Chicago politicians offer responses to homeowner discontent with property tax increases

• November 10, 2003

In the 1990’s, the city of Chicago experienced population growth and an accompanying surge in housing development. Illinois has among the highest property tax rates in the country at 3.8 percent. This ranks the state12th in the nation and above the national average of 3.2 percent for property taxes as a percentage of personal income in 1999. Illinois also ranks 11th in the nation for property taxes comprising the state’s total taxes at 37.1 percent, above the national average of 29.5 percent. As homes are assessed every three years, City of Chicago and Cook County officials are now being inundated with indignation from homeowners — particularly older, long-time residents — who are desperate for financial relief and protection against skyrocketing assessments and property taxes.

Many homeowners have seen their assessments more than double since the last assessment in 2000, without having had any kind of warning that increases would be so sharp. Local political leaders have offered different solutions and “relief packages” that address important aspects of the current burdensome property tax structure. Cook County Assessor James M. Houlihan’s Neighborhood Preservation Homeowner Exemption (NPHE) propose susing a steady assessment cap to level triennial assessments at a predictable rate, with the following guidelines:

• shift the homeowner exemption base year from 1977 to 2002
• remove the $4,500 limit on the exemption amount
• adjust the 2002 base year taxable value to grow at seven percent each year or the most recent assessment’s percentage increase, using whichever is lower
• calculate final exemption as the difference between the current taxable year and the adjusted base year taxable value in 2002 with a guaranteed minimum of $4,500.

City of Chicago Mayor Richard M. Daley proposes revising existing tax relief programs to reduce tax burden for homeowners through the followings means:

• increase homeowner exemptions to $5,000 from $4,500 for increases of assessed valuations of over 20 percent; families making below certain amounts receive higher exemptions
• increase exemptions by an additional $2,500 for homeowners aged 65 and over; additional reductions would be applied for lower income levels
• make senior homestead exemption permanent for homeowners aged 75 and over
• raise the income limit to $50,000 from $40,000 for senior citizen assessment freeze exemption eligibility
• protect long-term homeowners (who have been in their homes for over 10 years) who make less than $80,000 annually by basing increased assessments on no more than 25 percent above the city’s average increase
• increase home improvement exemptions from $45,000 worth of improvements to $75,000 due to increased construction costs
• extend the appeal time period after the Cook County Assessor’s decision (following an assessment’s appeal) to 35 days from 30 days.

Cook County Commissioners Forrest Claypool (D-Chicago), Mike Quigley (D-Chicago), Larry Suffredin (D-Evanston), and Tony Peraica (R-Riverside)’s “Save Our Homes Ordinance” would amend the current Longtime Homeowner Exemption Ordinance, which requires residency of at least 10 years and an annual evaluation according to the Cook County Assessor’s eligibility criteria. The four commissioners also offer the following changes:

• provide relief to longtime homeowners automatically without income restrictions
• freeze assessment increases to no more than 150 percent of the city’s average.

There is no simple panacea for the outcry over the current high property tax increases and even future rates, but city and county politicians recognize the gravity of the property tax situation enough to recommend and support change in the current tax structure. Though these changes may also provide some relief for property owners in Cook County, Illinois must also reduce its over-reliance on the property tax to fund vital state services to ensure all communities across the region remain economically competitive. Without such changes, Illinois residents could potentially face heavier burdens in the next round of assessments in 2006, which makes the state's future more expensive and uncertain.

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