DOLLARS & SENSE

Tax cap backed so people can keep homes
March 10, 2006
BY FRAN SPIELMAN ,Chicago Sun-Times

Chicago homeowners were warned Thursday to brace for a 41 percent increase in property tax assessments -- and the tax hike that comes with it -- unless the Illinois House renews a 7 percent cap on annual assessment increases.

"A home assessed at $150,000 in 2002 had a $4,052 tax bill that year. If the [cap] passes, the tax bill will drop to $3,997 next year. If the bill doesn't pass, the tax bill will rise to $5,465. That is almost a swing of $1,500," Mayor Daley said.

Cook County Assessor Jim Houlihan called renewal of the 7 percent cap "essential" to prevent Chicagoans from being "driven from their homes" and spare them the "sticker shock" of a three-year reassessment.

"Think of this. Over 80 percent of the homeowners in Chicago received tax bills that were lower than prior to the [last] reassessment. That same model will be true for this reassessment," Houlihan said. "The 7 percent homeowners exemption worked. It helped homeowners... . No school received less money from local property taxes. And in Chicago, the impact on commercial property owners was merely 1 percent."

The Chicagoland Chamber of Commerce, the Chicago Development Council and the Building Owners and Managers Association issued a statement calling the proposed extension of the 7 percent cap "fiscally irresponsible." "The law unfairly shifted enormous tax burdens onto businesses, landlords, renters and hundreds of thousands of homeowners, who are paying as much as 10 percent more," the statement said. "The biggest winners ... are property-rich homeowners in booming areas who are seeing large tax breaks on their rapidly appreciating homes."

The Illinois Senate voted last week to extend the 7 percent cap for three more years and raise the maximum exemption from $20,000 of equalized assessed valuation to $60,000.
The cap was imposed in 2004 to quell a property tax revolt triggered by skyrocketing assessments in 2003, the last time the city was reassessed.

At that time, the median residential increase for all eight Chicago townships was 35 percent. This time, "These notices will show that the taxable value of the average home has increased 41 percent over the last three years --and some will increase 90 percent or more," Daley said. Reassessment notices will be mailed in a few weeks.

Although Gov. Blagojevich has renewed his no-tax-increase pledge, Daley and Houlihan agree that the ultimate answer to the simmering property tax revolt is a tax swap that would shift the burden of education away from property taxes and toward increased sales and income taxes.