A bill designed to hold down skyrocketing property tax assessments squeaked through a bitterly divided Illinois Senate Tuesday night, clearing a major hurdle and giving hope to advocates who have fervently pressed for relief.
The legislation would cap assessment increases at 7 percent a year for many, but not all, homeowners in Cook County and possibly other counties in the state as well. If it is rapidly approved in the House and by the governor, the new limit could be applied later this year to tax bills that reflect huge assessment increases in Chicago.
With a bare majority of 30 votes, the measure was sent to the House, which passed a slightly different version last month. Twenty-five senators–mostly Republicans–opposed the bill.
Still, in a sign that the House could be poised to agree with the Senate changes, House Speaker Michael Madigan (D-Chicago) deliberately positioned himself in the front row of a Senate committee hearing on the tax measure before the floor vote.
Madigan backs the tax cap idea, and his spokesman, Steve Brown, said he knew of no reason that strong support for the concept shown previously in the House would dissipate.
A spokeswoman for Gov. Rod Blagojevich said he also supported the cap concept, but she couldn’t say whether he would sign the measure if it reaches his desk because it has undergone a series of changes in recent months.
The proposal drew strong opposition from business groups, which complained that taxes on commercial and industrial property would be forced up to compensate for tax breaks to homeowners. Educators also complained some school districts could lose money if the legislation were approved.
But Sen. Terry Link (D-Vernon Hills), who took the lead role in reshaping the bill in the Senate, dismissed the school concerns, saying local officials can adjust overall tax levies to counteract any ill effects of the legislation.
“If we don’t have the courage to make changes, nothing will get done,” Link said.
An outcry over big assessment increases in many Chicago neighborhoods inspired the cap proposal, championed most loudly by Cook County Assessor James Houlihan. Its application may have the most pronounced impact for homeowners in the city and Cook County suburbs.
Still, a provision granting every Illinois county the option to impose the 7 percent assessment cap was key to acquiring needed votes from Downstate lawmakers.
“This is an advantage for all homeowners in the state of Illinois,” Link said. “We’ve all heard about homeowners forced out of their homes by property taxes. We are addressing those concerns.”
Only five Republicans voted for the measure, which also gained the support of 24 Democrats and the chamber’s lone independent.
Link has shepherded the bill through the upper chamber and sweetened it with other targeted relief, such as a provision that would broaden eligibility for an existing senior-citizens assessment freeze.
Cap to last 3 years
The cap would expire in three years, after which it would need to be renewed by more legislation.
The property tax system in Illinois is fraught with complexities, and the cap proposal would add yet another dimension that could befuddle taxpayers seeking to calculate their savings.
In general, the measure would limit residential assessment increases in affected counties to 7 percent a year. Properties in the city and Cook County suburbs are reassessed on a rotating basis every three years, so in practical terms, the cap would be set at 21 percent per assessment cycle.
Under the plan, the owners of a $150,000 house in Chicago with a 30 percent increase in taxable value would save about $655 this year, according to Houlihan’s projections. The annual tax bill would drop to $3,798 from $4,453, officials said.
But the Senate tried to soften any extra tax burden on business and limit the potential windfall for owners of more expensive homes.
Under the measure, caps would be imposed by increasing the standard homeowner’s exemption–now $4,500 lopped off the assessed value. The increases would vary by property, depending on what it took to limit annual assessment increases to no more than 7 percent.
Exemption limit
But the Senate measure would also limit the homeowner’s exemption to no more than $20,000 annually. That would blunt the impact of the caps on homes with exceptionally large increases in assessed value.
Some local school officials and teacher unions have expressed fears that the caps could squeeze resources for public schools, which are primarily derived from property tax revenue.
Though assessment caps could shift some of the local tax burden from homeowners to commercial properties, critics of the caps said state law already limits tax rates that schools can levy. That means, they argue, that schools may have a hard time collecting more money from businesses and other taxpayers to make up the revenue lost from residential assessment caps.
Even so, Houlihan’s office contended he had met with school budget officials and allayed the fear that schools would lose.
During the Senate debate, one Republican critic called the plan an attempt to “monkey with market forces.”
“This is a signal to the business community: `Don’t come to us'” said Sen. Steve Rauschenberger (R-Elgin).
In addition to the 7 percent provision, the legislation would expand eligibility for a current program that allows many senior citizens to apply for assessment freezes for as long as they own their homes. At present, seniors are eligible for that freeze if they have a household income of less than $40,000. The proposal would raise that to $45,000.
In Chicago, Mayor Richard Daley voiced support for the 7 percent cap, but he called on the General Assembly to pass it as part of a package of property tax relief.
“The problem is that, as important as this bill is, if it is passed alone, it will shift the burden from rapidly improving neighborhoods to those where homeowners can least afford to pay their property taxes–low-income homeowners, seniors, renters [through higher rents] and longtime homeowners,” Daley said.
Daley seeking changes
Daley is seeking approval of a variety of changes, including an increase in the homeowner exemption for low-income owners and an increase in the senior citizen freeze.
In Chicago, where property tax assessments rose by an average of 32 percent during the past three years, tax-relief efforts have won backing from activists in widely varied neighborhoods. Thousands of “Homeowner Facing Extinction” signs have been planted on front lawns.
But Daley’s own legislative proposal would give little help to all but the poorest Chicago homeowners.
Taxpayers with an annual household income of more than $30,000 would save about $35 on their property tax bills in the expanded homestead exemption called for by Daley.
Those earning between $20,000 and $30,000 a year would have about $70 knocked off their tax bill under Daley’s plan.
And households with incomes below $20,000 would save between $100 and $120, said Myer Blank, director of the city’s Tax Assistance Center.
Also Tuesday, the Senate voted to pass a bill backed by Sen. Ira Silverstein (D-Chicago) that is designed to help protect disabled and elderly homeowners from losing their homes to tax scavengers.
Under the measure passed by the Senate and sent to the House, judges would appoint an attorney to investigate any instance in which someone is about to lose a home for failure to pay.
