Yesterday, the day after Cook County Clerk David Orr released property tax rates, the Mayor’s Office of Budget and Management started briefing aldermen on potential rebate plans the city could offer homeowners to offset this year’s historic tax hike. Those rebates will offer much less relief and require a lot more work to implement than the homeowners exemption the Mayor tried to pass through Springfield earlier this year. And none of the proposed plans include a way to pay the cost of the rebates.
The average City of Chicago residential taxpayer should expect to see a 12.8% increase on the tax bill set to land in their mailbox in the coming weeks, Clerk Orr estimated. More than half the increase (60%) is due to the $318 million property tax levy that kicks in this year. [A ward by ward breakdown of the median home value, impact of the property tax increase, and tax bill reduction from the homeowners exemption can be viewed on pages 24-73 here, but keep in mind it doesn’t reflect reassessments.]
The Budget Office released details of four rebate plans that have been floated in the months since the budget and property tax hike passed, adapted from those proposals, or a somewhat pared down version of the 2010 rebate put in place by Mayor Daley. [Details of each rebate option and how rebates are calculated here]. Each rebate plan comes with an estimated cost, but no mention of how the programs would be paid for.
“We’re trying to provide an offset for families and seniors as a direct result of the police and fire pensions,” Budget spokesperson Molly Poppe told Aldertrack. “We are trying to focus on the flow of income in middle class families. $50,000 is about the median income in Chicago.”
Ald. Walter Burnett (27) said he was late to the briefings, but “saw all four of them. My main question is, how are we going to pay for it?” Mentioning the recent news of McDonald’s relocating its corporate headquarters to Chicago and the improving area economy, Burnett says he’d like to get a clearer picture of how much the city is benefiting from commercial property taxes as well. “It’s kind of hard for me to make a decision on [a rebate] when I don’t know when all the moving parts are.”
He and Budget Chair Carrie Austin told Aldertrack they did not hear from the Mayor’s Office on how revenue would be generated from the plans, which range in estimated cost from $10.4 million to $50 million, but Austin and Burnett agreed they’d like to see a plan that would benefit the most people, without hitting others too hard with new taxes or fees.
The plan that could cover the most people, per the Budget Office’s count, is not surprisingly, the costliest. That plan (Option 2) was first proposed by Ald. Carlos Ramirez-Rosa (35), and would potentially cover 237,000 taxpayers: both homeowners and those who rent properties. The average rebate would be $195 for homeowners and $254 for rental property owners, but could go as high as $2,000. Rebate amounts would be determined based on assessed home value, the increase in the city tax rate, income as a percent of the federal poverty line, and whether residents receive social security or disability payments. Under Rosa’s plan, those who owe debt to the city (like unpaid parking tickets) and city employees would be eligible for a rebate.
The property tax rebate proposal first pitched by Ald. Michele Smith (43) and Ald. Proco Joe Moreno (1) also made the list (Option 1). Their rebate plan is limited to only the growth in City of Chicago property taxes due to the police and fire pension property tax increase. Household income is subtracted from $100,000 and multiplied by the growth in the City’s tax rate. This amount is multiplied by the home’s Equalized Assessed Value (EAV) to generate the rebate. The average rebate amount is estimated to be $116.
That proposal also includes a senior supplement for those over 60 years old, who have lived in their home for at least 18 years, and whose EAV has gone up by at least 30% from 2014. But those who receive the Senior Freeze or Home Improvement Exemptionwouldn’t be eligible.
A more modest version of Mayor Daley’s 2010 plan also made the list (Option 3): the rebate would be a fixed amount between $25 and $200, determined by using a combination of household income and the eligible increase in the homeowner’s city property taxes. Daley’s plan, intended to ease the impact of the 2008 recession, was eligible for homeowners earning up to $200,000. Today’s plan would only impact households earning less than $50,000.
A modified version of what Moreno and Smith introduced was also included (Option 4). It would impact 107,000 homeowners and would cost roughly $12 million. The growth in the City’s tax rate is multiplied by the home’s EAV to determine the eligible increase. The homeowner receives a rebate which varies depending on income.
Poppe says she anticipates the city will use some kind of non-profit partner or outside delegate agency to carry out and promote the rebate program, similar to how the city handles Earned Income Tax Credit (EITC) administration. Mayor Daley’s program was administered by an office within the OBM: the Chicago Tax Assistance Center. At its first application deadline, just 36,621 of 200,000 eligible homeowners applied. $35 million was set aside for the program, but ultimately the city paid out just $2.1 million. The program drew its funds from a portion of the city’s parking meter revenues, and was paid out using bank cards rather than checks so the city could avoid accounting for tens of thousands of individual grants.
Poppe could not say whether rebates would be offered on a card or a check, but said some rebates could be applied to pay off debt individuals have to the city.
All of the rebate proposals on the table would last just this year, and would only offset the increase in the property tax due to police and fire pensions. Poppe said there was no discussion of rebates for commercial properties like small businesses. Commercial property tax bills will go up an average of 10% this year, Orr’s office said.
The Mayor’s office will also continue pushing on a doubled homeowners exemption in Springfield, Poppe says. Property tax bills are expected to be mailed out in the coming weeks, and are due August 1.
This conversation is coming later than aldermen called for during the budget last year. A resolution approved in October called for the City Council to consider a city-administered property tax rebate program “Regardless of any action taken or not taken by the Illinois General Assembly… by June 1, 2016.”
Poppe says the budget office gathered input from aldermen and their staffers at yesterday’s briefings and might return with a hybrid proposal or “some type of melding of all the options” to introduce at the June 22 City Council meeting, or possibly at the July meeting.