In spite of the decline in property values over the last few years, property taxes will not be falling for most taxpayers. This is due to increases in government spending, declines in the value of the homeowner and longtime occupant exemptions, and the 2011 reassessment of Oak Park property values.
Can I do anything to reduce my current tax bill?
If you are eligible for a homeowner, senior citizen or other exemption but did not receive one, the Township Assessor's Office can assist you in obtaining a revised bill for a smaller amount. If you have received all exemptions for which you are eligible, you likely will not be able to do anything about your current bill.
Can I do anything to reduce future tax bills?
Later this summer, the Cook County Board of Review will be accepting appeals from Oak Park residents for next year's taxes. When appeal dates are announced, residents may call Oak Park Township to schedule an appointment for help in preparing an appeal. The Board of Review will also be holding a forum on tax appeals on July 30 at 7 p.m. in the auditorium at Percy Julian Middle School, 416 S. Ridgeland Ave.
Why aren't property taxes going down when property values are going down?
The main reason is that the cost of providing government services is not falling. Property taxes provide most of the funding for public schools and other local services. This year, the cost of providing these services in Oak Park increased by 3 percent, from $163.6 to $168.5 million.
Is every tax bill going to increase because of the 3 percent increase in spending?
No. Some properties will face double-digit increases in their property taxes this year, while other properties will see smaller tax increases or tax reductions. When all the tax increases and reductions are added together, however, the net increase will match the 3 percent increase in tax levies.
Whose taxes are going up and whose are going down?
Because of changes in the homeowner exemption, it is difficult to make general statements about the tax changes for most homeowners. But the following generalizations can be made:
Seniors receiving the Senior Freeze exemption pay 19 percent more. The well-intentioned Senior Freeze exemption provides special tax breaks for senior citizens with annual household income of less than $55,000. But this year's tax breaks are smaller than last year's, leaving most Freeze recipients with a very large tax increase of 19 percent.
The Senior Freeze does not freeze a senior's taxes; instead, it freezes the equalized assessed value of the senior's property. This frozen value is multiplied by the tax rate to arrive at a bill.
The problem is that Oak Park's tax rate increased by 19 percent this year. This higher tax rate ensures that local government receives the revenue needed to operate in the face of declining property values. But it will cause hardship for some seniors.
Homeowners with rising assessed values pay more. Although most homeowners saw a decline in their assessed values at the 2011 reassessment, the assessed values for some homeowners rose. Such homeowners can expect significant tax increases this year.
Residential properties with declining assessed values and minimal homeowner exemptions pay less. Most homeowners have smaller tax discounts under the homeowner exemption compared to last year. But residential property owners who are ineligible for a homeowner exemption, or who only received the minimum exemption last year, do not have to worry about declining exemptions. Most such homeowners will see lower taxes this year.
Why is my tax discount for the homeowner exemption or longtime occupant exemption smaller than last year's?
During the housing boom, the legislature passed a complicated tax law known as the 7 percent assessment cap. The law created two related tax exemptions, the expanded homeowner exemption and the longtime occupant exemption. The basic premise of each exemption was that the equalized assessed values of owner-occupied homes should not rise by more than 7 percent per year. Increases above 7 percent were supposed to be tax exempt.
At the time the assessment cap was adopted, assessed values were rising rapidly and so were exemption values under the 7 percent cap. These expanding exemptions helped protect homeowners from large tax increases during the housing boom.
But the 7 percent assessment cap was not designed for a falling market. Because of declining home values, the exemption values that had accumulated since enactment of the 7 percent assessment cap have been largely wiped out.
All owner-occupied homes in Oak Park are still eligible for a homeowner exemption discount worth a minimum of $633, and some will receive exemptions worth more. But for most people, the savings from these exemptions are smaller than they were last year.
Why didn't I get a long-term occupant exemption this year?
The expanded homeowner exemption is available to all owner-occupied homes. But that exemption has an upper limit, and during the housing boom, some taxpayers had assessment increases that exceeded the limit. The longtime occupant exemption waived the upper limit for taxpayers who had been in residence at least 10 years and had household income of less than $100,000. Waiving the upper limit provided such taxpayers greater tax exemptions and greater tax savings.
Last year, 1,280 Oak Park homes received the longtime occupant exemption. This year, however, only 94 Oak Park homes are receiving it. This dramatic change is due to the decline in the housing market. The value of most Oak Park homes is now below the threshold of eligibility for the longtime occupant exemption.
What effect do declining exemptions have on my taxes?
Tax bills are determined by multiplying a property's equalized assessed value (EAV) by the local tax rate. This year, two opposing factors are influencing the EAV of most residential properties. Smaller tax exemptions are raising the EAV of properties. But falling assessed values due to weakness in the housing market are reducing the EAV of properties.
The size of the two opposing factors is different for each property. If your taxes have increased significantly, it is likely that your tax exemption fell by more than your assessed value. And if your taxes are about the same as last year or lower, your assessed value fell by more than your tax exemption.
This year's property tax bills are confusing. First, the cost of providing local government services has increased, notwithstanding the decline in property values stemming from last year's reassessment. In addition, some of the programs that seek to protect homeowners from rising taxes were designed with a rising housing market in mind, and do not work very well with declining housing markets. The result is that some property owners who may have expected tax decreases will end up paying more this year.
Ali ElSaffar is the Oak Park Township Assessor.