Property tax relief in peril?

Tax relief for Cook County residents was thrown into turmoil Thursday when Gov. Rod Blagojevich amended a bill passed by the legislature, saying it didn't go far enough.

In doing so, however, he may have set off a chain of events that will kill even the lesser amount of relief passed by the legislature.

"Forty-nine out of 50 (Chicago) aldermen said this bill wasn't good enough," said Blagojevich in a prepared statement. "The Cook County Board said it wasn't good enough. … With the changes I'm making today, over 75 percent of Cook County homeowners will see significant property tax relief."

But Blagojevich, in using his amendatory veto, re-wrote several portions of the bill and in doing so, overstepped his constitutional authority, said a spokesman for Illinois House Speaker Mike Madigan.

That means the House is likely not to approve of Blagojevich's changes, a necessary component for the bill to become law.

Illinois Senate President Emil Jones, however, supports the changes, a signal that his chamber will likely approve them.

If the two chambers split, the bill will die altogether, leaving no tax relief whatsoever for Cook County residents.

Abby Ottenhoff, spokeswoman for the governor, said Blagojevich is confident that will not happen.

"Lawmakers recognize the need for property tax relief … and we look forward to working with them and with the local officials who pushed hard for a stronger property tax relief package," she said.

To understand what the fight is over, and what's at stake for the average homeowner, a little history is necessary:

Several years ago, when property values were exploding, homeowners in hot areas could see their property values rise as much as 100 percent or more, while others in more modest areas saw more average increases in the double-digit percentages. As a result, homeowners in hot areas saw astronomical tax increases out of line with the average homeowner's.

Cook County Assessor Jim Houlihan was able to persuade the legislature and governor to pass a law limiting, for taxing purposes, the amount a home value increased to just 7 percent a year, so that taxes on homeowners rose in a more controlled manner and more uniformly between hot and more-common neighborhoods. The 7 percent was reached by increasing the homeowner's exemption to a maximum of $20,000.

But the bill had a sunset clause, and Houlihan and Madigan disagreed on how to renew it. Madigan argued that with the slowdown in the real estate market, the law was no longer necessary. Houlihan argued that, with some homes' values having risen 100 percent or more in the past, taking away relief would let that full value flow in, raising their taxes too high too quickly. Houlihan even argued an increase in the exemption to $60,000 was necessary.

The compromise struck in Springfield with the bill that passed both the House and Senate was to raise the exemption to $40,000 the first year, then lower it to $26,000 the second year, $20,000 the third year, and then to phase it back to the pre-7 percent era of $6,000.

Blagojevich sided more with Houlihan. His changes Thursday would make the exemption $40,000 and make that amount permanent.

Now, though, with Madigan unwilling to sign on to Blagojevich's changes, and Jones unwilling to override them, neither version is likely to become law and the Cook County homeowner's assessment exemption would return to the base $6,000.

Madigan and business leaders have said repeatedly that Houlihan's approach shifts the tax burden from homeowners to businesses.

"We're very cautious about a program that says one group of homeowners, renters and commercial property owners will be asked to pay the taxes for another group," said Steve Brown, spokesman for Madigan. "We're very cautious about how much of the tax burden you want to shift."

Houlihan maintains that the bill that passed would have given tax breaks to buildings like the Sears Tower, and that, over time, homeowners would pay taxes on the full value of their assessments -- it just would happen gradually.