Mayor Daley

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The Mayor in the Mirror

When it comes to skyrocketing property taxes, Mayor Daley is wagging his finger in the wrong direction.

By Ben Joravsky

February 14, 2008

On February 7, Mayor Daley held a west-side press conference to announce that our property tax system is broken and he aims to fix it.

Watch out—he’s up to something.

In his speech Daley predicted that soar­ing property taxes would drive poor and working-class people out of their communities, particularly on the south and west sides. True enough—I’ve been railing about that for years. But the mayor went on to place the blame on our complicated, unfair, and unpredictable assessment system, which overvalues property and thus overtaxes home owners and called for corrections to assessments in hard-hit neighborhoods. That system, he concluded, needs to be “blown up.”

Looks like it’s time for another one of my property tax tutorials. Maybe the mayor will read this one.

Our assessment system is complicated, unfair, and unpredictable. For one, it’s far too easily exploited by property tax lawyers like house speaker Michael Madigan and alderman Ed Burke—both mayoral allies. Corporations and owners of downtown commercial property hire them to appeal their assessments before the Cook County Board of Review, on which sits Cook County Democratic chairman Joseph Berrios, another Daley ally. I agree the system should be radically changed. Specifically, I favor an acquisition-based assessment system, where increases are limited until a property changes hands—but that’s a story for another day.

Still, the central agent causing Chicago residents to be overtaxed is not the assessment system or even the review board. It’s the mayor himself. In a nutshell, we’re paying too much in property taxes because he’s spending too much in property taxes.

In essence three factors determine how much we pay in property taxes. The most critical one is what officials call the levy—the amount of money government consumes in a year. Another is the assessed value of property, as determined by Cook County assessor James Houlihan’s office every three years. (Chicago properties were last assessed in 2006.) Then there’s the tax rate. What happens there is that the city, county, schools, parks, and other taxing bodies figure out how much they need to spend, Houlihan figures out how much property there is to tax, and Cook County clerk David Orr calculates the tax rate that has to be applied to the property in order to generate the levy. It’s true that by lowering and raising assessments Houlihan has a hand in determining who pays what portion of the levy. But Houlihan doesn’t control the most important part of this equation, which is how much government spends.

Daley controls that. He does so because in our infinite wisdom, we voters have made it clear that we’re comfortable with a relatively benign brand of tyranny where one man controls everything. And I mean everything. Through board appointments and endorsements of elected officials, the mayor oversees the schools, parks, city services, and even to an extent the county—he virtually handpicked Todd Stroger to be president, and his brother John is chairman of the board’s finance committee. And of course he controls the city’s budget.

The problem is that Daley’s budget is built on a giant scam. He and his acolytes have blanketed the city with tax increment financing districts, which feed property taxes that could otherwise go to the city, county, schools, and parks, etc, into bank accounts that the mayor dips into whenever he pleases. In 2006 TIFs consumed $500 million in property taxes, 30 percent more than the $386 million they collected in 2005, which was $58 million more than the $328 million collected in 2004, which was . . . you get the idea. My conservative estimate is that TIFs consumed more than $600 million in 2007, though we won’t know for sure until the summer, when the county clerk David Orr completes his annual tally. Amazingly, and appallingly, these slush funds don’t appear anywhere on the city’s budget—or on your property tax bill, for that matter. Yet the party line for city officials is that TIFs don’t raise property taxes, and so they don’t hesitate to create more and more of them. There’s a TIF born almost every month now.

So what was Daley really up to at his west-side press conference last week? Simple. He was getting ready to raise property taxes by shifting the blame to someone else. It costs a lot of money to run government, and this winter has been particularly hard—more snow than expected means more plows to fuel and more streets to salt and eventually more potholes to fill. The mayor openly raised property taxes last year and caught hell for it. Obviously he was realizing that he’ll have to raise them again this year. To immunize himself against the outcry, he has to come up with a culprit, and in this case it’s Houlihan and the assessment system.

Anyone who’s not a shill for the mayor will admit, at least privately, that TIFs raise property taxes. But hardly anyone wants to speak out publicly, for fear of attracting the mayor’s wrath. And so the mayor is free to pretend he’s an advocate for the beleaguered bungalow owner, fighting to keep a cap on property taxes even as he’s jacking them up by millions of dollars a year.

The mayor’s right about one thing. The consequences of rising property taxes are severe. As they go up, the city becomes less affordable. I don’t need to look further than my own mailbox for proof: In 2000 I was paying about $3,000 a year in property taxes. This year I’ll pay close to $6,000—a 100 percent increase. My income hasn’t increased 100 percent since 2000. Has yours?

Renters shouldn’t be blithe about this issue: property taxes get passed on in the form of higher rents, even if you don’t realize it. In early February, someone at the Reader forwarded around an e-mail from a friend offering a two-bedroom apartment for rent a few blocks west of Kedzie on Chicago Avenue. “This neighborhood is not for those who aren’t used to ungentrified neighborhoods,” the e-mail read. “Drive by it first to see if you are comfortable in the area . . . very cool folks have lived in the building (artists, musicians, good humans).”

The apartment currently rents for $650—a $100 increase over last year, the owner tells me. A look at the building’s tax bills for 2006 and 2007 explains why. Last year around this time the owner paid a first installment of $1,090. The bill for 2007’s first installment, which went out in early February, was for $2,655, more than twice as much. (Worse, the second installment of the tax bill, due in the fall, is almost always higher than the first—last year for this property it was $4,220.) That means the monthly property tax cost on the building has gone from about $182 to about $442. If that keeps up, soon most artists and musicians won’t be able to afford to live there, even if the block remains iffy.

Meanwhile over in East Village, a fellow writer is looking at a potential housing crisis. For the last 14 years, even as the neighborhood was gentrifying, she’s lived in a funky three-flat whose owner was able to keep rents low because he’d paid off his mortgage and had no property taxes to speak of. No longer. His first installment last year was about $2,800. His first installment this year is about $4,900. It now costs him about $350 more a month just to hang on to a building he’s already paid for. Sooner or later, he’ll either have to raise rents or sell. If he sells, look for a developer to replace it with condos or upscale apartments that my writer friend and her ilk can’t afford.

I used to think that once average Chicagoans got hit with big tax hikes they’d finally rise up against their leaders. But now I’m starting to think they’re too bewildered to fight back. As some aldermen are always telling me, if you keep the people dumb, they’re easier to control. In this respect, Mayor Daley’s press conference on assessments was a step in the right direction.   

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