How can tax bills go up when home values are going down? The question has had homeowners all over the suburbs shaking their heads in the last few years.
In suburban Cook County, part of the answer is that homeowners are taking on more of the property tax burden, data from the Illinois Department of Revenue shows.
Homeowners' share of taxes paid to 19 northwest Cook County school districts rose by as much as 6.7 percentage points between 2008 and 2009, the most recent years available. Meanwhile, commercial property owners saw their tax payments to those districts decrease by the same amounts.
In other suburban counties, the property tax split between homeowners and "nonresidential" property owners -- commercial, industrial, railroad, mining and agricultural parcels -- stayed nearly level during that same time period.
So why are Cook County homeowners picking up more of the freight? The shift is being blamed on the county's unique assessment process and the controversial changes made to it in 2008.
Unlike all other counties in Illinois, which assess property for tax purposes at 33.3 percent of its market value, Cook County assesses different types of property at different levels, creating the state's only property tax classification system. Until 2008, residential properties in Cook County were assessed at 16 percent, commercial properties at 38 percent and industrial properties at 36 percent.
In 2008, those assessment figures changed to 10 percent for residential properties and 25 percent for commercial and industrial parcels at the behest of then-Assessor James Houlihan and with approval by the Cook County Board.
The Cook County Board of Review, which handles property assessment appeals, opposed the change. That's because the county couldn't actually cut a property's taxable value or else tax collections would go down, so instead it raised the number it sets as a property's market value.
That move increased a commercial property's market value by 52 percent during the worst economic downturn in generations, said County Deputy Assessor Tom Jaconetty, who worked for the Board of Review in 2008.
"All of this stuff was happening at the wrong time," Jaconetty said, pointing to more than 439,000 assessment appeals that year. "Many commercial properties appealed their assessments. But think of all the residential property owners who didn't figure that out."
When they do appeal, commercial property owners get bigger reductions, an analysis of Cook County Board of Review rulings shows. Commercial property owners in the Northwest suburbs averaged reductions of 14 percentage points more than residential property owners.
Experts believe the county's property tax methods need to change in order to prevent these problems in the future.
"It should be the goal of Cook County to move to more accurate and transparent property tax assessments, which includes the elimination of the classification system," said Laurence Msall, president of the nonpartisan government research organization the Civic Federation. "This system provides economic disconnect from the county's stated policy of wanting to attract jobs and industry."
Jaconetty moved to the assessor's office in 2010, when former Board of Review member Joseph Berrios was elected to the post. Jaconetty opposes switching to the system in place in all the other counties and thinks there will always be critics of any taxation strategy.
"Other counties have their own challenges, too," he said. "No one likes to be taxed."
Msall said substantial change "would necessitate a thoughtful and well-planned transition for this to occur. Unfortunately, there has been insufficient appetite in either the General Assembly and in Cook County government to pursue these goals."
Schools, more than most other taxing bodies, rely on property taxes to operate. School districts account for the largest portion of almost any tax bill in the state.
In Schaumburg Township Elementary District 54, the share of taxes paid by homeowners rose from 45.8 percent in 2008 to 51.3 percent in 2009. Only West Northfield Elementary District 31 had a bigger shift to homeowners, with their share rising 6.7 percentage points.
The property tax share for homeowners in District 54 increased by 5.5 percentage points during that time, resulting in $10 million more coming from that group from one year to the next. Commercial properties owners paid $8.3 million less in 2009 than they did in 2008, according to the Department of Revenue report.
"That is a concern, and we have talked to our legislators," said Terri McHugh, a district spokeswoman. "Even though a shift from commercial property taxes to residential doesn't directly impact the district, we are against it and want to protect our residents."
Huntley Unit District 158 receives more than 91 percent of its property tax revenue from residential property owners. That barely changed between 2008 and 2009. Superintendent John Burkey said the McHenry County district doesn't generally bicker with residents who fight their assessments but will frequently square off against businesses that do to help keep costs down for residents and maintain the revenue the district receives from commercial properties.
"If we have businesses that seek tax appeals, we usually fight those," he said. "We're vigilant about watching those. It's definitely a benefit to have more commercial property because it will take down the tax rate for residents. And it's beneficial to businesses to have a good school district because it makes it a desirable place for their employees to live."