Bad news arrived in the mailbox last week for residents on the North Side with property tax bills showing massive increases across the board. For those local industries suffering the burdens of Chicagoans’ reduced discretionary income, a warning: the worst may be yet to come.
Lake View Township (Fullerton to Devon avenues and from the lakefront west to Western Ave.) saw average assessments jump 53 percent. North Park Township (Fullerton Ave. south to the Loop) saw 27 percent increases and Rogers Park Township (Devon Ave. north to the city limits) saw 35 percent increases on average for tax bills whose first installment is due on Nov. 1.
Renters are feeling the heat, too, as many small multi-unit rental buildings (three to six flats) on the North Side have seen property tax increases ranging from 75 to 100 percent. Those increases, added to increased energy costs, are driving rents up at record levels and forcing many low-income tenants out of the city.
If the number of appeals brought before the Cook County Assessors office is any indicator of citizen angst, then emotions are stirring. In 1985 there were 35,000 appeals in Cook County; last year there were over 157,000. The sheer volume of work the assessors office is doing now overburdens the assessor’s staff and may lead to a wide range of assessments on any given city block.
“I’ve got to come up with another $500 a month just to pay for the increase from our last re-assessment and frankly I’m not sure where I’m going to get it,” said Robert Benes, a magazine editor who, along with his wife, purchased a two flat on Greenview Ave. in Lake View two years ago shortly after they wed. “We didn’t really spend that much on entertainment before, but now forget it. This is really going to hurt. And just exactly what am I and my neighbors going to be getting for that extra $6,000 a year?”
“We’ve got seniors in our community who are now being forced to chose between insurance and eating or paying their property taxes,” said Victoria Khamis, president of UpRav, an Uptown/Ravenswood neighborhood association. “Before this recent reassessment their choice was merely between insurance and taxes. Good nutrition will now be a luxury for many of them.”
At a public meeting held Oct. 3 at the Cardinal Bernadin Early Childhood Development Center, 1651 W. Diversey Blvd., over 160 people showed up to plead that the recent triennial assessment is forcing many residents to consider moving from their homes, is hindering retail business, could ultimately erode the stability of their neighborhoods and in the future could result in lower property values due to high tax burdens.
One couple testified that they had bought a home in Lake View in 1979 for $50,000 which they had hoped to live out their ‘golden years’ in. Their first year’s taxes were $400. Now in their early 50s, they have seen the value of the home go to $350,000—and have seen their taxes rise to $8,000, which is 2,000 percent of the tax bill they started with in 1979. “I’m up against the wall. If I want to live here I have to pay it,” said George and Jackie Linnik. “I wonder now if we’re going to be able to stay here. They tell you your house is worth more but I don’t care what it’s worth, I don’t want to sell. They’re out of control.
“But I’m not going down without a fight and I’d like to see some meaningful tax reform in my lifetime,” said Linnik. “Taxes should be based on your purchase price and be capped to the increases in the cost of living. Education should not be funded solely on property taxes—that’s crazy. We’re doing OK but our income is not going up as fast as these taxes are. It’s morally wrong and criminal. They just want more and more money.”
One large reason for the increases is that homeowners in Illinois are forced to pay a disproportionate share of the cost of public schools through property taxes. Almost 50 percent of the average Chicagoan’s property tax bill goes to the Chicago Public Schools.
“It’s unfair to force local property taxpayers to bear such a large burden for the cost of education,” said State Rep. Larry McKeon, who is serving as co-chair of the Property Tax Reform and School Funding Committee recently appointed by House Speaker Michael Madigan. “The Illinois Constitution gives state government the primary responsibility for financing public education, yet the state pays less than 38 percent of the cost of Chicago’s public schools.
“My committee is talking about shifting the burden to other funding sources while keeping the overall budget fixed,” said McKeon. “But it’s more than just schools. Property taxes affect affordable housing, jobs, consumer spending - it’s a real middle class issue. Our citizens are being strangled out there.
“Tax reform is not a popular issue right now but we’ve got to grow grassroots support in the collar counties and down state or we’re going to go nowhere,” said McKeon. “We need leadership from Gov. Ryan, those now running for governor and the Republican Party... it has got to be a win-win for everybody throughout the state. Right now most politicians are running from the issue. I promised my constituency that I would take a leadership role in tax reform and I will.”
“We’re telling our seniors who are lucky enough to own their own homes to consider a reverse mortgages,” said Khamis. “It’s like golden handcuffs: our properties are too valuable for us to stay in them but the only way to pay the taxes is to sell them. Some long-time owners are paying more in property taxes now than their mortgage ever was. It’s a hell of a way to win the lottery.”
A reverse mortgage uses the equity in a home as a loan, but it does not allow a person to pass their home along to their heirs. In the end it becomes the property of the lending institution. The portion loaned to the home owner is then used to pay down debt, pay taxes or provide cash flow through the use of a commercial annuity or other financial instruments.
“I don’t put much faith in political action, even though there are few more politicized issues before the state right now than taxation,” said Andrea Ralia, a property tax consultant. “I have more faith in a grassroots campaign underway now to get the issue before voters. There is a petition being circulated now which is calling for a taxpayer advocate to be created in Cook County. We need 250,000 signatures to get it on the ballot.” Petitions can be found online at: fairtaxes.net.
“Government is over reliant on property taxes now and we need to push for more unified assessments and caps on increases,” said Ralia. “Plus there are many powerful local politicians who preside over tax legislation and make big money as tax lawyers and consultants on the side. Politicians have promised change and have asked for faith for the last decade but it may take an actual citizens tax revolt to get any action.”
“[House Speaker Michael] Madigan runs the state’s largest tax assessment law firm and Ald. Ed Burke’s (14th) law firm does much of the tax work for the big banks in town,” she said. “There is an inherent conflict of interest there and you have to question where their motivation is. The state’s current political gridlock and lack of action on tax policy would appear to suit their side businesses perfectly. There is big money in it for them and it’s a real David versus Goliath fight for most small businesses.”
Some property owners are calling for means testing to be tied to property taxes, others for taxes based on original purchase price with caps on increases. Others folks are looking for more aggressive approaches such as California’s Proposition 13 which rolled back property taxes, or a system similar to Michigan’s where school funding was completely taken off the property tax rolls and transferred to a state sales taxes (or perhaps to increased income taxes).
“Frustration is at a very high level and people shake their heads and wonder how much worse it will get before something is done,” said Barb Head of The Tax Reform Action Coalition (TRAC). TRAC is undertaking an envelop-stuffing operation to increase pressure on elected officials. TRAC can be reached by phone at (312) 458-9202 or on their Web site at: trac-il.org.
“We want our elected officials knee deep in paper,” she said. “We’re tired of band-aid solutions and we want their office looking like the North Pole in winter. It’s different this time and it’s going to be a long process, but we’re in desperate need of sweeping tax reform. People are now motivated by their own fear and we cannot continue to let politicians pass the buck.”
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