Property tax burden grows for homeowners

Illinois homeowners are shouldering more of the property tax burden than ever before.

Much of the increase is fueled by shifts in Cook and DuPage counties, where the proportion paid by homeowners increased 11.3 and 4.6 percentage points, respectively, from 2001 to 2010.

Statewide, the share of property taxes paid by homeowners rose by 7.4 percentage points, a Daily Herald analysis of Illinois Department of Revenue records shows. And it's a bigger slice of a bigger pie, with taxes paid to the state's 6,000-plus units of government rising nearly $9 billion over the same decade.

Meanwhile, the share of property taxes paid by commercial and industrial property owners shrank.

One big reason for the shift is that the value of business property dropped more significantly than home values during the recession, said Laurence Msall, president of the Civic Federation, a government finance research organization. When property tax bills came due, homeowners had to pick up the slack.

“It's a reality of having so many units of government in Illinois rely on property taxes,” Msall said.

The trend is less pronounced in Kane, Lake and McHenry counties, but homeowners in those areas already bear a high proportion of property taxes. In Will County, homeowners' share of the tax burden dipped slightly after rising a few years ago.

Msall's group commissioned a report on overall property values in Cook County that shows drastic declines in commercial and industrial property values between 2001 and 2010, while residential values rose.

Countywide, residential property value increased 26 percent while commercial and industrial properties lost an estimated 19.6 percent and 13.2 percent of their values, according to the group's analysis.

But there are other factors. Cook County has a unique property assessment process that has helped shift more taxes onto homeowners' backs. Here's how:

Ÿ Houses are assessed at different rates than commercial and industrial properties, unlike in other suburban counties.

Ÿ Commercial and industrial property owners routinely appeal their assessments, and they get larger reductions on average than homeowners do.

Ÿ Apartment complexes with seven or more units are considered commercial properties. And unlike 10 years ago, they are now assessed at a much lower rate, reducing the amount owed by those property owners.

Ÿ Exemptions for homeowners are being phased out and eliminated.

Ÿ Communities desperate for development or to retain businesses are granting more tax incentives.

“The state phased out the homeowners exemption and the other thing is this shift has been driven by businesses that are leaving or closing during these difficult times,” said Cook County Commissioner Tim Schneider, a Republican from Bartlett. “We want to make Cook County a place where people want to live and build a business, so I'm a strong believer in keeping property taxes low for both types and that takes a delicate balance. Right now, we're out of balance.”

DuPage County is out of balance, as well.

“All you have to do is drive down Roosevelt Road in Wheaton and you'll see multiple car dealerships that used to be thriving businesses that are now closed and are vacant lots,” DuPage County Board Chairman Dan Cronin said. “We know the commercial property component of the property tax pie has diminished as a result of the recession. Our approach is to aggressively pursue economic development to help allay some of the property tax burdens on homeowners.”

Homeowners in DuPage County covered 75.3 percent of all property taxes collected in the county in 2010. Ten years before, homeowners were responsible for 70.7 percent of the county's property taxes, state figures show.

Homeowners in the suburbs already carry most of the property tax burden.

In McHenry County, 80.8 percent of all property taxes came from homeowners in 2010, up 1.4 percentage points from 2001. Lake County homeowners were responsible for 80 percent of all properties taxes in 2010, up 1.8 percentage points from 10 years prior. Kane County's residents covered 76.4 percent of all property taxes in 2010, a 0.6 percentage point increase from 2001.

Among suburban taxpayers, only Will County residents were collectively on the hook for a smaller share of property taxes in 2010 than in 2001. Homeowners there were responsible for 74.1 percent of the property taxes in 2010, but 74.8 percent in 2001. However, the amount of taxes collected by Will County governments more than doubled during those 10 years, going from nearly $780 million in 2001 to almost $1.6 billion in 2010.

The shifting tax burden and the actual increase in taxes collected have many worried about the future for suburban homeowners.

“The question becomes, 'Can Joe Homeowner continue to afford living in his home?'” Cook County Treasurer Maria Pappas said. “I think we're going to see less and less homeownership.”

Pappas said residents need to hold their local elected officials accountable for property tax levies and educate themselves about government spending. She will begin detailing financial information of local governments on property tax bills next year, she said.

In addition, community leaders should be focusing on economic development and balancing business and residential properties, experts said.

“If communities aren't balanced, the residential areas are going to feel it,” said Brian Bernardoni, senior director of public affairs for the Chicago Association of Realtors.

But Bernardoni warned that communities that aren't careful could create short-term solutions while providing a burden for the future. Some towns are rebating sales taxes or providing other tax incentives to lure or retain businesses.

“The struggle in my opinion is the political and economic sophistication by the decision-makers to leverage tax incentives and not give them away when they don't need to,” Bernardoni said.

Msall said it's in everyone's best interests to focus on creating a healthy environment for businesses in a community.

“The more robust the commercial area, the less reliant you have to be on property taxes,” he said, “because you have sales taxes, too, and job opportunities for the people who live there.”

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