Big property tax hikes to hit Chicago businesses struggling with pandemic

0

While the phased introduction of large increases in assessed value could help Cook County commercial property owners adjust, sustaining property taxes requires spending cuts through public pension reform in the Illinois.

Cook County Appraiser Fritz Kaegi clashed with incumbent Joseph Berrios in 2018, promising fair, accurate and transparent property assessments in a property tax system that was exposed as regressive, tainted with inaccuracy and opaque.

Kaegi was committed to fixing the system in which wealthy landowners got tax breaks, while landlords with fewer resources bore an unfair share of the property tax burden. He said commercial and industrial properties would no longer be undervalued, leaving owners to pay too much.

While many hailed the end of Berrios’ tenure in the appraiser’s office, Kaegi’s changes to the appraisal process – and the spikes in appraised value for many commercial properties that resulted – have left some homeowners behind. panic.

Cook County’s overall tax increases are not the assessor’s fault, but the sudden changes in assessed value have given property owners, who now face a relatively higher tax burden, little time to s’ adapt. In the wake of the difficulties caused by the pandemic for companies, the changes are even more difficult to manage.

A phased-in – over three years, for example – of higher assessed values ​​could mitigate the sudden and steep increases resulting from the assessor’s correction of perceived past undervaluation. But for significant and extensive tax relief, levies – the amounts charged by tax bodies such as the City of Chicago and the Chicago Board of Education – must stop increasing. And pension reform is key to limiting levies and relieving property taxes in Cook County and across Illinois.

Property tax assessment process

Properties are typically reassessed every three years in Cook and every four years in other counties in Illinois.

The Cook County Assessor does a general reassessment every year for a different part of the county. For Chicago, the 2021 reassessments are the first since 2018, when Kaegi took office. Homeowners will pay 2021 revalued value taxes through 2022 when new invoices are issued.

Unlike other counties in Illinois, Cook County taxes residential and commercial real estate differently. Residential properties are appraised at 10% of their market value, while commercial properties are appraised at 25% of their market value. So while businesses and owners in the same tax district pay the same tax rate, businesses pay this rate on 25% of their market value, while owners pay it on 10% of their market value. And homeowners can also apply certain exemptions to lower their taxes, which are not available to owners of commercial or industrial property.

Cook County businesses to bear an even higher share of the tax burden

Suburban Cook County reassessments in 2019 and 2020 have resulted in a sharp increase in valuations for non-residential property owners. The head of the Chicagoland Chamber of Commerce warned in January 2020 that higher property assessments for commercial and industrial properties would make the Chicago area less attractive to businesses, and the results would be higher prices for consumers.

In 2021, owners of some of Chicago’s iconic skyscrapers received reassessment notices with significantly increased values. The appraiser’s office increased the estimated value of Willis Tower by 78% from 2020, and Aon Center’s value rose to more than twice its previous level, according to Crain’s Chicago Business. In the Township of South Chicago, which encompasses the downtown area south of the Chicago River, the total value of residential properties has increased 10.5% since the 2018 revaluation, while the value of non-residential properties has increased by 82.6%.

But the increases in commercial and industrial property valuations have not been limited to the Loop skyscrapers. Much smaller businesses have also been affected.

In the Township of West Chicago, which covers the western part of the city and includes neighborhoods such as Jefferson Park, Little Village, Pilsen, Chatham and parts of the Loop, even small family businesses have been shocked by their valuation notices. .

Juan Giron, the owner of the Spanish-language Giron Books in Pilsen, was devastated when the estimated value of his bookstore and the adjacent storage building increased by 225% and 125% respectively.

Giron appeals its valuation, but no matter how much the assessed value might be reduced on appeal, its property taxes are bound to increase. And these rising taxes are causing residents and business owners to look elsewhere to settle and settle.

“People can come to our bookstores and learn more about their heritage, their parents’ countries of origin and their culture. Yet we may have to leave the very communities we exist to serve because we are being driven out, ”said Giron.

Pension debt fuels rising property taxes

Chicago has seen dramatic property tax increases in recent years, and the vast majority of those taxes have gone to struggling Chicago pension funds.

Chicago Mayor Lori Lightfoot included $ 47.9 million in discretionary property tax increases in her budget proposal for fiscal 2022, which follows a $ 77.9 million property tax increase in the budget for fiscal year 2021 (excluding taxes for new properties added to the rolls). And before Lightfoot took office, former Mayor Rahm Emanuel introduced a record $ 543 million annual property tax increase in 2015. Of course, Chicago city taxpayers also pay high property taxes for Chicago public schools and other city tax districts.

The main reason for the increase in property taxes in Chicago is its retirement problem. The vast majority of the city’s property tax revenue goes to the city’s pension funds. Between 2011 and 2021, Chicago’s spending on pensions grew 239%, while spending on city services grew only 18%.

Under Lightfoot’s proposed budget, all but $ 300 million – or about 82% – of the $ 1.7 billion taken from the city’s property taxes would go to the city’s four pension funds, according to the Chicago. Sun-Times. Yet those pension funds are still considerably underwater, with funding levels ranging from 19% for firefighters to 44% for laborers, according to a WTTW report. Lightfoot described the city’s retirement debt as the “biggest problem” for its fiscal position and the structure of pension benefits as “unsustainable.”

If structural changes could be made to pension debt, the city’s taxpayers – homeowners and business owners – could see the city’s finances clean up and their taxes stabilized. Equally important, homeowners would have confidence that their taxes would not continue to increase each year.

The gradual incorporation of large increases in assessed value could mitigate some of the shocks caused by dramatic increases in assessed value for property owners. But to prevent property taxes from rising year on year, residents, businesses, and city officials in Chicago and across the state should urge the Illinois General Assembly to pass a constitutional amendment to put the pension reform on the ballot.


Source link

Leave A Reply

Your email address will not be published.