Your tax bill might be less

Thanks to governor: Blagojevich signs measure providing property tax relief

By Maura Kelly Lannan and Michael Tarm
THE ASSOCIATED PRESS
The Courier News, Posted July 13, 2004

CHICAGO — Illinois homeowners could get to keep more of their money under a property tax relief bill signed Monday by Gov. Rod Blagojevich.

Critics contend the measure will shift more of the tax burden to businesses.

The bill increases the standard exemptions — the portion of a home's value that can be shielded from taxation — for all homeowners. The homeowner exemption would jump to $5,000 from $4,500 in Cook County and from $3,500 in the state's other counties.

It also would let counties put a limit on increases in property assessments, the official value estimates used to calculate tax bills. The 7 percent cap per year would last three years and take effect only in counties that adopt it, preventing the huge assessment jumps that result in increased tax bills. Cook County officials are expected to consider the cap today.

"We now have a bill that will make it so that when Starbucks comes or your neighbor starts improving his or her home, you don't have to fear that your property taxes will rise so high that you can no longer afford to stay in the neighborhood," Blagojevich said outside a private home on the city's northwest side.

Critics: tough on business
But critics contend businesses will be taxed more to make up the difference. The Chicagoland Chamber of Commerce calculates that businesses will be forced to pay $454 million more to compensate for post-cap revenue losses. In a June letter to Blagojevich urging him to veto the law, Chamber President Gerald Roper said businesses already are taxed at double the rates of homeowners. "The fundamental inequality is made all the worse by this bill," he said. Blagojevich dismissed the criticism.
"The fact is, that for far too long here in Cook County and in the city of Chicago, homeowners have been paying a disproportionate share of property taxes. They've been the ones who've been overburdened," he said.

Others say more of the tax burden also could shift to lower- and middle-income homeowners whose property values aren't rising as dramatically.

"While some will get phenomenal relief, there'll be pressure on those with lower property wealth to have their assessments maxed to the full 7 percent a year," said Ralph Martire, head of Chicago's Center for Tax and Budget Accountability. "They might otherwise have had increases of just a few percent."

But Michelle Kucera, spokeswoman for Cook County Assessor James Houlihan, who pushed for the legislation, said the bill is written so that assessments will increase by 7 percent per year or less, depending on a home's value.

Some want more change
Some activists who lobbied for the caps say the legislation doesn't go far enough.
"But it's better than a poke in the eye with a sharp stick," said Barbara Head, of Chicago's Tax Reform Action Coalition. "This is relief, not reform. It will give us breathing room while we work on further reforms."

Betty Rothfuss hoped Blagojevich would sign the bill so she could continue living in Lakewood-Balmoral, a leafy, north-Chicago district near Lake Michigan where she has lived for 45 years.

"My home's not an investment. It's where I've spent my life, where I want to live til I die," said the 63-year-old retired administrative assistant.

Rothfuss lives alone in a three-bedroom home that her parents bought in 1959 for $18,000. With an annual income of just $15,000 — the bulk of that Social Security — Rothfuss said she has had to dip into her savings to pay her $6,000 property tax bill the last three years.

Her latest assessment said the value of her house rose nearly 100 percent — from $220,000 in 2002 to $429,000 this year.

Illinois has the country's 12th highest property-tax burden, the U.S. Census Bureau reported. Property taxes are the state's single largest income source, accounting for 27 percent of total revenue in 2000, according to the Institute on Taxation and Economic Policy. Income taxes account for just 18 percent.

"The Illinois tax system is one of the worst in the country," Martire said. "Modern changes in our tax structure could solve virtually all our problems and Illinois could still have among the lowest taxes in the nation."

He said reliance on property taxes to fund public schools means wealthy districts tend to have better schools, which he called "outrageous and shameful." Higher income taxes, he argued, would lead to a more even distribution of money.

But Blagojevich repeated his pledge Monday not to increase income taxes.

"Raising the income tax on working people across Illinois would hurt the economy. Raising the income tax would hurt business," he said. "I'm determined to not raise the income tax."