Latest Post | Last 10 Posts | Archives
Previous Post: Big box blowback
Next Post: Mo’ Money
Posted in:
Almost every homeowner loved the skyrocketing real estate values in Chicago - until the new assessments started rolling in.
Not even 15 minutes into the workshop on property taxes, a man in the back of the room could contain himself no longer. “We cannot continue to pay at this rate,†he proclaimed, his voice cracking as he interrupted a local alderman’s opening remarks.More than 300 north-siders were crammed into the June 20 meeting sponsored by Cook County assessor James Houlihan. “We need change,†a woman exclaimed. “Yoo-hoo? Is anyone listening?â€
Taxpayer discontent has been brewing since April, when the assessor’s office began sending out new north-side property assessments for the next threeyear period. “The pitchforks are out, the peasants are restless,†cracked one state rep. “I sense a revolt.â€
How much of a revolt may depend on the sophistication of the peasantry. Assessments on the north side are up as much as 50 percent.
The north-side revulsion has not escaped Mayor Daley’s notice.
Chicago area homeowners could see their property tax bills “more than double” next year unless the Illinois General Assembly renews the 7 percent cap on annual assessment increases, Mayor Daley and Cook County Assessor Jim Houlihan warned Wednesday. […]The state Senate voted last spring to renew the 7 percent cap. But the Madigan-led House voted it down after a state study found the cap shifted the tax burden from homeowners to businesses, landlords, renters and “hundreds of thousands of homeowners who are paying as much as 10 percent more.”
Daley and Houlihan have long disputed those findings, and now they’re sounding the alarm. Unless the cap is extended, property taxes will more than double for some homeowners next year when tax bills will reflect the reassessment now under way.
I’ll be curious to see if Topinka has any property tax relief in her yet-to-be announced education funding plan. The governor skipped over the issue in his school funding proposal.
That Topinka plan, by the way, was supposed to be released last month, but is still under refinement, according to the campaign. And the governor’s lottery sales plan? It’s kinda faded into the distance, hasn’t it?
posted by Rich Miller
Thursday, Aug 3, 06 @ 7:00 am
Sorry, comments are closed at this time.
Previous Post: Big box blowback
Next Post: Mo’ Money
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
How else are we going to pay for Millenium Park, Northerly Island, bailing out the CTA pension program, bailing out the Chicago teachers pension program, renovating O’Hare, the 2016 Olympic games (and every other fat consturction contract that is need to keep ‘the machine’ from falling apart, for that matter) and offset falling revenues from the trade show industry in an environment of steadily climbing interest rates?
The monster we created needs to be fed. And they can only sell so many rides on the Navy Pier ferris wheel, you know….
Comment by Roberto Thursday, Aug 3, 06 @ 7:21 am
Reading about the property taxes in Chicago brought back memories for me albeit not pleasant ones. However, taxes are the price one pays for a civilized society. After all, think of all the bums who’d be out on the street panhandling if Mayor Daley didn’t take care of his friends giving them jobs and sweetheart contracts. Plus, it costs big bucks to transform downtown and the near environs into areas friendly for rich yuppies and dinks and occasional tourists.
Comment by David P. Graf Thursday, Aug 3, 06 @ 7:28 am
if JBT wants to appeal to folks in Chitown who want another reason to vote againt Vladgo, property tax relief is it.
Would JBT have the testicular (ovular?) virility to offer a sales tax increase in exchange for property tax relief? This has appeal to the middle class voters she needs to target.
Comment by Ravenswood Right Winger Thursday, Aug 3, 06 @ 8:44 am
Doubling of assessments will not lead to doubling of tax bills, unless levies double. And they won’t - real and voluntary tax caps prevents that. It is reasonable for unsophisticated homeowners to fear that - it is lying demagoguery for the Mayor and Assessor Houlihan to say it. Doubling of assessments probably WILL result in some tax increase, but nowhere near doubling. And anything that shifts that taxes away from those whose assessments went up the most will shift the taxes to those whose assessments went up the least. Spare the rich to soak the poor. Great policy, Mayor!
Comment by Anon Thursday, Aug 3, 06 @ 8:58 am
The property tax issue is a direct product of our messed up funding of schools as well as the TIF machine that the Mayor has created. The Mayor needs these tax dollars to keep coming in, his statements like yesterday’s are just for show. At least the Speaker is honest about trying to keep this from passing, regardless of what it is doing to his own voters.
Comment by Anonymous Thursday, Aug 3, 06 @ 9:11 am
Again, nobody is thinking over there in JBT’s campaign. She needs to win the suburbs to win the race. And tax reform is a major issue for the
Cook and outlying suburbs, an issue which will not be resolved without major, permanent, reduction in the suburban property tax burden.
Simply raising our income taxes with vague promises to lower property taxes isn’t good enough, and unfortunately JBT has already aligned herself with the income tax increase crowd without presenting a plan for permanent (that is, not just for a few years) property tax
reduction.
So, in the absence of a clear stance on this issue, it looks like JBT is for increasing our income taxes while allowing our property taxes to continue to rise as well.
No wonder Blago is winning in the polls.
Comment by Cassandra Thursday, Aug 3, 06 @ 9:17 am
I’m always amazed that reporters so eagerly swallow this “tax will double” BS. PTELL (that’s Property Tax Extension Limitation Law - PA 93-689 - for reporters and posters who don’t do research and that Chicago has voluntarily adopted) would prevent that from happening.
If you limit the levy, rising assessments means the limited growth levy is extended across a larger total assessment which results in a lower tax rate and a lower proportionate share of actual taxes. Taxes may go up for some higher assessments, but not in the same proportion. In fact, in some cases, where assessments go up less than the levy % increase, the lower rate means actual taxes owed may go down.
I urge reporters to take the time to review the statute before quoting Jim “Chicken Little” Houlihan again on this subject. Here is the statute number for the research challenged:
35 ILCS 200/Art. 18
Division 5. Property Tax Extension Limitation Law
Also, the Illinois Department of Revenue has extensive PTELL background information available on their website: http://www.revenue.state.il.us/LocalGovernment/PropertyTax/ptell.htm
Comment by Anon sequitur Thursday, Aug 3, 06 @ 9:33 am
P.S. For the cynics among us, Jim “Chicken Little” Houlihan is using the 7% law as a clever ruse to draw attention away from his efforts to raise residential assessments up to their proper level. Over the years, Cook County assessors have intentionally underassessed homes (voters) and overassessed businesses (non-voters). I’ll begrudgingly give Houlihan credit for trying to change that.
Comment by Anon sequitur Thursday, Aug 3, 06 @ 9:40 am
If Daley thinks he can get re-elected on a platform of skyrocketing taxes, he is sorely mistaken.
Comment by Yellow Dog Democrat Thursday, Aug 3, 06 @ 9:46 am
So Topinka wants to be governor, won the primary, wants to win the general, and has no plan for education?! I know she has no money but there must be someone in that campaign with some common sense.
Comment by HANKSTER Thursday, Aug 3, 06 @ 10:23 am
My $1,800 property tax in rural Illinois looks better everyday.
Comment by zatoichi Thursday, Aug 3, 06 @ 10:49 am
The real question is what is Speaker Mike Madigan, father of future Governor Lisa Madigan, up to? Is he sticking it to Houlihan because he’s not getting as many favorable tax cuts for his law firm’s property tax appeal clients? Is he making life uncomfortable for Daley in order to leverage something from him?
Madigan’s motives aren’t always discernible on their face, but they are always about his personal self-interest (or now his daughter’s political interests, short and long-term.). So the whole tax debate is a phony one. Everyone who wants to avoid getting whacked by the higher taxes on higher assessments should be ignore the debate about what’s in the public’s interest, and start figuring out what’s in the Madigan family’s interest.
Comment by Horace Thursday, Aug 3, 06 @ 11:05 am
Just another reason I’m glad I live in DuPage. My property tax is high but at least it is stable. And no Todd Stroger to spend it.
Comment by Bluefish Thursday, Aug 3, 06 @ 11:09 am
The only way to compare taxes is to use a tool called an “effective tax rate.”
To discover your effective tax rate, divide your tax bill by what your home is worth.
If enough people throughout Illinois did that, you would have an idea of the burden of the proportionate burden of real estate taxes in various parts of the state.
Statistics from the Illinois Department of Revenue show that the tax burden of homeowners in Chicago is among the lowest in the state–about 1%, the last time I looked.
My effective tax rate in Lakewood (a suburb of Crystal Lake) is about 2%.
Comment by Cal Skinner Thursday, Aug 3, 06 @ 11:48 am
If the 7% cap lapses, then there will be a sharp rise in Chicago property taxes next year. Probably not double, but 50% increases could happen. Such steep hikes would be a hardship on moderate income homeowners who don’t qualify for the senior freeze.
Comment by fightforjustice Thursday, Aug 3, 06 @ 11:50 am
I am pleasantly surprised that you are all catching on.
Did you observe what the Multiplier has increased to on your current tax bikks? The State’s job is to conform the County’s AV to the State level of 33 1/3.
Calculators at the ready? If the homes are supposed to be at 16% and the multiplier is 2.73 that comes out to be 43.7% true ratio and not 33.3%. Or perhaps the multiplier rose because the County is still assessing residential property at something like 12%, not 16%.
The proposed assessments in the City are high because Houlihan must put back on the valuation rolls what the seven percent solution took off.
And, of course, he wants the noise to reach the legislature to extend the seven percent solution anew. That will get him off the hook for the time being once again — and the Mayor and the toddler as well.
It will also raise the drowning waters around many of the businesses as well.
Nobody appears to be telling the full truth to the public.
Comment by Truthful James Thursday, Aug 3, 06 @ 12:32 pm
Nobody is telling the full truth to the public. As Jack Nicholson said: “Truth, you can’t handle the truth.”
Comment by Truthful James Thursday, Aug 3, 06 @ 12:34 pm
The problem with the Skinner ETR formula lies in the validity of “home value.” What is it? Is it what the assessor says its worth, or the IDOR, or what you think you would get for it if you sold it today? How useful is it in relation to the value of industrial and commercial property? It doesn’t stand up well as a useful point of comparison.
Comment by Henry George's Ghost Thursday, Aug 3, 06 @ 12:45 pm
It is not my forumla. It is widely recognized.
You home is worth what you could sell it for.
Let’s say my home is worth $400,000 and my annual tax bill is $8,000. That would give me an effective tax rate if 2%.
I’ll bet no one in Chicago has an effective tax rate that high. (And, if you claim to, please provide the home value and total annual tax bill, so other can make comparisong.)
I can’t speak for commercial property, but this is a completely valid way to compare relative tax burdens.
Comment by Cal Skinner Thursday, Aug 3, 06 @ 12:56 pm
fightforjustice
You are incorrect. The key variables you are omitting are
the amount of money being demanded by the various governments; the value of the new property hitting the rolls, the effect of property tax caps themselves.
Of the taxing bodies, only the cities/villages have a diversified revenue stream. More money from sales taxes less money needed from property taxes. As I said earlier, only ten to twelve perent of your property tax bill comes from municipalities. Hello, and welcome, Big Boxes. Of course that is if the city/village runs a lean operation and does not throw in a lot of fat or extra services to get votes. But we know that voters wouldn’t request that…don’t we
The we have the new property going on the rolls — new buildings, massive remodeling. Goodness knows, many prefer quaint.
Finally we have all but the home rule units — hello City of Chicago, hello Cook County, restricted as to the amount of new dollars they can levy for to — effectively — the inflation rate. Of course, they might go all sneaky and pass a referendum in the light of day in those pesky primary and off year election dates, when 75% of the citizens rather than vote had other fish to fry.
Laws do not protect people — articifial devices do not protect people. Participation protects people.
fightforjustice, wassup. Houlihan screwed up the system to enhance his political rep when he decides to move on.
Oh what a tangled web we weave.”
Comment by Truthful James Thursday, Aug 3, 06 @ 1:57 pm
Truthful “Chicken Little” James (Houlihan?) wasn’t very truthful.
The reason the multiplier is 2.73 is because homes are assessed at around 10% or less of true market value, not 16% as required under classification. IDOR gave Cook the high multiplier - most counties are around 1.0 - because residential was substantially undervalued. A 2.73 multiplier means the Illinois Department of Revenue determined from actual sales prices that Cook County assessments need to be at least 273% higher to “equal” the rest of the state.
Now get out your truthful calculator:
2.73 x 10% = 27.3%
33.3% - 27.3% = 6.0% below the 33.3% assessment everyone else gets outside of Cook County.
Perhaps the multiplier isn’t high enough.
Comment by Anon sequitur Thursday, Aug 3, 06 @ 2:06 pm
I am in the group of folks about to get hit and am furiously trying to find a way to contest it- i can barely handle the bills and the increased utilities and am going to get slapped hard on this - this is my punishment for wanting to stay in my neighborhood - i am apalled at the continual rise in taxes - the city and county shoudl spend more time cutting positions and spending less internally - then they will realize the damage as I have to cut expenses at hmoe and luxuries such as going to a movie because i can’t afford the added expense - dupage and southern ilinois look appealing for those reasons - but chicago/cook you are making it hard for us middle folks to stick around and barely make it - oh and here’s a three cheers to Judy who thinks making $70K per year is enough money to not need health care assistance…
Comment by annoyed all the time Thursday, Aug 3, 06 @ 2:11 pm
- Anon sequitur
You’ve got it almost right, but not quite. Because of the classification system in Cook - residential at 16%, commercial in the 30’s - the multiplier would be greater than 1.0 in Cook even if Houlihan was 100% honest (i.e., exactly at 16% for all homes, 3x% for commerial) because the TOTAL is supposed to be 33% of aggregate value, and you can’t get there with homes being assessed at 16%. So the true measure of Houlihan’s underassessment is the difference between the announced multiplier and the theoretical multiplier (not 1.0). To get the theoretical multiplier, you’d have to know the proportion of aggregate property in each classification.
Comment by Anonymous Thursday, Aug 3, 06 @ 2:33 pm
A. Sequiter — love the pun
God bless, A++
The problem with a higher multiplier is that it its the rest of the properties as well.
You aptly illustrated why the 50% increase in valuation proposed for Chicago residences would bring it back in the right range — scary, but correct.
El problemo numero uno. Cook County is in technical violation of the State statute which permits it to value by classification.
However, the highest ratio — commercial property — can be no more than 250% of the lowest — residences.
The quandry is that if houses have been at 10%, commercial propery can be no mor than 25% (no calculator needed.)
For the longest time Cook County finessed everything by having all appeals before it went to court under the control of the County. Then the State created a State Property tax Appeals Board, which Houlihan and his master have been trying to gut.
Smart building owners with smart lawyers called the attention of the new agency to the discrepancy between 25% and 38%. PTAB started issuing orders to lower the AV and rebate money to the property owners — not only for a single year but if the case could be shown to one or more prior years.
Thus, in the absence of the 7% solution, while he might be politically required to keep the homes at 10% all commercial and industrial property would be lowered to no more than 25%
Three years ago he bit the bullet and raised the houses by 50% to something I estimate to be just inside the 250% ratio, if commercial remained at 28%.
If that had been allowed to stand, the Multiplier would have dropped precipitously.
The machine couldn’t stand the heat as citizens sa that their projected valuation was going to rise 50% or greater. They equated Valuation increases with full blooded tax increases.
So, Houlihan’s people artfully crafted the 7% solution which in fact postponed valuation increases for the three year period — a trienniel assessment cycle. He was well aware that in three years the chickens would come home to roost once again.
The machine does not have the moxie to face up to the situation. The valuation threat is being unlimbered again, for a new 7% solution.
There is a coda to all this. PTAB ordered refunds. From where would they come? Not me, said the Assessor, I have no pockets. Not me said the Treasurer, I am just a pass through agent, I know noddings — like Sergeant Shultz.
In order to pay refunds, the Treasurer deducted the proportion from the current tax distributions going to each taxing body.
Ouch. Now, it must be said that many of these bodies had not spent the earlier distribution money, awaiting a final decision. Many found their needs too great. Some were suprised bythe multi-year paybacks required. All who were under the tax caps suffered.
Sic transit Gloria on Monday
Comment by Truthful James Thursday, Aug 3, 06 @ 3:04 pm
A Sequiter
No Houlihan I. No Chicken Little either. The only part of the sky that is falling is the part at Clark and Randolph.
There is a solution which is fair to all. Iowas has had the first part of it for more than 25 years. Indiana instituted that part three years ago and it is just shaking out.
First — get the State out of the multiplier business.
Second, freeze all the Assessor’s estimated market values. Doi not change the taxable valuation until the property is improved (add on the value of the improvements) or sold (replace the old valuation.
Third, use the Tax Rate limits which remain in existence in Illinois as the means by which the tax extensions on behalf of a municipal body are controlled. Limit the total taxes on any property to 2% of its market value.
Fourth, otherwise eliminate the so called property tax caps, which say to the taxpayer, go back to sleep, your government is watching out for you.
Fifth, Levy taxes against the Market Value. It will be argued that a newer owner will pay more dollars than an existing one. True — but the additional dollars outlay expected each year will be reflected in the lower offering and purchase price for the property.
Real estate is an unique asset. One piece cannot be substituted for another in a contract, therefore the current assessment practice of comparative valuation is dead wrong.
It works for California, it should work for Illinois Knowledge is power and instead of the three monkey set up at the County, the taxpayer will know from the git go what his taxable valuation is and by participating in local politics, how much it is going to cost him
The direct result of this system in addition will be the lowered size of County government and underemployment for attorneys.
Comment by Truthful James Thursday, Aug 3, 06 @ 3:40 pm
Talk about multiplier rates all you want. My 80 year old parents live in the west suburbs in a house they paid off years ago. They paid $19,000 for it 50 years ago and is now worth $225,000 based on recent comp sales. Their taxes are $5,000 a year. That is a 2.2% tax rate. Sounds great except their total income is $27,000 a year. At that rate they are paying 18.5% of their income for property tax alone. If they were pulling in $100,000 in retirement income that 2.2% rate would be cheap. Their current monthly tax payment is more than their house payments used to be. They are very concerned about being able to afford staying there, but they feel they cannot afford to move because of increased housing prices anywhere around them. Those increased values are great when you have the income. Not so good when income is limited. My $120,000 home in central Illinois would easily go for $400,000 in Chicago, but I pay 1/4 the total taxes. I’ll stay an ex-suburb boy, down in the sticks.
Comment by zatoichi Thursday, Aug 3, 06 @ 4:05 pm
Downstate, my effective tax rate is 2.7%. Try that one on.
Comment by Anon Thursday, Aug 3, 06 @ 7:32 pm
Rich Daley has taken out the equivalent of a “home equity loan” on the future tax base of Chicago with his huge number of TIF’s. An extremely risky strategy, and now the chicken’s are roosting in my property tax bills.
All the stuff with Houlihan, and his white knuckle fury over loosing big box retailers is just his trying to shift the focus away from his TIF’s and their impact on my tax bill.
Comment by Elder Thursday, Aug 3, 06 @ 10:34 pm
zatoichi –
Say that $19K house had over the years $41K in improvements. If the system had been in place, the taxable valuation would be $60K and at the 2% max the tax would be $1,200.
Elder —
The original concept of TIF in Illinois was to make up for blight and other matters which made it uneconomical for the private sector to purchase at the market price today, correct the problem and bring it to highest and best use. After the costs of the financing were paid the property was immediately returned to the tax rolls at its highest and best use.
The concept was that BUT FOR the TIF intervention the property would remain in sub par condition, contributing nothing, or very little, to the local economy.
The structure was 23 years and out. Abstracting from any argument regarding a particular TIF, we find two humongous changes to the original idea.
1) The extension of the TIF for an additional 12 years, keeping the tax money away from the general rolls. These extensions have to be approved by the State legislature.
2) Use of the incremental tax revenue for municipal purposes on properties adjacent to but outside the District. THe valiation of this use provided an unrelated source of revenue with which municipalities could play. If the so called surplus money had been used to retire TIF financings, the District might have been closed at an earlier date and the valuation released to the tax rolls.
Interestingly, the school districts when given the choice between TIF closing and Valuation returned to the rolls versus TIF continuing and the surplus moneys distributed annually have opted for the latter. Those revenues are given outside the levy limits.
Comment by Truthful James Friday, Aug 4, 06 @ 8:10 am
purchase t.home(new contruction)Monee. April 24, 06 closed.Arm’s length sale…Just recieved letter from tax assesor-$2,789(8 mnths) p.tax for 06. They have the wrong closing date(4-1-06). I figured my effective tax rate per Cal S. formula= 2.3%. Should I File an appeal?
Comment by advice seeker Friday, Mar 9, 07 @ 1:12 am