Property taxes up 13 percent on average Chicago home
The average single-family home in Chicago will see a $400 increase in property taxes. And property-tax revenues for the city of Chicago will top $1 billion for the first time in city history.
Chicago homeowners are drowning.
About 1 in 5 Chicago-area homeowners are trapped in an underwater mortgage, according to two recent studies. That share is among the highest in the nation for major metropolitan areas.
On June 13, Cook County Clerk David Orr announced more bad news. Property-tax hikes will take hundreds of dollars more out of middle-class residents’ pockets in 2016.
The average single-family home in Chicago, worth $225,000, will see a 12.8 percent property-tax hike, or a $413 increase, compared with last year’s bill. The property-tax bill on that home will total $3,633.
Orr’s office told DNAinfo property taxes on the average commercial property will shoot up 10 percent.
The property-tax increase is due to two factors. First and foremost is Mayor Rahm Emanuel’s 2015 property-tax hike, the largest in modern city history. Second is the Cook County assessor’s reassessment of home values in the city proper, an often-corrupt process that occurs every three years.
As the tax hike hits Chicago families and businesses, a who’s who of the state’s political machine will continue to line its pockets through a property-tax game in which connections are priced at a premium.
Illinois House Speaker Mike Madigan, D-Chicago, and Chicago Alderman Ed Burke, 14th Ward, both run law firms specializing in the lucrative field of Cook County property-tax appeals. And Illinois Senate President John Cullerton, D-Chicago, practices at a large law firm that handles a range of matters, including property-tax issues.
Advocates of further tax hikes without reform in Chicago say the city’s fiscal problems boil down to lack of revenue. But Orr also noted that property-tax revenues for the city of Chicago will top $1 billion for the first time in city history. Cook County is set to take in $13 billion, also a new record.
Chicago will not be able to tax its way out of its fiscal mess.
The bulk of the extra money taken from Chicago residents will not go to gleaming streets or better schools. Rather, it will go to the police and fire pension systems, which politicians have mismanaged for decades. The property-tax hike will generate $1.9 billion in extra revenue over the next four years. Nearly $1.8 billion will go to pensions.
Furthermore, government-worker pension costs are set to skyrocket over the next 15 years, according to a November 2015 report from Moody’s Investors Service.
By 2030, Moody’s estimates Chicago’s contributions to its four government-worker pension funds will be three to nearly six times higher than the city’s 2015 payment.
Instead of passing massive tax hikes that only serve to burden a flatlining tax base, it’s time the city focused on passing reforms that can help fix the pension crisis in the long run.
To stop the bleeding, the city should start by getting politicians out of the retirement-planning business.
That means all new city employees should be moved into self-managed retirement plans, and current employees should be given the option of switching out of the defined-benefit system, which politicians have bankrupted. In order to shrink the growth in accrued pension benefits, the city must also freeze city-employee salaries.
Beyond the idea that Chicago need only continue to hike taxes to fix its problems, another curious response to news of higher property-tax bills is that it’s just not that bad in comparison with nearby communities.
Such arguments lack context. Illinois is home to the highest property taxes in the nation, driven largely by the areas closest to Chicago. Using property-tax bills from nearby areas as a benchmark is misleading at best, and is an insult to Chicago residents, who bear a far higher total tax and fee burden than residents of any other major city in Illinois.
Chicago needs deep, structural spending reforms.
Tweaks around the edges and steep tax hikes on struggling residents have proved to be a losing formula.