Fix Cook County tax system, Civic Federation says

The Civic Federation is calling for simplifying the property-tax system in Cook County, pointing to a complicated array of exemptions it says unfairly shifts taxes off some groups and onto others.

The proposal made Monday by the nonpartisan business-oriented government watchdog stopped short of endorsing a “tax swap” on education funding from property taxes to an increased state income tax, as proposed by Gov. Pat Quinn.

The Civic Federation's “Vision for a Better Property-tax System” laid much of the blame for tax inequities on the county's complicated homestead exemptions, such as the senior exemption and the so-called 7 percent homeowner's exemption.

“The total value of homestead exemptions in Cook County more than doubled between tax year 1999 and tax year 2008,” the report stated, “removing a full 12.6 percent of equalized assessed value from taxation in 2008.” It added that “because property taxes in Cook County are a zero-sum game, tax relief provided to one property owner must be paid for by all owners.”

The report recommended limiting exemptions to means-tested exemption that would limit large tax increases, especially for low-income homeowners.

Yet, the senior exemption and “7 percent solution,” which is slowly being phased out after being salvaged in the General Assembly earlier this year, have proved popular with voters and taxpayers.

Cook County Board President Toni Preckwinkle said responsibility for those remained with the state legislature, although she endorsed other Civic Federation proposals to consolidate taxing bodies and duties within the tax system.

The federation said it did not support the proposed “tax swap” shifting education funding from property taxes to the state income tax.

“Illinois has shown itself to be an extremely unreliable funding partner,” said Civic Federation President Laurence Msall.

“The federation supports the property tax as an important component of the local government tax structure because it is a reliable source of revenues to local governments — especially schools — in a volatile economy,” Msall said.

As of Nov. 9, according to the report, the state was almost $1.2 billion behind in payments to schools, leading to layoffs and program cuts.

The report also called for Cook government agencies to be consolidated, pointing to how 1,300 taxing bodies draw on property taxes across 498 separate local governments. It also suggested a “unified property-tax administration office” be created to take on tasks now being shared by the county treasurer, clerk, recorder and auditor. Those measures were cheered by Preckwinkle as positions she took on the campaign trail.

The report did not address the record number of assessment appeals filed this year, many of them on commercial properties, which resulted in $5 billion in reductions, only $800 million of that going to homeowners, according to former assessor James Houlihan, who added that also shifted the tax burden.

The report also supported the use of tax-increment-financing districts, which critics say shift the tax burden to other county residents as well.