the University of Illinois at Chicago in March that found, among other things, that the cap tended to shift the tax burden from residents to businesses through increases in commercial property taxes.

“We have been consistently opposed to the 7 percent as a strategy that is actually only a band-aid and even exacerbates a system that is flawed,” said MarySue Barrett, president of the Metropolitan Planning Council.

Barrett and many others believe that Illinois needs a comprehensive tax restructuring and that the city depends far too much on property tax money, especially for education.

Barrett said Illinois ranks 47 in the nation for educational funding. “I think there is agreement that that state does not do its part,” she said. “Illinois’ share of [educational] support should be at 50 percent or higher, instead of 30 percent, where it is now.”

The Chicagoland Chamber of Commerce has also aggressively opposed the 7 percent cap as a measure that hurts businesses, but a coalition of 12 smaller Chicago chambers takes a different view.

“Most of our neighborhoods are reliant on local shoppers – they were built that way on mom and pop type stores,” said Maureen Martino, executive director of the East Lakeview Chamber of Commerce.

“We have to understand that the people shopping in our area are the residents. And if they don’t have disposable income, they’re not going to shop in our stores our go to our movie theaters.”

Martino does believe that businesses are suffering under the assessment cap, however, and would like to see the new legislation include an assessment cap for commercial property taxes as well.

“We do know that we have to fight against taxes that go towards commercial properties,” she said, “because what the owners of the buildings will do is drive up the prices for the leasers, which will ultimately drive small-business owners out.”

But Martino understands that the money has to come from somewhere.

“Either you get the money from this pocket, or you get it from that pocket,” she said. “The budget’s not set realistically, and that’s something that’s going to take more than [April’s House session] to figure out.”

Kownacki does not believe that businesses are necessarily taking an unfair hit under the 7 percent cap. She says that the 2003 legislation was merely correcting a tax burden shift the county was experiencing.

“In 1997, residential properties generated a little more than one-third of the overall tax burden while commercial properties accounted for about half of all property taxes paid,” Kownacki said. “In 2003, figures had nearly reversed with homeowners accounting for approximately half of the property tax take.”

While debate continues as to whether the 7 percent cap unfairly burdens businesses or corrects an unfairly growing burden on homeowners, or whether the law even ended up benefiting most residents in the first place—it seems clear that some kind of relief is needed soon.

“We’ve received assessment notices from people who have gotten 70, 80, 104 percent increases this year,” Head said.