September 18, 2009
This week the Civic Federation released its annual Effective Property Tax Rates report. The report highlights the fact that in 2007 property tax burdens for many Northeastern Illinois communities rose, while property tax rates in Chicago are still among the lowest in the area.
Effective property tax rates is an average calculation that offers a method of comparing residents’ property tax burdens across municipalities and counties. For example, this report shows that in 2007 the average property tax burden for property owners, both commercial and residential combined, in Oak Brook, IL was 0.79% of the property’s full market value. More simply stated, in 2007 a property owner in Oak Brook with real estate worth $200,000 paid an average of $1,580 in property taxes.
Conducting a comparison of this nature has pitfalls as counties use varying levels of assessment and different assessment categories for types of property. Cook County, for example and unlike most counties, breaks down its property into three different classes; residential, commercial and industrial. Other counties included in the study group all property classes together. This distinction inhibits direct comparisons between Cook County and other counties in Northeastern Illinois.
However, looking across counties that use similar grouping methods for their assessments, there is clearly a wide variation in the effective property tax rates for residents. While these rates are impacted by a number of variables, two variables that affect a property tax rate most are the amount of real estate wealth in a community and the community's reliance on property taxes to fund its operations. Oak Brook, the example mentioned above, had the lowest effective tax rate in 2007 out of the 32 communities studied. The highest effective tax rate was in Harvey, IL. These two communities differ substantially in both the amount and value of taxable property and the existence of other revenue sources that relieve pressure on property owners. The annual Effective Tax Rates report helps to highlight these differences in property tax burdens among communities.