Property taxes, driven by TIF districts and school funds, outpace inflation and wages: county treasurer study

Property taxes outpaced inflation and grew “well above wage growth” over the last 30 years, shooting up nearly 182%, according to a new report from the Cook County Treasurer’s office.

The county’s property tax levy has increased from $6.8 billion in 1995 to $19.2 billion in 2024, or twice the rate of inflation, according to Pappas. If it had remained on track with inflation, per Treasurer’s office calculations, it would be closer to $10.1 billion.

Pappas blames loopholes in the state Property Tax Extension Limitation Law, or PTELL, which was designed to limit tax increases to the rate of inflation or 5%, whichever is less.

But “local officials took advantage of that law’s loopholes to enact tax increases that substantially exceeded that limit,” and 94 of the county’s 135 municipalities aren’t bound by the law, the report says.

“The biggest culprit is what we call the levy,” Pappas said in an interview with WBEZ. “Locally, we have to cut down how much we’re spending.”

Predominantly Black neighborhoods on the South and West sides were hit hardest by the impact.

The Oakland neighborhood, just north of Kenwood, saw a 636.22% increase in property tax bills between 1995 and 2024 while East Garfield Park saw a 447.22% increase, per treasurer’s office data. The Lower West Side, West Garfield Park and North Lawndale all saw increases over 200%.

In the suburbs, the closest comparison was in unincorporated Riverside, which saw bills shoot up about 235% in that same time frame; Phoenix, Illinois saw an increase of 192.73%.

In an email, Illinois Department of Revenue Director David Harris said the agency “continues to make progress on the property tax study required [by law],” which directs it and other state agencies to evaluate the state’s property tax system and recommend possible improvements to its associated processes.

There are a number of other places to put the blame, as well, according to the report, though schools and tax increment financing (TIF) districts top the list.

Schools countywide, which account for about 50% of the total tax bill, also have seen tax demands skyrocket 189%, or $6.9 billion.

Taxes imposed by Chicago Public Schools and other city governments rose from about $2.9 billion in 1995 to nearly $8.9 billion in 2024, in large part due to public pension funding mandates, the report said. Suburban municipalities added about $6.3 billion for the funds.

CPS has demanded even more money because of pension costs, which now total about $662 million a year. The city district is on the hook for 65% of its own pension costs, while suburban school districts pay 2% because the state picks up the rest for them.

And Illinois already covers a little less than a quarter of its schools’ funds, the lowest of any state.

“The schools have to make it up with property taxes,” said Hal Dardick, director of research for the treasurer’s office. “It may require some sort of alternate method by the state of funding schools.”

In 2017, state lawmakers set a 2027 goal to fund at least 90% of each school’s state funding needs, though it’s $5 billion short with just a year to go. At the current rate, it will take until at least 2037 to reach the level mandated by the original bill, closing a $3.3 billion gap, according to the Center on Tax and Budget Accountability.

Last month, state Sen. Graciela Guzmán, D-Chicago, and state Rep. Will Davis, D-Hazel Crest, introduced bills that would fulfill the funding, albeit without a plan in the legislation. Guzmán suggested a millionaire’s tax, which former Illinois governor and treasurer Pat Quinn has also endorsed.

This is while tax increases in TIF districts — which also aren’t subject to PTELL — exploded, demanding $1.3 billion more in the city and $372 million in the suburbs, an eleven-times increase, per the report. They now account for about 10% of the county’s property tax burden, up from 2.5% in 1995.

“[Legislators] need to really take a hard look at the entire tax system in the state of Illinois,” Dardick said. “In its fairness and how it harms businesses and residents.”