The saga of the property tax relief bill known as the 7 percent cap took a twist last week with the release of a letter from House Speaker Michael Madigan to dozens of aggrieved home owners.
To provide relief–and to get people to stop calling his office with complaints–in 2003 Houlihan proposed a cap that would have limited the hike in assessments to no more than 7 percent a year. The General Assembly passed a watered-down reform bill in 2004, providing some relief for taxpayers not by capping reassessments but by increasing the home owner’s exemption (a standard deduction from the assessable value) from $4,500 to $20,000 for a period of three years. Oddly, the legislation is still commonly referred to as the 7 percent cap.
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But it expires next year, setting up the current dilemma. If the cap’s not extended, home owners in Chicago will face hikes as high as 70 percent when tax bills come out next August, Houlihan warns. This time around he expects west- and south-side communities like Englewood, Woodlawn, and North Lawndale to get hit particularly hard. “The general word I would use for these communities is catastrophic,” says Houlihan.
“I voted Yes for the renewal of the 7% cap. I encourage you to get Jim Houlihan and Mayor Daley to do a better job of persuading legislators to vote for the 7% cap.”
If the stalemate continues the cap will expire, though that might not be so bad–it’s hardly without flaws. It has failed to provide relief across the board, shifting the tax burden for home owners in some neighborhoods to home owners whose high assessments offset the increased exemption–roughly 20 percent saw their taxes go up in spite of it. And being confined to households, it does nothing to improve the lot of commercial property owners. It might be best just to let it die and force Daley and County Board president Todd Stroger to confront the issue of tax rates truthfully.
“Friedman takes with him the satisfaction of the iconoclast who lives to see his once-revolutionary ideas prevail–and his enemies surrender,” the Tribune editorialized. “Friedman spent his career nudging the world of economics toward the realization that the free choices each of us makes daily have more power to deliver prosperity than the elaborate plans and infernal tinkering of government officials.”
It’s somewhat harder to quantify what we, the taxpayers, get for subsidizing this deal. Property taxes on 550 W. Adams will be funneled into the Canal-Congress TIF until 2021. By keeping USG in town we do keep the monthly head tax of $4 per employee it pays the city. If USG makes good on its promise to keep at least 500 employees in its headquarters, we’ll make at least $24,000 a year in head taxes. In just over 270 years we’ll have recouped the $6.5 million the city paid to subsidize the deal. I hope your great-great-grandchildren are around to enjoy it.
