Enter Kaegi the reformer—and his approach of tearing the bandage right off the property tax wound.
In a Zoom conference with Crain’s editorial board the other day, the Cook County assessor made clear his view that his job is to figure out what each property is worth on the free market, and set its value accordingly. Period. “If we’re not basing our figures on the market (price)," he said, “we’re in danger of putting the burden on blue-collar people.”
Yet, in this complex system, things are a little more complicated than rapacious rich white guys sticking it to poorer, often minority folks. Oh, that surely happens. But as in all crusades, people get hurt on the warpath to the holy grail.
Like apartment renters. Chicago and Cook County have hundreds of thousands of them, and they range from the very rich to the very poor.
As I’ve previously reported, one of the characteristics of the new assessments Kaegi has proposed in his first two years in office is, in round terms, to shift the property tax burden from homeowners to commercial properties. But the class of property that has been hit the hardest, seen its valuations and potentially tax bills rise the most, is rental apartment buildings—buildings filled with people who, um, pay rent.
Now, running for re-election on the slogan of “I raised your rent” probably is not the best strategy. So I asked Kaegi if he was worried that, however his good intentions, he’s put himself in just that spot.
His response was immediate—and sharp. Tax assessments “don’t matter” in setting rental rates, he said. “Landlords rent out to what the market will bear.”
There’s probably some truth to that, particularly in higher-end buildings. But I find it really hard to believe that raising taxes doesn’t eventually pressure landlords to raise rents. As one of my old college profs would have put it, there’s some elasticity in almost every financial situation.
Kaegi was equally stern on another matter. I asked him if it might not be better to have gone a little slower in implementing decisions that, even if justified, will end up costing certain types of property owners billions of dollars a year more in taxes at a bad time. His reply: No, every dollar not collected from a fat cat instead is squeezed out of a little guy. “What’s the alternative?” he asked.
One outside expert I spoke with, Taxpayers’ Federation of Illinois President Carol Portman, said Kaegi is right. “Technically, what he’s supposed to do is assess property at the market value,” letting the chips fall where they may.
However, Portman continued, Kaegi acted rather differently in the middle of the pandemic last fall when he unilaterally declared a “COVID adjustment” that ended up cutting assessments on homeowners about 10 percent even as prices of their homes on the free market were headed way up. “He’s clearly very aware—when he wants to be—of the consequences of his actions,” Portman dryly notes.
She has a point. And so does he. There’s reform. Then there’s reform mixed with common sense. Sometimes, it makes sense to ease off the bandage.
Kaegi will almost certainly face a big re-election fight next year. So will some members of the county’s property tax appeals agency, the Board of Review, which has been busily undoing many of Kaegi’s assessment hikes on business. All of the above ought to give them something to talk about on the campaign trail.
via Crain’s Chicago Business
August 27, 2021 at 01:56PM