35 Comments - VanillaMan - Friday, Jun 5, 15 @ 11:40 am: Coopting. Not just for Rauner anymore. - Nick Naylor - Friday, Jun 5, 15 @ 11:41 am: And the games played on. - Norseman - Friday, Jun 5, 15 @ 11:41 am: Got to give the folks something to do. - Oswego Willy - Friday, Jun 5, 15 @ 11:42 am: Same “class”, different teacher, different classroom. - Not it - Friday, Jun 5, 15 @ 11:56 am: I have hope that the President is more sincere then the Speaker and this isn’t a game. Hope. - Precinct Captain - Friday, Jun 5, 15 @ 11:57 am: Riveting stuff. - Juvenal - Friday, Jun 5, 15 @ 12:01 pm: N-KB6ch - Juvenal - Friday, Jun 5, 15 @ 12:05 pm: Not it: Sincere, yes. I sincerely doubt Rauner will like it though. I expect the Andy Manar show. How the Rauner property tax “freeze” will actually freeze in the lowest property tax rates for the richest Illinoisans while exorbitant property rates for middle class families and seniors, particularly downstate, will be frozen into place. - Bluefish - Friday, Jun 5, 15 @ 12:07 pm: If the goal is to address high property taxes, we need to get serious about state education funding. While the U.S. average in 2013 was about 45% state and 45% local (the rest being federal), the state/local ratio in Indiana was 63%/29%, 45%/48% in Wisconsin, 52%/41% in Iowa, 57%/34% in Michigan but a ridiculously low 35%/57% in Illinois. Fix that and property taxes won’t be such an issue. - walker - Friday, Jun 5, 15 @ 12:09 pm: Maybe it will flesh out the extent that local governments and boards, both Dems and Republicans, really don’t want this. Or maybe another waste of time. - DuPage - Friday, Jun 5, 15 @ 12:15 pm: Rauner wouldn’t seriously negotiate in committee, so Cullerton calls the “Committee of the Whole” hopefully with live coverage. Let’s see what each Senator has to say. - Team Sleep - Friday, Jun 5, 15 @ 12:19 pm: Things to expect: Senator Righter will ask at least 100 pointed questions. Senator Haine will give everyone a lecture on the history or property taxes. Senator McCarter’s voice will roller coaster from a whisper to a loud shout in the middle of a sentence. Senator Raoul will start to make a good point and then stop for 2 minutes. So pretty much the same. - sideline watcher - Friday, Jun 5, 15 @ 12:21 pm: It is a fact that nearly 70% of a property tax bill is what goes to school. It is a fact that there are wildly different rates and disparities across the state. It is a fact that you can’t freeze property tax rates and not effect the money that goes to schools districts. If we could just agree on those facts whether you are a Democrat or a Republican, then maybe we can slowly build some progress into this. I think this could be a good thing. But I”m a hopeless romantic. Lol! I want so badly for a group of rank and file to rise to the forefront and help “unstick” the Leaders. - Mr. 17.5 - Friday, Jun 5, 15 @ 12:27 pm: Team Sleep is spot on. - Ron Burgundy - Friday, Jun 5, 15 @ 12:27 pm: That’s Committee of the Hole, without the W. - X-prof - Friday, Jun 5, 15 @ 12:28 pm: == Juvenal== Right. == Bluefish == Also right. The fix should start with the income tax. Income tax too low and flat ==> over reliance on local sales and property taxes ==> effective tax rate on top 1% is 4.6% vs. 13.2% on bottom 20%. - Not Again - Friday, Jun 5, 15 @ 12:29 pm: I am with Team Sleep. Only way this gets interesting is if Goldberg shows up. - Anonymous - Friday, Jun 5, 15 @ 12:36 pm: We’re a service based economy with a tax structure that doesn’t match. Freeze property taxes,expand the service tax base, and both local and State governments will benefit - illinifan - Friday, Jun 5, 15 @ 12:45 pm: bluefish you are right to say fix the ratio. We have been trying in Illinois to do this for a long time. As X Prof says we need to fix the income tax rate…so let’s change the state tax, implement a service tax and commit through legislation that this money goes to education (not a new program). In the legislation set hard benchmarks to begin to reduce property taxes as state increases the amount paid to schools (they can’t keep what they have through the property tax and also increase state funding). Put someone who understands all of this in charge to monitor it is happening correctly. Okay I had a chance to dream for a moment. Back to reality nothing will change. - Keyser Soze - Friday, Jun 5, 15 @ 12:58 pm: Are these folks not aware that the public is now (suddenly)paying attention? - Levois - Friday, Jun 5, 15 @ 1:07 pm: soooooo, this seems like a frequent tactic downstate. committees of the whole. - Juvenal - Friday, Jun 5, 15 @ 1:11 pm: Keyser: Democrats are thrilled that the public is paying attention. Why do you think Rauner wanted negotiations behind closed doors and killed his own dog-and-pony show roll calls at the local level? It is the legislative version of War Games. The only way to convince Rauner to stop playing games with the budget is to convince him that nobody wins, and Democrats have to be willing to play out as many scenarios as it takes. - Judgment Day - Friday, Jun 5, 15 @ 1:12 pm: “How the Rauner property tax “freeze” will actually freeze in the lowest property tax rates for the richest Illinoisans while exorbitant property rates for middle class families and seniors, particularly downstate, will be frozen into place.” ————- Huh? No, don’t think so. There are few, if any ‘low’ property tax rates anywhere outside of the City of Chicago. In fact, if there is a “property tax freeze”, the biggest beneficiaries will be property owners in the City of Chicago. That ‘freeze’ might be the only way to actually protect real estate values inside the City of Chicago. Here’s why: There’s a Nuveen Investments study (previously cited) that sees as much as a 48.8% increase in property taxes on the average $400k property located in the City of Chicago. Unfortunately, it looks to be a pretty solid piece of work. That estimated increase translated into an annual property tax increase of $3,355. If you capitalize the annual tax increase at 8.5%, that means a potential loss in value of $39,470, or almost 10% of that $400k property. You increase the amount of money having to be paid out annually by the property owner for RE taxes, you have a trend in decreasing property value as to what people can afford to pay. You really want to go there? If you are that confident that property values can withstand such a hit - go for it. But you better be right - you are unlikely to get a ‘do over’ card on that type of shock to the RE market. Also, realize that most real estate located outside the City of Chicago has property tax rates at or in excess of $9.00 per $100 of taxable value. That means those property owners are paying an effective tax rate of 3% of the value of their property each year in RE taxes. So for everybody who owns property in the City of Chicago, congratulations, you are ‘wealthy’ compared to the rest of us. Better get ready to (potentially) pay substantially more in RE taxes IF they don’t ‘freeze’ property taxes. - PTR - Friday, Jun 5, 15 @ 1:34 pm: How about a freeze for any taxing body that has more than 50 percent of their annual operating budget in cash reserve? - Marcus Agrippa - Friday, Jun 5, 15 @ 1:48 pm: Judgment- The Nuveen paper makes the calculation of what the tax would be if all Chicago pension payments were made at the 100% amount. It said nothing about declining property values. I thought values were set by what a buyer was willing to pay in an open market. The biggest factor driving down prices were foreclosures and a bunch of bank owned properties coming on the market. We need better ways to fund education. Also we should consider a new ramp for payment of pensions in conjunction with a constitutional amendment requiring full funding to keep the legislators hands off the money. - titan - Friday, Jun 5, 15 @ 1:48 pm: @ Judgement Day +++There’s a Nuveen Investments study (previously cited) that sees as much as a 48.8% increase in property taxes on the average $400k property located in the City of Chicago. Unfortunately, it looks to be a pretty solid piece of work. That estimated increase translated into an annual property tax increase of $3,355. If you capitalize the annual tax increase at 8.5%, that means a potential loss in value of $39,470, or almost 10% of that $400k property. +++ A $400k home in the middle of DuPage County would have property tax bill more than double that Chicago residence. - not so simple - Friday, Jun 5, 15 @ 2:11 pm: A tax that almost no one understands but everyone hates. Not a good recipe for enlightening discussion. Capitalization of property taxes into re-sale values is one big issue. Property taxes as a progressive form of taxation is another. Wealth tax versus ability to pay tax is a third. At this point, I fear we have lost every member of the GA and will descend into grandstanding. Something needs to be done, but to whom and for what benefit? - Juvenal - Friday, Jun 5, 15 @ 2:13 pm: Judgement Day: The Governor and Ken Griffin are both property owners in the City of Chicago. Both stand to benefit if property tax rates are frozen in Chicago. The property tax freeze also gives Rauner extra leverage to push for his sales tax increase, which is precisely what Brownback has engineered in Kansas. Lower the income taxes, to benefit the wealthiest folks, and raise the sales tax, the most regressive tax there is. Rauner has said over and over that he favors consumption taxes, and raising the sales tax may be his ultimate goal. - Mama - Friday, Jun 5, 15 @ 2:23 pm: A property tax freeze will hurt the local schools & local governments. There is no good reason to pass a property tax freeze. - Anonymous - Friday, Jun 5, 15 @ 2:26 pm: ===but a ridiculously low 35%/57% in Illinois. Fix that and property taxes won’t be such an issue.=== Lets say that the State of Illinois ‘fixes’ the property tax problem by moving the education funding ratio to the national average of 45%/45%. It is true that local property taxes would go down. But the state would then need to increase some type of taxes such as the income tax or the sales taxes. As I am an ‘average’ tax payer I would see a reduction in one tax (property tax) and an increase in another tax (say income tax or sales tax). In the end I would be paying the same total amount under the current tax scheme only it would be collected in a different way. The only way I see that I can get ahead is if all property owners are exempted from the tax (say income tax or sales tax) that the state would need to increase to pay more to fund education. In what is called a ‘zero sum game’ I can pay less only if some else pays more. - Judgment Day - Friday, Jun 5, 15 @ 2:34 pm: “The Nuveen paper makes the calculation of what the tax would be if all Chicago pension payments were made at the 100% amount. It said nothing about declining property values. I thought values were set by what a buyer was willing to pay in an open market. The biggest factor driving down prices were foreclosures and a bunch of bank owned properties coming on the market.” ———- Marcus Agrippa, when you are buying (assuming you are financing your purchase), you have to get qualified. In effect, they figure out how much you can afford. If the RE taxes go up by and average of $3355 a year, that’s right at $280 a month increase. If housing expenses go up, that means you can only afford “less house”. Or come up with more cash….. If that’s across the board increases in the City of Chicago marketplace, guess what? Prices are either going down, or there’s going to be a glut of unsold homes (until prices adjust), or all the banks are going to change their financing/qualification criteria (good luck with that last one). Now if you are all cash RE purchases like what is happening in certain areas of CA (lot of hot Asian money coming in), then you are golden. That doesn’t seem to be happening here. Nuveen didn’t talk about decreasing RE values from higher property taxes. That’s my quick analysis if those type of property taxes increase occur. But realize, the money has to come from someplace. As an aside, you mentioned about foreclosures. They’re still happening, and there’s still this glut of properties out there that are working their way through the system. There’s another little issue - most foreclosure sales are being included in the IL DOR sales ratio studies (have been since 2011, IIRC). Didn’t use to be included. Most of those sales are having a result of little, if any (maybe negative) increase in the annual sales ratio studies, which assessment levels directly affect the state assigned equalization factors. That’s having a lot of consequences - for example, if you are under tax cap, you can see your taxable value staying the same, but your tax rate increases, and your overall tax bill increases. But your property is not any more value. The math is very complex, and extremely confusing. But bottom line, it means more money out of your pocket. - illinifan - Friday, Jun 5, 15 @ 2:34 pm: If money shifts to sales tax then it spreads the money out over all persons in the state thus giving a broader base of persons to get the funds. Property tax only collects from home owners so the pool of payers is fewer. I would think that the offset on property taxes could be more than what comes out of our pocket as consumers. Any data on this? - walker - Friday, Jun 5, 15 @ 2:38 pm: Maybe Education Head Purvis should testify on behalf of Illinois school districts? Unlikely. If property taxes are driven down over time, that could drain enough resources from public schools that private charter schools will prosper, - downstate government - Friday, Jun 5, 15 @ 2:53 pm: I thought the Guv want to freeze levies not rates. This will cause local governments that have been stewards and have cut levies to less property taxes currently finance problems in the future. The problem no one really understands the Illinois Property Tax System. You can freeze the rates but the districts can still get more dollars if the assess value goes up. In case of many Downstate counties the assess vale is going down causing rates to go up or max out. Freezing property taxes does not help or hurt the state budget but could destroy local governments. - Henry Moon - Friday, Jun 5, 15 @ 3:34 pm: This may be a really dumb question, but what is fair about paying taxes on an assessed value of a home after you buy it? You’re paying increased taxes per a complex formula on the potential selling price, a price and value you don’t receive if you don’t sell. People don’t pay taxes on a painting that increases in value as it hangs on the wall. Sorry, comments for this post are now closed.