As property tax bills are put in the mail to Cook County homeowners, Governor Rod R. Blagojevich today called on the Illinois General Assembly to reconvene before the end of the year to provide permanent property tax relief. Earlier this month, lawmakers overrode the Governor's recommended changes to a property tax relief bill and approved a version that takes relief away next year, and completely phases out relief in three years.
“I’m disappointed the General Assembly voted to override my veto of HB 664 that would have provided much needed property tax relief to Cook County homeowners. Instead, they voted to take it away and continue a system that places too much of the property tax burden on homeowners while it protects commercial property owners and real estate developers. Homeowners in Cook County may enjoy a false sense of hope when they get their property tax bills soon, but the relief they’ll see this month will disappear next year unless lawmakers do something to provide real and meaningful relief,” said Governor Blagojevich. “I urge legislators to reconvene before the year end to make the necessary adjustments. If they fail to do that, then it is my intention to call them into special session to get it done.”
According to the Cook County Assessor’s office, in the 2006 tax year, about 75% of Chicago homeowners will see their bills go down less than $100. In the next tax year, if lawmakers do not extend the relief, a third of the city’s homeowners will see their bills go UP by over $500.
Governor Blagojevich had proposed two primary changes to House Bill 664: increasing the Expanded Homeowner Exemption (often called the 7% solution) for Cook County homeowners to $40,000 per year from its current $20,000 maximum; and making the increased exemption permanent. The Expanded Homeowner Exemption is the mechanism that currently helps slow the growth of rising property tax bills to 7% per year; it expires this year.
Elected officials throughout Cook County, including Assessor Houlihan and the Cook County Board have criticized House Bill 664, calling for more property tax relief for homeowners. In July, 49 out of 50 Chicago Alderman signed a letter calling the House of Representative’s efforts to provide property tax relief, “nothing more than a disingenuous attempt at property tax relief [that] will result in most homeowners seeing increases as great as 40%.”
“The good news is that 7% will help protect most homeowners from skyrocketing tax bills this year,” said Cook County Assessor James Houlihan. “Unfortunately those homeowners won’t see that same protection next or the year after that. The savings this year will pale in comparison to the increases homeowners will face over the next two years. That’s why it’s critical for us to go back to Springfield and fix this bill so that we can make 7% permanent, reliable and simple.”
In 2003, the General Assembly originally passed a three year property tax solution called the 7% Expanded Homeowner Exemption. This law increased the Homeowner Exemption from $4,500 to $20,000. The Homeowner Exemption is an exemption that most property tax owners can subtract from the taxable value of their home (Equalized Assessed Value or EAV) when calculating property taxes.
Homeowners who utilize the expanded exemption slow the growth in the taxable value of a home to approximately 7% per year until the next assessment, rather than increasing it all at once. Under the original 2003 legislation, 76% of homeowners in Cook County realized cash savings. In the first year under the original 7% solution, Cook County residents saved on average between $400 and $900 on their property tax bills.
The new law passed by the General Assembly will phase out while simultaneously reducing the 7% solution over the next three years from $33,000 in the first year to $26,000 in the second, to $20,000 in the third, and terminating the exemption in its fourth year. This could result in the doubling or tripling of a homeowner’s property tax bill.