CHICAGO — Residents of Chicago and its suburbs have once again seen their property taxes rise.
For 2016 taxes, which will paid this year, Chicagoans can expect their bills to rise by 10 percent, while people living in the North and South Suburbs can expect increases of 6.5 and 3.9 percent, respectively.
The increases are part of the 2016 budget that are being phased in over a four-year period. The revenue will be directed toward paying down money the city owes to police and firefighter pension funds.
The city was unable to keep up with obligations to pension funds partly because of the 2008 recession and is now left with little choice but to make up for years of short payments.
“The economic downturn did effect the pension fund,” Molly Poppe, a spokesperson with the city's Office of Budget and Management, told the Cook County Record. “The city cannot go in and say your benefit is decreased by this amount.”
The four-year increase is set to expire in 2019. However, this might not mean the end of high property taxes for the City of Broad Shoulders, as a period of ARC funding will follow on its heels.
ARC funding, or Actuarially Required Contributions, entails payments from the city to the pension funds while the city sets aside enough money to make future payments.
As opposed to predetermined fixed payments under the current four-year plan, payments will be determined year to year. The city’s current ARC plan runs through 2055, by which time it expects to have pensions 90 percent funded, according to the city’s annual financial analysis blog.
Whether or not these taxes will affect the real estate market in Chicago is hard to say, but the fact that values are increasing despite the tax increases is a positive sign.
“You have seen the values of property rebound after the recession," Poppe said. "Property values have increased, and that is a sign of an improving economy."
It doesn’t seem that the property tax increases are in any way affected by the budget crisis in Springfield, because Chicago is governed under “home rule authority,” Poppe said.