Cook County Assessor James Houlihan is looking for advice.
He is about to convene a bipartisan Tax Policy Forum. The blue-ribbon gathering of civic, business and community leaders will draft a set of sweeping property tax reforms–presumably to be adopted next year by the Cook County Board and the Illinois General Assembly.
I like Jim Houlihan, but Don Quixote had a better shot at bagging that windmill.
Houlihan is tilting at a house of mirrors. When it comes to property taxes hereabouts, nothing is as it seems. As grotesque and indecipherable as our system might appear to the average taxpayer, it works very well for those wise to its ways. Provisions that seem unfair to some are, to others, wisely targeted tax breaks. Complexities that befuddle the masses are bread-and-butter to tax lawyers and other well-connected pros.
Not that Houlihan should call off this crusade. Many others have failed, to be sure, and I have in my office a groaning shelf of yellowed property tax “studies” to prove it. But that doesn’t mean it can’t be done. A former state legislator and lakefront progressive with contacts on both sides of the aisle, Houlihan might be the guy to pull it off.
Unfortunately, my job as a fourth estate know-it-all prevents me from participating in the upcoming Tax Policy Forum. So here, Mr. Assessor, are some things you ought to know about “reforms.”. Actually you probably know this stuff already, but some of our reading and taxpaying friends might be interested:
Item 1: The property classification system.
Once upon a time the lords of the Democratic Party thought it would be a good idea to have Cook County’s mighty commercial and industrial owners pay more so the bungalow and three-flat owners could pay less. That made sense in the ’50s because companies could write it off as a business expense and because there was no place else for them to go . . . Mannheim Road being the western edge of civilization. Now companies are moving to the collar counties, where their offices and factories are assessed at 33 percent of market value compared to Cook County’s 38 percent for offices and 36 percent for factories. The argument is made, with merit, that Cook homeowners will suffer, long-term, by hanging on to their lower assessment level (16 percent of market value) while the rest of the county’s tax and jobs base skedaddles.
There’s just one problem with canning the classification system. If it were done all at once, assessments on houses and small apartment buildings would rocket up an average of 48 percent. Actual tax bills might not rise that much, but you, Mr. Assessor, soon would be looking for another job and so would the responsible members of the county board.
My advice: Phase out classification so slowly–over a 15-year period, say–that hardly anybody would notice the bump what with all the other confusion surrounding tax bills.
Item 2: The confusion surrounding tax bills.
The way it works now, the value of a house as listed on your office’s triennial notice of reassessment is only half the value which later will be used to compute a homeowner’s tax bill. Unsophisticated owners rejoice at these notices, thinking they’re getting a break when you value their $200,000 ranch at only $100,000. Later they’re miffed when the county treasurer sends them a bill on which your assessment has been “equalized,” which is to say, doubled.
Your predecessor, Thomas Hynes, an Irish charmer, used to blame this doubling on state bureaucrats. He claimed this, I thought, with slight a gleam in his eye.
You, Mr. Houlihan, should lead the charge for truth-in-taxation by providing taxpayers, along with your reassessment notices, an estimate of how the new assessment will change their tax bill using the previous year’s multiplier and rates. Or you could go on playing Santa Claus to the treasurer’s scrooge. It’s up to you.
Item 3: Taking “the burden” off the property tax.
This familiar mantra has much to recommend it, but beware of pushing it to too far. Gov. Jim Edgar, and before him, wannabe Gov. Dawn Clark Netsch, were right to seek a further shifting of the public school tax burden–now two-thirds of a typical property tax bill–onto the state income tax. If nothing else, this would lessen the cruel disparities in resources available to children in rich and poor school districts.
But the property tax has been bad-mouthed for so long that people forget it can be a better deal than other kinds of local taxes. My suburb needs a new sewer system and the aldermen were so afraid to raise property taxes that they put the multimillion dollar expense on our water bills. Trouble is, I can deduct property taxes from my federally taxable income (at least until Newt Gingrich & Co. get around to “simplifying” the tax code) but water bills I cannot. Now I’m taking shorter showers and my lawn is turning brown. Sad to say, local governments everywhere are denying themselves, and their taxpayers, this backdoor federal subsidy just so they can say they’re not raising property taxes. Not smart.
Then again, seniors and other fixed-income, non-itemizing folks need somehow to be sheltered from steep increases in property assessments and taxes. Figuring how best to do this would be worthy work for your policy forum.
Just remember that property taxes can be a good deal . . . if you itemize on your federal income taxes and if you send your kids to public schools.
Like I said, Mr. Assessor, everybody’s got an iron in this fire. Including yours truly.
