Property taxes are a test of strength for most homeowners. For people on fixed incomes, rises in property values — and thus taxes — can be dastardly. Now, imagine people on fixed incomes who just happen to live in Illinois.
Illinois ranks #2, after New Jersey, for highest property taxes in the nation, according to a recent WalletHub analysis. The Illinois homeowner shells out an average of $5,000 in property taxes on a $217,500 house. That means people in Illinois pay double what the average homeowner pays in property taxes nationwide.
Some seniors can’t pay it, and have no way to earn the extra income. For them, there is a little extra relief coming this year — perhaps just enough to keep some of the most cash-strapped homeowners in their homes. More on this below.
First, What’s the Matter in Illinois?
The Illinois property tax issue has been brewing for two decades or more. Now, maybe in part because the tax bills in surrounding states are so much lower, Illinois is experiencing a secondary problem: the flight of residents out of the state.
United Van Lines ranks Illinois as the third most-moved-from state in the country. (New Jersey’s first.) The states where Illinois residents move to most include Arizona, California, Florida, North Carolina, Texas, and Washington, says the moving company. Some of those are known for their affordable tax structures. And just a short move to Indiana or Kentucky could chop an Illinois homeowner’s $5,000 tax bill down to about $2,000. So, is there any solution to this growing problem?
Answers are complicated. “If the government decides that they need more money to run the government, taxes for homes and commercial properties are going up” and that is happening statewide, Cook County, IL Treasurer Maria Pappas has said to ABC News. Businesses pay higher property taxes, but some of them have not survived the impact of the pandemic, and residents will be called on to take up the slack.
Without property taxes, local governments cannot afford to pay for schools and local public services. But the state’s biggest budget issue is well known. Illinois and its local governments are struggling to make their public pension fund payouts. And their pension debt leads them to continually raise property taxes.
Pension reform is on state legislators’ radar, but the Illinois Supreme Court, noting the pension protection clause in the state constitution, says certain reforms may not be carried out unless the constitution is amended. The Illinois pension protection clause states:
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
Illinois has continued to turn to property taxes to cover the pensions.
So, How Will These Illinois Retirees Pay Their Property Taxes?
It would be an odd thing indeed if older people were priced out of their homes because the state is trying to pay the retirement funds for its older residents. But that’s where things are headed.
In Illinois, homeowners aged 65-plus can look forward to some property tax relief options over the next few years, under a law sponsored by State Senator Laura Murphy and State Representative Debbie Meyers-Martin. The new legislation increases the maximum income limit, and the deferral allowed, for an existing senior property tax deferral provision.
Signed into law in August 2021, the new provision enhances an Illinois initiative to provide key support to Illinois seniors and allow them to stay in place. The initiative has already allowed seniors to defer up to $5,000 in taxes if their income is $55,000 or under. The income limit will be raised another $10K by the 2025 tax year; and the deferral ceiling will be lifted to $7,500.
This is some help, for some people. And it might come just in the nick of time, given the rising inflation levels in the wake of the pandemic.
But it does shift the burden rather than solve the underlying budget problem.
Can the Senior Property Tax Freeze Investigation Help?
In Cook County, in the Greater Chicagoland area, many residents are getting hit with an increase of more than $1,000 this year. The county does offer a property tax assessment freeze for homeowners aged 65+ making under $65,000 in annual income. As of 2021, more than 144,000 Cook County properties have been granted a senior assessment freeze.
As its full title indicates, the Senior Citizens Assessment Freeze Homestead Exemption is geared to reduce the burden of older homeowners and help them avoid the impact of rising taxes on their primary residences. The freeze is especially critical for longtime residents of increasingly popular areas where property assessments have soared. Seniors may apply to the county assessor to have their properties shielded from annual reassessments.
As important as this option is, the way it’s run has made it part of the Illinois problem. The Chicago Sun-Times reports that the administration of the freeze is severely mismanaged. The newspaper’s in-depth analysis of Cook County assessment freezes found the initiative shifting tax burdens from the frozen properties to other households — quite often based on corrupted assessments.
In some cases, the freeze has wrongly been given to businesses. In other cases, frozen assessments are extended for years, based on no-longer-existing homes, or on past homeowners’ incomes. Some recipients of the benefit are extremely wealthy. Cook County Assessor Fritz Kaegi’s office blames the mismanagement found by the Sun-Times happened on previous county assessors.
Among the many surprising Cook County tax freezes is the one that went to a three-bedroom, 5 ½-bath Water Tower Place condo priced by its owners at more than $3 million. The owners’ 2020 tax bill was $2,502. By comparison, the couple’s South Florida condo’s annual tax bill is $19,000.
Aftermath: Innocent Taxpayers and Public Servants Pick Up the Pieces.
After the investigation, Cook County is now insisting that taxpayers on ten homes noted in the investigation pay up a collective $273,000 more in 2021 to make up for unjust tax losses. And the Water Tower Place condo? Its tax bill for 2021 is $21,091.
The county assessor’s office is issuing a flurry of corrected tax assessments. Many are impacting seniors who were unaware of the office’s longtime errors and failures, and are now being told to pay large bills for back taxes under threats of liens.
None of this involves the Cook County Register of Deeds or its other departments. But those other departments are also forced to deal with the harm done by the assessment mess. And some Illinois seniors just trying to pay their fair share are, no doubt, reeling from the effects on their finances and their faith in fair, equitable taxation.
Supporting References
Ill. Const. 1970, art. XIII, § 5.
Ill. Supreme Court: In re Pension Reform Litigation, 2015 IL 118585.
John S Kiernan for WalletHub.com: Property Taxes by State (Feb. 23, 2021).
Lisa Rigoni for IllinoisPolicy.org: Illinois Again Ranks No. 2 in U.S. for Highest Property Taxes (Mar. 4, 2021).
CBS Channel 23, WIFR (Rockford, IL): Illinois Ranks Third Among “Most Moved Out States” in 2020, Study Says (Jan. 8, 2021).
Jason Knowles and Ann Pistone for ABC Channel 7 (Chicago, IL): Cook County Property Taxes Increase by $534M Despite Some Pandemic Relief Funding (Aug. 17, 2021).
Deputy Majority Leader Laura Murphy, IL State Senator, 28th Senate District: Older Illinoisans Have More Options for Property Tax Relief Under Murphy Law (Aug. 27, 2021).
Chicago Sun-Times: “Senior Tax Freeze” Homeowners Told by Cook County Assessor They Will Have to Pay More This Year in the Wake of Sun-Times Investigation (Sep. 3, 2021).
Photo credits: Teona Swift and Tom Leishman, via Pexels.