The city’s Budget Office plans to start discussing different city-run property tax rebate options with aldermen “in the upcoming month”, a spokesperson for the City’s Budget Office told Aldertrack.
In an emailed statement, Molly Poppe, a spokesperson for Budget Director Alex Holt, told Aldertrack yesterday that the office is looking at multiple rebate options, including a handful of plans aldermen have introduced since the City Council passed a historic $544 million property tax hike to help the city’s vastly underfunded Police and Fire pension fund.
“Any rebate plan will remain true to the Mayor’s goal of protecting low- and middle-income families that can least afford it,” Poppe said in the email.
Back in October, when aldermen approved Mayor Rahm Emanuel’s spending plan for 2016, aldermen also adopted a resolution, albeit symbolic, imposing an April 30th deadline for the city to start considering its own property tax rebate program should Springfield fail to double the homeowners exemption, a plan Mayor Emanuel was confident would pass.
The resolution, introduced by Ald. Michele Smith (43), was fueled partially by skepticism that the state legislature would pass that bill to double the homestead exemption from $7,000 to $14,000 by the time property tax bills were mailed out this year. 28th Ward Ald. Jason Ervin, at one point during the budget season, said voting on a property tax hike before Springfield passed an exemption was “akin to jumping in a pool and not knowing if it is a 9-foot pool or 29-foot pool.”
That exemption, Emanuel, Holt and Chief Finance Officer Carole Brown argued, would shelter homeowners whose homes are valued at $250,000 or less from seeing any increase in their tax bills. Homes valued above $250,000 would also see some relief.
The $544 million levy increase, which will be ramped up over four years, is an average 12.2% increase over the current 2015 estimated tax bill. According to numbers provided by the Mayor’s Office, a home valued at $232,630 would see an estimated $4,146 tax bill for 2015, a $276 increase over the previous year. At the peak of the ramp, in 2018, that same homeowner is expected to see a $4,344 tax bill, a $474 increase. If Springfield were to double the homeowner exemption, that homeowner would see $3,707 tax bill for 2015, and a $3,879 tax bill for 2018, a savings of $439 and $464, respectively.
“The exemption doesn’t need to be in place before the end of the year,” Holt explained to aldermen during a Finance Committee hearing held on October. “It does certainly need to be in place before the second installment [property tax] bills go out in July. Certainly for the purposes of the County, it would be preferable, given the work that they need to do, that this happen as soon as possible. But from a residents perspective, they won’t see an increase until the bill that’s due…next year.”
The Cook County Treasurer is responsible for compiling tax bills for all governments in the County while the Cook County Clerk is responsible for sending them. Last October Cook County President Toni Preckwinkle expressed doubt the County treasurer’s office could even implement the Mayor’s exemption plan, saying County does not have the technological capacity to separate city properties and their tax rates from the rest of the county’s. Cook County Treasurer Maria Pappas later told Crain’s “They can’t do it. I’m 95 percent sure they can’t do it.”
And since State Rep. Barbara Flynn Currie introduced an amendment to Illinois Senate Bill 1488 in October to double the homeowners exemption, the bill has yet to advance out of committee. With no state legislative action, the Mayor’s Office has yet to explain how it will make good on its promise to aldermen to make sure Emanuel’s historic property tax hike won’t impact homeowners who can least afford it.
Any city-run property tax rebate plan would likely face an uphill battle, too, making it doubtful that a reasonable plan would be put in place in time for when the second installment of the 2015 property tax bills are mailed out to residents this summer.
First, any rebate plan would need a funding source. The city has estimated it would cost upwards of $35 million, and finding a new revenue source could prove to be a hard sell for a Mayor whose latest budget included that historic property tax hike and an unpopular new garbage fee.
Second, business interests are vehemently opposed to special tax breaks for homeowners. When the Illinois House Finance and Revenue Committee held a debate in October on doubling the homeowner’s exemption, Michael Reever, Vice President of Government Affairs for the Chicagoland Chamber of Commerce, vocally expressed the group’s opposition to what he described as “Cook County’s archaic and unfair classification system,” which taxes commercial and industrial properties at a rate 2.5 times higher than residential properties. Those property owners would have to make up the levy difference if a residential exemption passed.
“[Mayor Emanuel’s] proposal would shift an even greater share of the property tax burden to business– something the Chicagoland Chamber does not support,” Rever said in his statement. The burden, Reever said, is the recent minimum wage hike, implementation of the plastic bag ban, the new cloud tax, and an increase in the 911 surcharge.
There are four property tax rebate plans introduced by aldermen that have been sitting in Ald. Ed Burke’s (14) Finance Committee. All but one have been untouched since they were introduced last fall. And each plan caters to the needs of the sponsor’s constituents.
Ald. Joe Moreno’s (1) plan uses a rebate formula that factors in household income. His ward, which covers part of Wicker Park and Bucktown, has seen a significant increase in property values. Moreno’s ordinance would provide relief for homeowners with income under $100,000, with a higher rebate rate for those earning less. The rebate rate is multiplied by the difference in the City’s real estate tax assessment rate from last year to this year, then multiplied by the assessed value of the house. Moreno’s office said 57% of the occupied household population in Chicago would potentially be eligible to apply for relief under his ordinance.
In a conversation with Aldertrack yesterday, Moreno affirmed that he still believes doubling the homeowner’s exemption is the best course of action for the city, because rebates require more work for homeowners. An exemption is automatically deducted from a tax bill, while a rebate would have to be applied for. Noting that he’s skeptical Springfield will enact a rebate plan in time, Ald. Moreno said he has a meeting scheduled with the Budget Office next week to discuss why his rebate plan is the best one for the city.
Lincoln Park Ald. Michele Smith (43) introduced another rebate plan catered more towards elderly residents in her ward. Her plan provides additional relief for homeowners who are 60 years or older and have lived in their home for at least 18 years. Similar to Moreno’s, her ward has seen a surge in home values over the past two decades.
And Ald. Carlos Ramirez-Rosa (35), whose ward includes Logan Square, has two complementary proposals. One plan, which he introduced with Progressive Caucus members last fall, would shelter Chicago homeowners living 400% below the federal poverty level. In order to qualify for the rebate, a family of four would have to have a gross annual salary under $97,000, a family of two would have to report an annual salary under $63,000, and a single homeowner would have to have an annual salary under $47,000.
The fourth plan, which Ald. Rosa introduced at the April City Council meeting, expands on his first plan by extending the rebate to include rental property owners who do not increase their tenants’ rents. In order to be eligible for this plan, a property owner would have to prove that their tenants did not or will not see a rent increase “between the applicable year and the year immediately following the applicable year as determined by leases, affidavits, or other required documentation”, in addition to providing proof that at least 50% of all units on-site are rented to individuals or families whose income is within 400% of the federal poverty level.
Even more rebate plans could be introduced later this spring, after aldermen receive and study data from Cook County on the receipts from the first installment of this year’s property tax bills, one aldermanic staffer said. Those were due on March 1st of this year.