Chicago property owners brace for hefty tax hikes
Financially battered from years of being slapped with higher real estate taxes and municipal fees, Chicago property owners are shuddering about what tax increases are on the horizon for 2021.
Mayor Lori Lightfoot’s dark vision of the city’s 2021 budget deficit skyrocketing to $1.2 billion is frightening to the average homeowner who likely will have to dig deeper in 2021 to pay ever-increasing real estate tax bills.
Earlier in 2020 the COVID-19 virus spiked the budget shortfall to nearly $800 million, and the mayor said the deficit would be filled using relief funds, federal dollars, debt refinancing, and borrowing.
This bad news comes after homeowners scratched to pay the final installment of the largest property tax hike in Chicago’s history – $589 million phased in over the past four years to pay for pensions for the city’s police officers and firefighters.
Analysts say Mayor Lightfoot now is considering a plan to save $200 million in 2021 by reducing the city’s work force of 31,000 full-time and 1,800 part-time employees through furloughs and layoffs.
Since many city workers are members of municipal unions, the mayor is asking Chicago labor unions to suggest alternatives and measures to help protect workers. Other cost cutting could come from tapping surplus Tax Increment Financing (TIF) funds.
Chicago property owners will receive the first installment of the 2020 real estate tax bill due on March 1, 2021. Typically, the amount of the first installment is 55 percent of the last year’s total bill.
Hefty 2020 property tax bill increases could come due in August 2021, when the second installment of the bill arrives.
Along with paying for the skyrocketing city budget, much of the predicted property tax increase also could depend on the work of Cook County Assessor Fritz Kaegi (left), who said he has dramatically revamped the assessment process, especially how commercial properties are valued.
Kaegi said he started from the ground up, reworking the assessment formula and drawing on Multiple Listing Service information about sales prices. For 2020, the assessor is re-assessing the south and western suburbs.
Crystal ball gazing into the outlook for the expected 2020 property tax hike, payable in 2021, is cloudy, tax experts say.
“The property tax bill is determined by four factors – the assessment, the equalization factor or multiplier, the tax rate, and the exemptions,” said Michael Griffin (right), a Chicago real estate tax appeal attorney.
Homeowners also should review their exemptions because they can reduce their tax bill if they have the proper exemptions applied to their tax bill, Griffin noted. The three main exemptions are the Homeowner Exemption, Senior Exemption, and Senior Freeze.
The Homeowner Exemption recently was increased to $10,000 from $7,000, and the Senior Exemption was hiked to $8,000 from $5,000. Those amounts are deducted from equalized assessed value of a home to which tax rates are applied to determine individual tax bills.
Also, more seniors can qualify for the Senior Freeze because the Illinois Legislature increased the maximum annual income to receive the freeze to less than $65,000 from less than $55,000.
“Every homeowner should review their last tax bill to see if they received the proper exemptions and contact the assessor if the exemptions are wrong,” Griffin advised.
Predicting a hefty property tax increase next year really centers on two wild cards – the tax rate and the state equalization factor, which can’t be challenged by taxpayers.
The equalization factor, or “multiplier,” is established each year for Cook County to bring property tax assessments in line with other parts of Illinois. The value is determined by the Illinois Department of Revenue.
However, the main engine that drives up property tax bills is the amount of money spent by local government.
Property owners who think they are over-assessed should file an appeal. The Cook County Assessor and Board of Review have expanded the online filing process so a homeowner can file their appeal without having to visit either office. Contact the assessor’s office to find comparable properties or start the appeal process.
If the deadline for filing an appeal for your township has already passed at the assessor’s office, you still can file an appeal with the Cook County Board of Review and the Illinois Property Tax Appeals Board.