The property tax discussion has been front and center through Illinois’ continued budget crisis.
Illinois ranks second nationally for the highest property taxes. Many reasons have been tendered for this dubious ranking: too many units, inefficient management, increasing cost to local units, and pension debt.
Yes, all these factors can contribute to rising property taxes, but they pale in comparison to the impact of the following two factors.
First is the tax base. A healthy tax base consists of a balance between commercial and residential properties.
In 2007, at the recent height of our economy, commercial and industrial properties comprised 40 percent of the City’s assessed value. Now, in 2016, this shrank to 34 percent, meaning that the levies (annual operating cost) by taxing bodies, if remained constant, would be shouldered at a higher rate by the remaining residential home owners.
Levies generally increased during this time, giving homeowners a double whammy of declining tax base and rising levies. Illinois needs to become more business friendly and competitive with other states, retaining current businesses and attracting new ones. The growth of the tax base would be the largest factor in reducing your property tax bill.
The second factor is education funding. The majority of property tax is for education funding in Illinois – 73 percent on average. Illinois ranks first nationally in education funding appropriated through property taxes.
The state’s inability to fund public education up to the foundational levels leaves local school districts reaching further to cover the shortfalls through property taxes. Growing state revenue, prioritizing education funding, and reasonable pension reform, will account for the second largest reduction to property taxes.
Sometimes the focus gets blurred, but be assured that Illinois property owners will only see noticeable property tax relief when these two issues are addressed through a common sense approach.
