Phase-out of cap on property tax assessments begins in city this year
BY LISA DONOVAN Cook County Reporter email@example.com April 3, 2013 5:35PM
Bungalows near Midway Airport on the Southwest Side. | Rich Hein~Sun-Times files
Updated: May 5, 2013 3:04PM
For Chicago homeowners, the sun is setting on the 7 percent cap on property assessment increases — a break created during the real estate boom to rein in steep property tax hikes.
But with questions being raised about just how many households will see an increase in their second-installment property tax bills this summer, elected officials and observers disagree on whether to blame the end of the cap or the spending habits of local government.
Created a decade ago, the cap was considered a “shock absorber” for homeowners in gentrifying neighborhoods where property values soared and, as a result, so did tax bills. But a political fight resulted in the phase out of the cap.
The cap is officially gone in the city this year, while north suburbanites will see it go away next year and south suburbanites in 2015.
In many ways the cap is a vestige of the real estate market explosion. When the bottom fell out of the market, home values and assessments dropped, and the cap lost its benefit.
So come tax bill time, the cap won’t mean much unless you’re living in one of the more well-heeled areas of the city.
“The average homeowner won’t see a change [in their tax bill] as result of the 7 percent cap going away,” said Laurence Msall, with the Civic Federation, which keeps an eye on taxation and spending by local governments.
“Because of the decline in residential — and really all property values — people’s property tax values aren’t being impacted by assessed value.”
Msall did say, though, that tax bills continue to rise because “the government levies continue to grow – limited only by inflation.”
Cook County Assessor Joe Berrios says once a break such as the 7 percent cap is yanked away, property tax bills will naturally go up.
But even he acknowledged that the effects of the cap are waning. “To be honest with you — it’s not really working, because assessments are going down,” said Berrios, whose office sets the value of 1.8 million parcels in of property in Chicago and suburban Cook County for taxing purposes.
Of 640,000 residential properties on the books in Chicago, owners of two-thirds take advantage of some type of tax break. And of those 400,000-plus, owners of about half took advantage of the break provided under the 7 percent tax cap. While no comparative data was available, the number represents a continuing drop in those homeowners able to take advantage of the deal, according to the assessor’s office.
While homestead and senior exemptions remain on the books, Berrios wants to boost those benefits in Springfield “to soften the blow” of losing the 7 percent tax cap. Right now homeowners receive an exemption, under a complicated tax calculation, for the first $6,000 in equalized assessed value on their property. But Berrios is pushing legislation in Springfield to boost that to $7,000. Seniors get an added exemption, and Berrios is similarly pushing for that exemption to go from $4,000 to $5,000.