An Illinois law easing residential taxes is being challenged in court, partly on the grounds that Chicago benefits more from the law than its suburbs do. But the numbers behind that claim don’t quite hold up.
Suburban home owners benefit from the law later than Chicago homeowners do, but will not be at a long-term disadvantage if the market value of their homes increases at the same annual rate as that of Chicago homes.
The law, the “7 percent assessment cap,” prevents an owner-occupied home’s assessed value from increasing more than 7 percent per year. The cap applies for three years.
The law is being challenged by the Chicagoland Chamber of Commerce and the Building Owners and Managers Association of Chicago, which filed a suit on Oct. 13.
These groups do not support the law and lobbied strongly against it because any decrease in residential taxes will increase business taxes.
The median assessment increase in the city of Chicago was 32 percent for the three-year period before property values were reassessed there in 2003. The law would cap that at 22.5 percent.
Homes in Cook County are assessed every three years. The north suburbs are being re-assessed this year and the south suburbs are being re-assessed in 2005.
Because of this, the cap applies to Chicago in 2003-05, to the north suburbs in 2004-06 and to the south suburbs in 2005-07.
According to the suit, this delay causes Chicago homeowners to receive a bigger break than those in suburbs since the 7 percent increases are allowed to start in 2002. The Illinois constitution requires that tax law affects all residents equally.
“The law discriminates against suburban homeowners,” said Mike Elliott, a lawyer who prepared data for the Chicagoland Chamber of Commerce.
Based on The Daily’s calculations, the Chamber’s allegations rely on the assumption that property values would remain constant between 2003 and 2005. The Chamber’s calculations showing that a Chicago home benefits more are based on a home with a market value of $250,000 in 2002 that would be reassessed to $325,000 in its assessment year, a 30 percent increase.
In Chicago that would be a 30 percent increase in one year. In the north suburbs, that would be 30 percent in two years, 15 percent per year. And in the south suburbs, it would be 30 percent increase in three years, 10 percent per year. Elliot declined to elaborate on his calculations.
“All (three) districts will benefit equally from the expanded homeowner exemption and 7 percent assessment cap,” Maura Kownacki, a spokeswoman for the Cook County Assessor, wrote in an e-mail to The Daily.
She added that residential property value had been increasing significantly faster than business property value for the past six years, so the law works to correct the balance of taxes paid.
Joan Parker, director of government relations for the Chicagoland Chamber of Commerce, disagreed, saying homeowners should pay their fair share of taxes if residential property values are increasing.
“We’re talking about fair treatment here — if indeed the residential market is growing … those properties should be paying their fair share of the taxes,” she said.
The lawsuit also challenges the constitutionality of the law in other ways, claiming it is void because it is not within the powers delegated by the constitution. Further, it alleges that the law has “no rational foundation in sound public policy,” so it violates the prohibition of special legislation.
Both the assessor and the business associations agree that the tax system of Cook County needs a complete overhaul — but they likely disagree on what should be done.
Reach Paul Thissen at [email protected].
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Numbers unclear in lawsuit claim against tax law
