For years, our elected officials have said that new property will reduce our property taxes. It can be done. This is how: Zero is a powerful number. It is time for our local taxing bodies to use it.
Each December, taxing bodies in Cook County decide on a property tax levy for next year. Simply put, taxing bodies in Oak Park use current tax revenue, raise it by CPI-U (consumer price index urban) and then anticipated tax revenue from new property, resulting in the available property tax revenue for the next year. To reduce our current property tax, this is the practice that must change.
Taxing bodies must use zero for new property revenue in the levy calculations. Over the next three years, this would amount to a 10%-plus reduction in our local property tax.
The question is, “Should the tax money generated from new property become additional income for the taxing body to spend or should it help reduce the current property owners’ tax bill?”
Here is a very simplified example:
Currently, our town has 10 properties and paid a tax bill of $100. Each property paid $10. This year, a new property is built that will generate $10 in taxes.
When taxing bodies want additional income, this is what happens:
$100 current revenue + (CPI x $100) $10 new property = $112
Divided by 11 properties = $10.18 new tax bill
Each property owner pays an increase of 1.8% over the current year.
When taxing bodies want to provide tax relief to residents, this is what can happen:
$100 current revenue (CPI x $100) $0 new property = $102
Divided by 11 properties = $9.27 new tax bill
Each property owner has a reduction of 7.3% over current year.
This was a very simplified example. In real dollars, our property taxes could be reduced by 10% over the next three years, if taxing bodies did not include dollars generated from new properties in their levy request.
This year the savings would be about 1% reductions for property tax payments made in 2019. Next year though, the reduction is 8%. This is because both the Downtown and Madison Tax Increment Financing districts are expiring. The property in those two districts will be returning to the general village EAV as new property. The 8% tax relief would affect tax payments made in 2020. The third year an additional 1 % reduction can occur with additional new property being added to the tax rolls. It will reduce property tax payments in 2021.
In the next few weeks, each taxing body in Oak Park will be voting on their tax levy request for 2019.
There is no time like the present. Let new property help lower our property tax bill. Do not include new property when calculating the levy.
Sharon Patchak-Layman, an Oak Park resident, is a former member of the district 97 and 200 school boards.