Cook County’s tax delay exposes Illinois’ worsening business environment
Cook County’s property tax system is way behind schedule again, with second-installment tax bills just mailed Nov. 14 and due Dec. 15 — nearly four months late and just in time for the holidays.
As details emerge, they show reason for concern: Chicago’s and Cook County’s tax bases are eroding. The cost of the government keeps climbing.
The biggest weak point is in the business sector. Commercial property values in the Loop fell by 7.2% during the past year. The taxes their owners will pay dropped by more than $129 million.
Illinois’ property tax system is built to satisfy what governments want, not what taxpayers can afford. When commercial contributions shrink, residential taxpayers automatically pick up the difference.
That’s what is happening now: homeowners are seeing the biggest property tax increases in 30 years as residential property tax bills in Chicago jumped 16.7%, or $469.4 million. This came even in the wake of the Chicago City Council’s unanimous vote last year against a proposal to raise property taxes by $300 million.
The shift is part of a long-running pattern in Cook County. Businesses face some of the highest commercial property tax rates in the nation, more than double the average of large U.S. cities.
Chicago’s high commercial property taxes result in fewer businesses and job opportunities across the region, ultimately hurting workers and homeowners. And it gets worse as state and city lawmakers keep increasing the cost of doing business through tax hikes and onerous mandates. Office vacancy in the central business district recently reached a record-high 28%.
“When the Loop gets a cold, the rest of the city gets pneumonia,” Cook County Treasurer Maria Pappas said.
High property taxes plague all of Cook County, not just Chicago. If the city is failing, that trickles out toward the suburbs. If Chicago can’t carry its share of county taxes, suburban residents and businesses must shoulder more.
Some suburbs have seen devastating spirals as businesses flee and tax rates skyrocket for those left behind. Take Ford Heights, once a transportation and industrial hub, now with residential and commercial property tax increases ranked among the top 10 nationwide as of 2020. The burden has helped drive out remaining manufacturers, hollowing out the local tax base and pushing even more costs onto those who stay.
The Cook County treasurer’s 2023 analysis found in the South and Southwest suburbs, about 4% of the tax burden shifted from businesses to homeowners, illustrating how quickly communities can unravel when commercial taxpayers disappear. In the North and Northwest suburbs, both residents and businesses felt the pain as total property tax rates increased more than their counterparts inside the city.
All the while, the cost of government and the debt taxpayers are accountable for keeps going up. Spending in the city of Chicago’s budget rose two times faster than most other major cities since 2019. And the city’s pension systems carry over $53 billion in debt, more pension debt than 44 states. In total, Illinois local governments are accountable for more than $75 billion in pension debt. Yet, the more people pay, the more the debt keeps rising.
Residents and businesses across the state aren’t seeing an increase in services from increased property tax revenue. Because of the state’s worst-in-the-nation pension crisis, more and more tax revenue that could be going toward adding police, fire protection, education staff and community programs is spent on pensions.
The result is stagnating services for businesses and homeowners alike.
Instead of easing pressure on employers, Chicago Mayor Brandon Johnson, city leaders and progressive groups are considering policies that would make a challenging business environment even less competitive.
Johnson’s proposed head tax would charge larger businesses for each in-person employee to add $100 million to his budget. At a moment when downtown offices are increasingly vacant and companies are reassessing their place in the city, a per-employee tax hands them another reason to hire outside of Chicago or keep workers remote. That would further drain foot traffic from downtown, exacerbate the public transportation ridership crisis, weaken commercial property values and shift even more of the tax burden to city homeowners.
Chicago cannot afford to shrink its business base further by taxing job creation. The city needs to grow that base, attract more employers, investment and suburban commuters.
If leaders want to ease property taxes for residents, they need a stable, growing commercial tax base. Without it, every delay, every borrowing decision and every policy that drives employers away eventually shows up in a homeowner’s mailbox.
• Matt Paprocki is the president and CEO of the Illinois Policy Institute.