Report finds tax burden unfair
County assessment verifies what many already knew
The Cook County assessor’s office within the pastweek announced findings of a new study that verified conclusions reached by other researchers and investigators.
The new study concluded that assessments in Cook County are unfair.
Many south suburban homeowners will greet this information with about asmuch surprise as discovering that Thornton Quarry is a big hole in the ground. They’ve felt for some time that they’re on the losing end of a rigged property tax system.
The winners are fat-cat corporations that occupy downtown Chicago high-rises and the politicians who moonlight as tax appeal attorneys. When privileged, well-connected moneybags pay less than their fair share, everyone else pays more.
“If there’s a large group of properties that is under assessed, that means that they have shrunk their share of the pie at everyone else’s expense to pay for local government,” Cook County As
sessor Fritz Kaegi said Friday during a telephone interview. “That means everybody else has been picking up the tab for them.”
Kaegiwas elected in 2018 on a reform agenda. He has criticized methods used by his predecessor to calculate assessment values, saying theywere unscientific and lacked transparency.
For the new study, researchers with the International Association of AssessingOfficers compared assessments of commercial buildings in Cook County to actual recent sales prices.
They found that in general, expensive properties are assessed at values lower than their true worth and lower value properties in the south suburbs and elsewhere are assessed at values greater than their actualworth, Kaegi said. Assessment professionals call this regressivity.
The study found that assessments deviated from actual market values by about 40% countywide, on average, Kaegi said. In the city of Chicago, values were off by 50%, the report found. In the south suburbs, itwas a little better, but assessed values still
differed from market values by about 30%, Kaegi said.
“I’m not aware of anywhere in theUnited States where the numbers are this far off,” Kaegi said. “The industry standard is to get it within 15%.”
Discrepancies in assessments mean that the typical homeowner in the south suburbs is overpaying property taxes by about $1,000 a year, Kaegi said.
Cook County reassesses properties every three years. Last year, properties up northwere reassessed. This year the focus is on townships in the south suburbs. Next year, it will be the city of Chicago’s
turn.
“Fixing the commercial base, aswe did in the north suburbs last year, in Chicago it makes a big difference because you have this huge base, where there are millions of people living who can benefit frommaking sure the commercial (values are) accurate,” Kaegi said.
The south suburbs, in general, have fewer occupied commercial and industrial properties than other parts of the county. The impact here of Kaegi’s new assessment methods will be less dramatic here compared to Chicago and the northern suburbs.
“Even ifwe get the assessments rightwe are spreading the fixed costs of education and local services across very narrow shoulders,” Kaegi said.
Another finding of the new studywas that more expensive commercial propertiesweremore likely to be improperly valued than less expensive business properties, he said. Little guys have been picking up the tabs for bigger taxpayers.
“Think about all our struggling small businesses,” Kaegi said.
Unfair assessments are one part of a complex system that has made some parts of the south suburbs look like a disaster has unfolded in slowmotion. Some neighborhood are characterized by vacant lots, fire-damaged structures and abandoned buildings.
The area has some of the state’s highest tax rates. Costs are high to provide services in Cook County compared to other parts of the state. There are fewer commercial properties in the south suburbs to shoulder the tax burden, so homeowners bear a greater share.
High tax rates discourage business investment. Why should a company open a shop inMatteson when tax rates are much lower right next door in Will County? Why invest in ChicagoHeights when lower taxes are just across the border in Indiana?
Home values here have been slower to recover from the Great Recession than virtually anywhere else in the nation. A home often is a family’s biggest investment and best opportunity to transferwealth to the next generation. “It’s a spiral,” Kaegi said. Taxes have become so repressive throughout the region that owners of many commercial properties do not pay real estate taxes that they owe. Tax collection rates inHarvey and other communities are below60%, officials have said.
Since real estate taxes are the primary source of funding for public schools and other local services, the lack of revenue affects the quality of education, public safety, recreation and other quality-of-life concerns.
“We knowthese problems. We need to focus on solutions,” Kaegi said. “There are some thingswe can do with the assessment system to fix that. The assessment system is not a cure-all.”
Kaegi said he is doing what he can to make assessments more fair and address that part of the equation. His office has pushed for legislation, which his office has called theDataModernization Bill, thatwould require collection of information about monthly property rents and other data.
“A big part of whywe see the disparities identified in this report is that data gaps create a lot of these disparities,” he said. “Third-party data doesn’t do a good job representing what is happening in smaller suburbs or communities that are not economically thriving because economic databases tend to cover the areas that are thriving.”
The COVID-19 pandemic’s impact on businesses has complicated efforts to correct imbalances among commercial and residential assessments, he added. Also, the state’s overreliance on property taxes to fund education has amplified the system’s negative effects in the south suburbs.
InMarch, the Chicago Tribune published an opinion piece in which Kaegi wrote that even a modest increase in federal funding for education could help reverse the crippling, spiraling effects of high property taxes in the south suburbs.
Title I funding forK-12 education is about $15 billion annually, he said.
“It hasn’t gone up in the past decade,” Kaegi said. “It would make a real difference in the south suburbs.”