Residential property tax rates rose—in some cases, steeply—in 9 of 12 representative Cook County municipalities over the past decade, according to the Civic Federation. Meanwhile, taxes on commercial and industrial property went the other direction, declining in 11 of the 12 municipalities. That means homeowners in those communities are carrying more of the tax burden than they did a decade ago, while businesses carry less.
In a report released Monday, the Civic Federation showed that homeowners in Chicago, Chicago Heights, and Evanston were being charged a lower rate of property taxes in 2008 than in 1999, but homeowners in nine other representative communities scattered around the county are paying more. In Barrington, Elk Grove Village, and Harvey, residential property tax rates climbed by more than 20 percent during the ten years covered by the study. In all the communities except Harvey, tax rates for industrial and commercial real estate dropped during the decade. (In the Chicago region’s other counties, residential property is taxed at the same rate as commercial and industrial property.)
Laurence Msall, president of the Civic Federation, thinks the upsurge in residential rates is not terribly surprising: “It’s a result of the big run-up in real-estate values,” he says. In most of the communities that his organization studies, home values “were on a ten-year trend upward until around 2008,” so municipal leaders were able to reduce tax rates while still collecting more tax money.
While the ten-year rate changes indicate a long-term shift of the burden to homeowners, the one-year changes from 2007 to 2008 reveal that rates across the board—for all types of real estate in all the sample communities—went up, with the burden tilted back some toward business. Property values may have drooped, but municipalities “still had to offer their core functions,” Msall says, so they raised their rates all around.
For the decade, the tax rates in Harvey rose the most in all three property categories. “Harvey has to maintain its municipal and educational functions even without a strong commercial district or rising [home] values,” Msall says. “But every time it goes back to the property [tax] rates for more, it has an impact on the attractiveness of the community” in the eyes of business owners as well as homeowners. And Harvey isn’t alone. “[Other] southeastern suburban Cook County towns are in the same very difficult situation,” Msall says.
The report is also a useful tool for making comparisons on what comparable homes in different communities would be dunned for property taxes. In 2008, a homeowner in Chicago would have paid $1,310 in taxes per $100,000 in home value, compared to $1,930 in Wheaton, $2,630 in Oak Park, and $3,280 in Waukegan.
It’s a fun exercise, but as Msall notes, nobody is likely to move to another town based strictly on its property taxes. “People don’t think much about whether the property taxes are good,” he says. “They live where they live.”
But people do think about home values—and according to an August 19th Zillow report, Midwesterners are pessimistic on that subject. Midwestern respondents to Zillow’s second-quarter 2010 survey were more likely than those in other regions to say local home values will decline in the next six months. What’s more, they gave by far the biggest estimate of how much their own home’s value will drop in the next year: 20 percent.