In addition to already seeing their property tax bills jump almost 13 percent, Skokie homeowners soon may be paying even more, ending a 19-year property tax freeze.Faced with a deficit in public pension funding, the Skokie Village Board of Trustees is contemplating options to bridge the gap created by disappointing returns on its investments and the Illinois General Assembly's unfunded mandate of expanded pension benefits.
Finance Director Bob Nowak presented the board with four funding options at a special session last week. Among the ideas were two proposals to increase taxes to fully fund fire and police pension needs, one of which would raise the village's portion of residents' total tax bills 21.7 percent.
In a phone interview, Trustee Donald Perille said while the village has been proactive, the property tax hike may happen. "I think it's entirely possible," he said.
Last year the village's portion of an average annual residential property bill was about $469, which represented only 7.7 percent of the average total bill. According to real estate service Zillow.com, the average home value in Skokie was $269,800 in August. If the board votes to increase the property tax levy for the first time since implementing its freeze in 1990, those who own homes worth the average value can expect their bill to go up approximately $100.
To maintain its heralded property tax freeze, the board may instead choose to fund the pension deficit through raising taxes elsewhere, likely on utilities. A 2 percent increase in levies on electricity and natural gas would provide 94 percent of the needed funding. A 3 percent increase would provide 140 percent.
While these options would keep pensions strong, the burden on the taxpayer would be significant. The other options offer lesser burdens but do not fully compensate for the funding gap, which could weaken pensions. One proposal suggested increasing the property tax levy by 5 percent every year for the next five years, while another proposed lowering the pension funding goal to 90 percent from 100 percent.
Perille advocated a hybrid plan that would use a little of each option to meet the village's goals. "It would spread the burden around so it wouldn't all fall to property owners," he said.
The session occurred the day before the Chicago Tribune reported Skokie's property tax bills will soon jump with a median increase of 12.9 percent, meaning that about half of property owners received a larger increase and about half received a smaller increase.
The Tribune attributed the hike in part to the phasing out of a state-imposed cap on tax assessments, which proved beneficial in a stronger housing market. Now a smaller portion of home values is protected each year for three years, which has translated into higher assessments.
Due to the three-year assessment cycle in Cook County, Skokie home values also haven't been evaluated since 2007, meaning they don't reflect the market's downturn in recent years. Hence, Skokie residents are being taxed based on assessed values that are likely higher than their current home values.
Marketing and Communications Director Ann Tennes said there is nothing the village can do to ease the hike because increases come from districts including the parks and schools, which are separate units of government. This year, the village took only about 7.3 percent of the average property tax bill, compared to the 38.5 percent that went to elementary schools, for instance.
"We have done our part," Tennes said.
The board will further discuss its pension funding options at its Dec. 7 meeting.
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