Three years of property tax reductions in Elgin have added up to a $10 million cut to the city's revenues. But some residents are still seeing a higher charge from the city on their property tax bills this year.
It all comes down to a homeowner exemption that Cook County applies differently than Kane County, meaning east side residents don't see what Elgin City Council members have been trying to trumpet: lower property taxes.
Residents who live in their own homes qualify for an exemption on their tax bills.
In Cook County, that exemption comes in the form of a dollar-for-dollar reduction in the overall tax amount, based on a cap that means any increase beyond 7 percent in the home's equalized assessed value is tax-exempt. The system worked well when EAVs were rapidly rising, insulating homeowners from major tax increases.
The system, designed to save people money, is breaking down as EAVs go in the other direction.
"As the homeowner exemption amount is reduced, the tax levy amount increases," Elgin Chief Financial Officer Colleen Lavery said.
In Kane County, the exemption applies to the equalized assessed value, so it is deducted before the tax rate is applied rather than as the last step.
That system meant Kane County taxpayers didn't see as much of a benefit as their Cook County neighbors when EAVs were rising, but they're getting the last laugh with their current tax bills.
Lavery sampled some of the city's Cook County properties that had relatively stable EAVs from 2011 to 2012, keeping that number constant to see how the homeowner exemption affected taxes on its own.
The homeowner exemption on one property declined by almost $500, pushing Elgin's tax collection up about $72 -- if the exemption had stayed the same, that homeowner would have seen the taxes paid to the city go down by almost $40.
The Elgin City Council has been under fire in the last year since it voted to implement new electricity and natural gas taxes to diversify its revenue stream, getting away from a reliance on property taxes.
The city also started passing on the costs of refuse collection, increased the home-rule sales tax and instituted an alcoholic beverage tax in 2012.
City Manager Sean Stegall defended the revenue diversification at his first 2013 budget presentation Nov. 7.
"By moving to utility taxes and away from property taxes, you spread the burden among a larger group of people," Stegall said, adding that more people paying means less per household and greater fairness.
The council has made a goal of reducing property taxes to 30 percent of its total revenue by 2016 and is already ahead of schedule. But Elgin's Cook County residents, especially, are not seeing the benefits of that shift because of the housing market.