Local property tax levies up $3.5 billion since '05
Schools get lion's share of tax increases
As the recession gripped the nation and suburban property owners were forced to find ways to hold the line, local taxing bodies did the opposite.
Property tax levies in the suburbs and Chicago increased by almost $3.5 billion in 2010 compared to just five years earlier.
Statewide, 2010 property tax levies were up nearly $4.8 billion above 2005 figures.
"I know Illinois is in trouble financially and there's been a lot of talk about restraint, but a $5 billion increase doesn't sound like restraint," said Don Boyd, co-executive director of the New York-based State Budget Crisis Task Force that recently produced a report on Illinois' ongoing financial struggles.
A Daily Herald analysis of Illinois Department of Revenue reports from 2010 and 2005 shows that 300 suburban school districts in six counties plus Chicago Public Schools accounted for most of the property tax increase. The school districts levied $2.2 billion more in 2010 than they received in 2005, with Cook County's 152 school districts responsible for more than $1 billion of the increase.
The state's reports show Chicago and suburban municipalities increased property taxes by nearly $800 million over the same time period. Townships collected $60 million more, while the six county governments combined to increase their collective levy by almost $90 million more than 2005's take. Libraries, parks, fire districts and other specialty taxing agencies increased taxes by more than $365 million in 2010.
Most tax experts point to rising pension obligations and contractually mandated personnel costs as the chief cause for the property tax levy hikes.
"Most local taxing bodies have 80 percent of their costs tied to personnel," said state Rep. Elaine Nekritz, a Northbrook Democrat who also serves on Gov. Pat Quinn's pension reform task force. "It's a big number, but there are a lot of components to it. It shows how important it is for taxpayers to pay attention to the budgets of school districts, which is usually two-thirds of their tax bill."
School officials say they have cut back as much as contracts allow and continue to do so.
Critics argue school districts have been poor stewards of tax dollars by handing out large raises to retiring teachers and administrators that spike pension costs even higher. In recent years, legislators have capped such raises covered by the state but place burdens on local taxpayers if school boards ignore the cap.
"It's a really big stinking problem," said Jack Roeser of Barrington, chairman of the Family Taxpayers Foundation, a conservative organization often critical of the state's public education system. "It's all tied up in the way you run it."
The Illinois legislature currently is considering shifting some of the state's future teacher retirement costs to the local school districts.
"What will happen with that is that it will instantly increase the property taxes," Roeser said.
Pension obligations have increased in recent years for local taxing bodies and the state because investment returns for the pension funds have not been met. The systems are set up so that the employer -- government agencies in this case -- assume responsibility for any funding shortfalls in the pension system. Boyd's group recommends immediate changes to the state's pension programs, such as a hybrid of the existing pension and a 401(k) program to share the investment risk.
But school districts aren't the only taxing bodies in the suburbs feeling financial pinches from pension obligations.
Illinois Municipal League Executive Director Larry Frang said pensions have been a chief driver of higher property tax levies for the nearly 1,300 cities and villages throughout the state. The 270 municipalities in Cook, DuPage, Kane, Lake, McHenry and Will counties levied $762,442,552 more in 2010 than they did in 2005, according to Department of Revenue records. A February Daily Herald investigation of municipal property tax levies in 83 suburban communities showed that only Elburn levied less from 2006 to 2011.
"Cities over the past seven or eight years have been putting more and more into pensions, but the funding level has been going down," Frang said. "We always talk about sustainability. We made changes to the pension system two years ago, but how many people have been hired in the last two years? Cost of pensions go up as salaries go up."
Boyd said property taxes are tied to the state's overall financial health. When the state isn't sharing its revenues with the local governments, those local governments have to find revenue elsewhere or make cuts.
"It all depends on whether you want to pay for the services local governments are providing," Boyd said.
Among the recommendations in the State Budget Crisis Task Force report is quicker reporting of financial figures. Now, the most recent statewide data available is from 2010.
"That's horrible," Boyd said. "The state needs much more disclosure and faster because you make decisions on recent information and if you don't have it, you don't know what decisions to make."
Boyd's group also recommends the state legislature require fiscal notes on all bills that will show the financial impact of proposed legislation. The Illinois Policy Institute recently conducted a study of the state's fiscal note policy and discovered that only nine of the 650 new laws passed by the General Assembly in 2011 had fiscal notes attached to them.
Boyd also suggests Illinois' sheer volume of government agencies is a problem. Illinois leads the nation in units of government, with 6,032 collecting property taxes in 2010, according to state figures.
The state's 1,500-plus townships levied more than $650 million in property taxes in 2010, up from $540 million in 2005. Other taxing districts like libraries, parks, fire protection districts, forest preserves, water and sewer agencies and mosquito abatement districts account for 2,220 of the state's units of government. Those agencies combined to levy almost $2.8 billion in 2010, up from $2.3 billion levied in 2005.
"There's likely potential savings through mergers," Boyd said. "So many different units of government often create inefficiencies that can be fixed through consolidating services."