Property tax rates nearly double since 2007 as residents leave Harvey, Illinois

Property tax rates nearly double since 2007 as residents leave Harvey, Illinois

Declining home values and a shrinking tax base have created a bigger property tax burden for Harvey, Illinois, homeowners. For their higher taxes, residents get corruption, debt and fewer services.

A legacy of corruption in Harvey, Illinois, is costing residents by quickly growing their property tax burden.

The south Chicago suburb’s struggle with plummeting home values, coupled with a dwindling population, has resulted in a nearly doubling of the amount residents pay in property taxes relative to the value of their homes. 

In Harvey, the average effective property tax rate – what homeowners pay in property taxes as a percentage of their homes’ estimated market value – was 82 percent higher in 2016 than it was a decade earlier, according to a report by the Civic Federation, a government financial watchdog.

The Civic Federation report measured changes in average effective property tax rates in Chicago and 28 other northeastern Illinois communities between tax years 2007 and 2016, with those taxes actually paid the following year. Of the 12 Cook County communities included in the study, Harvey property owners in 2017 paid the highest effective rate for both residential and commercial properties at 6.9 percent and 15.4 percent, respectively.

What does that mean for Harvey homeowners? For a resident occupying a home with the city’s median value of $72,400, property taxes paid in 2017 were $4,996. That’s $2,252 more than a house of the same value would have been taxed in 2006, but the double whammy is that Harvey’s median home value fell 28 percent during the decade.

For a community of about 25,000 where the median household income is less than $24,000, the report’s findings are especially disheartening: As a depressed local economy pushes home values down, residents’ effective property tax rates climb up; and as more residents leave the city, those left behind must shoulder a larger share of the burden.

Harvey’s 6.9 percent residential rate is more than 200 percent higher than the 2016 statewide median of 2.29 percent. While Harvey’s average effective rate has fallen from its 2012 peak of nearly 9 percent, it remains nearly double what it was a decade ago ­– and among the highest in the state.

The blighted suburb’s inability to keep up with pension contributions for government workers caused property taxes in Harvey to skyrocket. The city owes over $87 million in pension debt, and has already been forced into severe service cuts due to pension pressure, including layoffs for dozens of public safety workers.

In 2018, Harvey’s poor pension funding levels resulted in the state comptroller intercepting $3.3 million in tax revenues. While Harvey eventually reached a settlement with the state, the city still owes $9 million to its police pension fund and $14.2 million to its fire pension fund.

What’s worse, Harvey’s crisis was only the prologue to the state’s grave pension story: A number of Illinois municipalities have since found themselves facing similar circumstances.

Illinoisans face the second-highest property tax burden in the nation, a phenomenon driven primarily by the unsustainable growth in pension costs.

Hiking taxes on a shrinking population has repeatedly failed to rescue the state’s dismal finances. The only path toward stability – and property tax relief – is through serious, lasting pension reform pursued at the state level.

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