Kadner: Southland hit with highest tax rates
By Phil Kadner email@example.com June 26, 2013 9:12PM
Ed Paesel, executive director of the South Suburban Mayors and Managers Association
Updated: July 30, 2013 7:36AM
Ten of the poorest south suburbs are stuck with the highest property tax rates in Cook County.
Ford Heights ranks No. 1 on the list compiled by Cook County Clerk David Orr, with an astounding composite property tax rate of 31.8 percent.
Park Forest and Riverdale rank second and third with tax rates of 28.7 and 24.4 percent, respectively.
Chicago has the lowest composite property tax rate in Cook County at 6.3 percent, according to Orr’s office.
The other nine communities with the lowest tax rates are all wealthy, mostly white and primarily in north and northwest Cook County.
They include Northfield, ranked second with a composite tax rate of 6.5 percent; Inverness at No. 3 with a tax rate of 6.6 percent and Northbrook at No. 10 at 7.2 percent.
The list was compiled by combining the rates of all taxing bodies, such as school districts, fire protection districts, library districts, park districts, townships and Cook County.
“That’s devastating, just devastating,” said Ed Paesel, executive director of the South Suburban Mayors and Managers Association when asked about the impact of the property tax rates on the Southland. “Obviously, tax rates alone make it difficult, virtually impossible, to get economic development.”
And as commercial enterprises flee communities, the tax burden falls more heavily on homeowners, Paesel said, adding that the primary reason for soaring property tax rates is the lack of state funding for public schools in Illinois.
Public school districts typically represent about 67 percent of a homeowner’s tax bill in Cook County.
“Clearly, over the long term, we can’t give up the fight to get the state to adequately fund the public schools,” Paesel said.
Ralph Martire, executive director of the Center for Tax and Budget Accountability, a think tank that long has studied the impact of taxes in Illinois, said its property owners have the “heaviest property tax burden in the country” due to the state government’s failure to adequately finance public education.
As a result, Martire said, towns with the highest tax rates “often have the poorest social services and the poorest schools. So they’re paying a larger and larger share of the tax burden and getting less and less in return. That’s not their imagination. It’s a fact.”
In the meantime, Martire said, property wealthy communities such as Inverness can raise more money with lower rates and have better funded school systems.
According to U.S. Census data, Ford Heights, population 2,763, had a median household income of $21,916 in 2010 and a 49.6 percent poverty rate.
In contrast, Northfield (population 5,470) had a median household income of $101,000, a median home value of $618,000 and only 1.7 percent of its population lived below the poverty line.
Over the past year, the state’s elected leaders in Springfield have been trying to shift the burden for funding the suburban and downstate teachers pension system to local school districts, contending that Chicago property owners are unfairly forced to contribute to that pension fund while also paying for Chicago public school teachers’ separate pension system.
But the extremely low property tax rate of Chicago demonstrates that the city is not suffering nearly as much under the state’s financing system as the south suburbs.
“This is simply a natural consequence of the state’s financial system,” Martire said. “It’s not a surprise.”
He said the only way to shift the property tax burden off the backs of the poor is to alter the Illinois sales tax and income tax systems.
“The system creates inequities throughout,” Martire said. “It’s unfair, but it reflects the income shift that has been taking place throughout the country.
“We know from Internal Revenue Service figures that 9 out of 10 adults have seen their incomes decline. Sixty-seven percent of the income gains have gone to 10 percent of Americans.”
Other south suburbs with high property tax rates are Harvey, 24.2 percent; Chicago Heights, 23.6 percent; Dolton, 22.3 percent; and Markham, 22 percent.
Some of the communities actually appear twice on the list because they are served by different school districts that have different tax rates.
“I would point out that tax rates are not tax revenues,” Park Forest Mayor John Ostenburg said. “In other words, while the south suburbs may have higher tax rates, I would guess that there’s not a single one generating as much tax revenue as any of those northern Cook County suburbs.
“You can raise a lot more money taxing homes a little that are worth $500,000 than you can taxing homes worth $100,000 at a much higher rate.”
Ostenburg noted that Park Forest has been struggling in trying to balance service cuts with tax increases.
“In general, our people complain more about cuts in city services than about tax rates, although no one is happy with the tax rates,” he said.
Home foreclosures have also resulted in lower property tax revenue in south Cook County, Ostenburg said, increasing rates even more.
“At some point Cook County is going to have to re-evaluate its tax distribution system,” he said, explaining that the county taxes commercial property at a much higher rate than single-family homes on the theory that it would drive down tax bills for homeowners.
But in the south suburbs, the higher commercial tax rates are a disincentive for business investment when developers can opt for low-tax options nearby, such as Will County or Indiana.
The result is that homeowners’ tax bills in south Cook County go up ever higher.
Addressing this issue should be a top priority. But the “haves” don’t care if the “have nots” end up with nothing.