The recently mailed property tax bills are the first to reflect last summer’s reassessment of Oak Park properties. To understand the changes in the new bills, it can be helpful to compare the tax system to a restaurant tab for a group of friends. Restaurants typically give a total tab to the group, with each member of the group paying a part of the tab. A “tax tab” results when the property tax levies of all units of government serving Oak Park are combined, and each property owner is responsible for paying a part of the tab.

When the restaurant raises its prices, all members of the group are affected. The same is true for all property owners when the government raises its tax levies. In Oak Park, this year’s total tax tab is up 12.9 percent over last year. The tab has grown by 53 percent since the year 2000.

Just as a restaurant patron’s share of the tab depends on the size of his order in relation to the order for the entire group, a property owner’s share of the tax tab depends on her property’s value in relation to the property values of the entire community. When assessed values change due to reassessment, property values that increase at rates above the community average pay a higher share of the tax tab, while properties with below-average value increases pay a smaller share of the tab.

Complicating the issue of changes in one’s share of the tax tab is a new state law designed to limit tax increases after a reassessment through a larger homeowner exemption. The expanded exemption reduces a property owner’s share of the tax tab-although it is worth noting that the tax reduction for each property is redistributed to other taxpayers. The reassessment, the higher tax tab, and the expanded exemptions have combined to create wide variation in Oak Park’s latest tax bills.

Can I do anything to reduce my tax bill?

If you are eligible for a homeowner exemption or a senior citizen 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. However, you may be able to reduce next year’s tax bill if you file an appeal. You should call the Township Assessor’s office at 708/383-8005 for more details.

It is important to remember that the increase between first and second installment tax bills is not the same as your annual tax change. To get an accurate view of how much your tax bill has increased, you must compare the total taxes paid last year to the total taxes paid this year. If your second installment tax bill is higher than your first installment bill, the tax bill you receive in February 2007 will be lower than the bill you just received. Next February’s bill will be exactly one half of the total amount of taxes paid in both installments this year.

I thought caps on spending prevented taxing districts from raising tax levies above the rate of inflation. How is it possible for Oak Park tax levies to grow by 12.9 percent?

The 12.9 percent tax tab increase, from $119.9 million last year to $135.3 million this year, is the largest of a series of large levy increases this decade. In 2000, Oak Park’s tax tab was $88.3 million. It has since grown by $47 million, reflecting a 53 percent increase in six years (See accompanying chart). During the same period, inflation grew by 16 percent.

Most taxing districts serving Oak Park are subject to tax levy limits imposed by the state, which generally restrict tax levy increases to the rate of inflation. For the current tax year, the rate of inflation is 3.3 percent. But state law permits the levies of a taxing district to exceed the rate of inflation if the voters approve such increases through a referendum. This decade, voters have approved tax increase referenda for Oak Park and River Forest High School, the Oak Park Public Library, and the Park District of Oak Park.

Two of the three referenda approved this decade are influencing the 12.9-percent increase in tax levies evident this year. Although the high school won its referendum in 2002, state law allowed the school to receive additional increases for the four years following 2002. As a result, the high school’s levy is up 16.5 percent over last year, and has increased by 82.8 percent since 2000.

Another referendum influencing the Oak Park tax tab this year is the park district referendum, which was approved by Oak Park voters in the spring of 2005 but has not appeared on tax bills until now. Because of the referendum, the tax levy of the park district has grown from $2.3 million to $5.9 million this year, representing an increase of 154 percent. This year’s levy increases for the local taxing districts that did not win tax referenda ranged from 3.4 percent to 6.5 percent.

Are residential property owners paying a significantly greater share of the Oak Park tax tab due to the 2005 reassessment?

No. In 2002, the last time Oak Park was reassessed, there was a shift in the tax burden that increased taxes on Oak Park residential properties while reducing the burden on large apartment buildings as well as commercial and industrial properties. This happened because in 2002 the assessed values of residential properties grew at a significantly faster rate than the assessed values of the other property types.

Because this type of burden-shifting occurred throughout Cook County, a law commonly known as the “7-percent assessment cap” was enacted to counteract the burden-shifting phenomenon. The legislation expanded the homeowner exemption for owner-occupied residential property, and largely stabilized the tax burden between business and residential property classes in Oak Park. But within the class of Oak Park residential property owners, the 7-percent assessment cap law has helped shift the tax burden among different groups of homeowners.

Among residential property owners, which groups are paying more and which groups are paying less?

The largest tax increases are going to taxpayers who previously benefited from the now-expired HELP exemption program for long-term property owners, and to property owners who received tax reductions in prior years due to the disruptions caused by the problems at Barrie Park. In addition, properties that are not owner-occupied and hence ineligible for the homeowner exemption, such as rental homes, rental condominium units and rental apartment buildings of six units or less, are also experiencing large property tax increases.

Among most owner-occupied properties that receive the homeowner exemption, significant variation exists in the changes of individual tax bills, but there is one clear trend: smaller properties with relatively low property values tend to have smaller tax increases (or outright decreases) compared to larger homes with relatively high property values. For example, the tax bills have gone down for about 90 percent of condominiums. In addition, the tax increases for Oak Park bungalows (homes with one story or with a partial second floor) have tended to be smaller than the tax increases for two story homes (See accompanying chart).

If the tax tab is up by 12.9 percent, why did the property taxes of most condominiums and some homes fall?

Tax bills are determined by multiplying a property’s net assessed value by the tax rate. After a typical reassessment, assessed values rise and tax rates fall. Oak Park’s tax rate fell by 12.2 percent this year, which means that any property with a net assessment increase greater than 12.2 percent will have a higher tax bill, and any property with a net increase of less that 12.2 percent will have a smaller bill. Because the net assessment of most condominiums and some homes grew by 7 percent due to the 7-percent assessment cap, the tax bills for those properties fell.

Why didn’t the law known as the “7-percent assessment cap” influence the tax increases of all owner-occupied homes equally?

In spite of its name, the 7-percent assessment cap does not actually cap assessment increases at 7 percent. The law instead provides for an expanded homeowner exemption that is supposed to counteract assessment increases after a reassessment. For example, if a condominium’s assessed value increased by 70 percent, from $10,000 to $17,000, it would receive a $6,300 exemption. The $6,300 exemption would reduce the condominium’s net assessment from $17,000 to $10,700. This represents a net increase of 7 percent over the $10,000 assessment from the prior year.

To prevent very large homeowner exemptions, however, the legislature mandated that the homeowner exemption could not be worth more than $20,000 in assessed value under any circumstances. This has had the effect of restricting the benefit of the 7 percent cap for higher value properties, as many Oak Park properties would require exemptions much higher than $20,000 to reach a net assessment increase of 7 percent. The $20,000 maximum homeowner exemption is a big part of the reason for the disparity in tax increases between smaller and larger homes.

If I had a large tax increase this year, will I have another large increase next year?

A majority of Oak Park taxpayers will not see large tax increases next year. Oak Park properties will not be reassessed next year, and unless the voters approve a referendum, next year’s tax tab should increase by just a few percentage points. However, a significant minority of property owners will see tax increases of more than a few percentage points next year.

Property owners who had either tax decreases or small tax increases due to the 7-percent assessment cap are likely to see tax increases of more than just a few percentage points. For those property owners, the 7-percent law mandates a decrease in the value of the homeowner exemption in 2007 and 2008, which will translate into above-average tax increases.

The 7-percent cap law also states that people who bought their homes in 2005 and 2006 will automatically see the value of their homeowner exemptions fall. For new homeowners who have the maximum homeowner exemption this year, the mandated reduction in the exemption could result in tax increases of as much as $1,400 next year.

Homeowners with specific questions about the tax changes for next year should call the Township Assessor’s office. The accompanying graphs were prepared by Nile Wendorf and are based on data compiled by the Oak Park Township Assessor’s office.

Taxing their patience: Not all housing types got hit with large increases. Most condominiums actually saw a tax decrease.
Chart by Nile Wendorf

Bursting levies: Thanks to several referenda in the past 5 years, the overall Oak Park tax tab has significantly swelled.
Chart by Nile Wendorf

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