Part II: Let's talk taxes, baby
Sunday, December 07, 2008
by Kristen McQuerey
With property reassessment notices in hand, many Southland residents are questioning increases reflected in the paperwork.
From Country Club Hills to Orland Park, rising assessments beg the question: Will tax bills increase, too? If so, why?
Can you still buy the 52-inch flat screen for your, um, wife for
Christmas? Or will your discretionary income be gobbled by property
Last week, I explained one reason for higher assessments in the
midst of a foul housing market. The assessments reflect home sale
prices for 2005, 2006 and 2007 during a much hotter real estate
This week, I'll revisit tax cap legislation of the 1990s; how it
affected your pocketbook; and the status of the 7 Percent Expanded
Homeowner Exemption pushed by Cook County Assessor James Houlihan.
Sharpen your pencils, pupils. Here we go:
In 1991, the state Legislature approved the first Property Tax
Extension Limitation Law, also known as tax cap legislation. The law
limits the amount of money governmental bodies can collect to 5 percent
above the previous year or the consumer price index, whichever is less.
The law is the reason taxing bodies must go to referendum to take on
new debt for school buildings and water parks. Voter approval is
"Tax caps are a break on greed," according to Cal Skinner, a former House member who worked on the law.
Most taxing bodies request more money each year than they intend to
spend. Once their request is filed with the county clerk, however, the
clerk applies a tax rate that brings them into compliance with the tax
That's why you might see a legal notice in the newspaper, for
example, from a school district levying taxes that appear to violate
the cap law. The district is estimating the amount of money it needs,
erring on the high side, knowing the clerk will pull them under the cap
with an appropriate tax rate. Then the bill is sent to you.
So caps have done what they intended. They rein in spending.
Still, tax caps are only one spoke in the wagon wheel. The algebraic
nature of property tax bills means the amount you owe is not restricted
to a 5 percent increase or the consumer price index.
Another spoke is your assessment, which is the value your local assessor places on your property.
In 2003, when the real estate market soared, assessments in
traditionally under-assessed Cook County climbed. From Lincoln Park to
Englewood, homeowners began to see triple-digit increases.
To Band-Aid the bleeding, Houlihan introduced legislation limiting annual assessment increases for homeowners to 7 percent.
The 7 percent bill wasn't focused entirely on reducing property tax
bills. It was designed to infuse predictability into the process. At
least in Cook County, homeowners could expect, after each three-year
reassessment cycle, an assessment increase limited to 21 percent.
Remember, folks: We're only talking assessments here, not tax bills.
There is no direct correlation between a rise in assessments and a rise
in actual bills.
Are assessments an indicator? Yes. But your tax bill has far more to
do with what your local school district is charging you, not what the
assessed value of your home is.
After three years of the program, Houlihan's office says homeowners
did, in fact, see more manageable increases in their assessments. He
and Gov. Rod Blagojevich tried to make the 7 percent bill permanent in
But House Speaker Michael Madigan disagreed, along with the business
community and south suburban lawmakers. The freeze, they believe,
benefitted North Side residents at the expense of South Siders - a
contention Houlihan describes as a myth.
The freeze also became unnecessary, opponents said.
"The assessment cap was put in place during a booming real estate
market when property values were rising rapidly," Chicagoland Chamber
of Commerce president Jerry Roper said. "That day is long gone."
Either way, here's the bottom line for Southland residents of Cook County:
The tax bill you paid this fall reflected the 7 percent freeze under
the homeowners exemption of your bill. Your tax bill - not your
reassessment notice - included an exemption of $20,000 instead of the
Next fall, the exemption will jump to $33,000 when the "freeze" bill is maximized.
The following year in 2010, the exemption will drop to $26,000, and
then it will fall back to $5,000 in 2011, unless lawmakers decide to
renew the law.
Personally, I'm ambivalent about Houlihan's bill. What we need is an
overhaul of our state's taxation system. Until then, we're blind mice
skittering through a maze.
Next Sunday, I'll examine school district levies in Lincoln-Way.
I'll also show you two businesses across the street from one another,
one in Cook County and one in Will County, and the difference in their
property tax bills.
Most importantly, I must correct an error from last week: Assessor
Houlihan and Board of Review Commissioner Brendan Houlihan are not
related. They are not cousins.
I mixed up my Irish. My apologies.
Kristen McQueary covers government and politics for the
SouthtownStar. She can be reached at (708) 633-5972 or