Call out the latest idea in Springfield for what it is – another property tax hike. Lawmakers want to create yet another tax break for some, which everybody else would have to pay for.
Two bills, SB 2259 and HB 2168, pending in Springfield would impose property tax caps or assessment reductions for affordable housing.
n other words, they would give a property tax break to owners of apartments for lower income renters. The problem is that the levy – the total amounts collected by each taxing authority – wouldn’t change. That means all other property owners pay the difference. The end result is simple and undeniable: Property owners would fund a special subsidy for affordable housing.
Wirepoints founder Mark Glennon
You’d think lawmakers had already learned their lesson about such carve-outs. In 2017, Chicago wanted a way to soften the blow of the city’s property tax increases, or at least make them look softer. Singling out the city wasn’t workable, so it got Springfield to pass increases in the homestead and senior exemptions for all of Cook County. We wrote about the dismal results for taxpayers here, which the Chicago Tribune detailed. Property owners got clobbered, especially in lower income areas.
The Tribune reported on the results: “Many, many people are saying it’s not financially beneficial for them to pay the taxes they pay on their homes, when every 11 to 13 years, they’re paying the total costs of their home in taxes,” said Harvey Ald. Keith Price, economic development committee chairman. “I’ve talked to a couple of people that have personally told me that they are not paying their taxes anymore. They’re going to save their money, and within the two years they have (before they lose the house), they’ll just save all their money and leave.”
If Illinois wants to pay for affordable housing it should be done smartly. The simplest and most efficient means to provide housing assistance is vouchers, not convoluted tax incentives like Springfield is moving towards. The pending bills would require a whole new level of bureaucracy for assessors and administrators to enforce.
The pending bills have other major flaws. Projects that would have been built anyway will still get the tax break. The subsidy will be wasted on them. And there’s no way to measure results. How will we know how many new projects, if any, get built thanks to the tax incentive? We won’t. That’s unknowable. For that same reason, we won’t know the full cost until after the fact.
Most importantly, property taxes are the last place to look to for funding. Illinois tax rates are already neck and neck with New Jersey’s for the highest in the nation. Hundreds of thousands of Illinois homeowners have had their equity erased or worse, been trapped with underwater mortgages. Suppressed values, primarily because of those taxes, have already cost Illinois homeowners a quarter trillion dollars just in the last ten years.
Raise property taxes for affordable housing. Only in Illinois.
- Mark Glennon is founder and executive editor at Wirepoints.com