Ten years ago, Bonita Hatchett built her dream home in Flossmoor. A lawyer by trade, she moved to the south Chicago suburb to join a diverse community that included black professionals like herself.
But Hatchett is now planning to leave it all behind. The culprit? Property taxes.
“You’re told all your life: Be educated, be successful, work hard and buy a house. But, we’re being abused for doing so,” Hatchett said. “Living in a town like Flossmoor, it’s just not worth it.”
She’s not alone.
Illinoisans pay among the highest property taxes in the nation, according to the nonpartisan Tax Foundation. Some Illinoisans’ property-tax bills are more than their mortgage payments. And the squeeze is getting worse.
Since 1990, the average property-tax bill in Illinois has grown more than three times faster than the state’s median household income.
While Hatchett estimates the value of her home has been slashed in half over the past decade, her property tax bill has only gone up. She paid more than $18,000 in property taxes last year — well over 5 percent of what she thinks her house is worth.
Hatchett plans to move to Indiana, where taxes on residential property are capped at 1 percent of the value.
Seventy miles from Hatchett’s home, in the northwest Chicago suburb of Crystal Lake, Cassandra Bajak thinks this coming Christmas will be her two children’s last in their home. Since she and her husband, an Army veteran, built the house in 2002, their property-tax bills have doubled — eclipsing their mortgage payments.
Her family now is choosing between a move to a southern state or downsizing in their community.
“We’re being taxed out of our home,” Mrs. Bajak said. “The only reason we would ever leave our home or this state is property taxes, and that’s what’s going to happen.”
In McHenry County, where the Bajaks reside, property taxes eat up nearly 8 percent of the median household income. What’s worse, Illinoisans aren’t getting much bang for their tax bucks.
Property taxes at the municipal level have not been going to fund spotless roads or other public works. Instead, they’re mostly funding out-of-control pension costs.
Just take a look at Springfield, where 98 percent of the city’s 2014 property tax levy went to pensions. And where, from 2000 to 2014, members of the typical household have seen their property-tax bill grow more than twice as fast as their income.
Despite that, city-worker retirements are still in jeopardy.
While taxpayers have more than doubled their contributions to the local police and firefighter pension systems over the past decade, Springfield’s police pension fund has a mere 53 cents in the bank for every dollar it needs to pay out future benefits; for firefighter pensions, only 45 cents.
Forcing homeowners to keep shoveling more property tax dollars into broken pension systems has become a morally bankrupt solution to the problem.
In Springfield, for example, residents already contribute four times more money into police, fire and municipal employee pensions than do the employees.
The problem is that, in Illinois, state politicians mandate pension benefits for local government workers, with little regard to fairness for local taxpayers.
Many communities would prefer not to pay the high cost of workers enjoying early retirement ages, health insurance benefits normal residents could never afford, and annual 3 percent cost-of-living adjustments that private-sector workers could only dream of.
So how can the state protect homeowners?
Forcing local governments to begin to live within their means through a property-tax freeze, as has been proposed by Gov. Bruce Rauner, is necessary. But solving the root cause of the property-tax problem will require further reform, such as moving all new government workers from defined-benefit to self-managed retirement plans, transferring the power to negotiate pension benefits down to local leaders, and encouraging aggressive consolidation and resource-sharing across units of local government. For some communities, the only option to undo decades of mismanagement will be bankruptcy.
Until sincere efforts are made at reform, Illinoisans will continue to live in fear: taxpayers of being squeezed out of their homes, and government workers of pension payments that may never come.