If you live in the Chicago suburb of Palatine and thought that a plunging real estate market would protect you from property tax increases, you would be wrong.
Palatine and many other cities in Illinois and across the USA are coming under tremendous pressure to increase property taxes.
One area causing a huge problem is exploding pension and healthcare costs for city employees and retirees.
While officials say it’s not unusual to increase property taxes, cities across the country are requesting significant increases to cover pensions and other expenses.
If the problem wasn’t bad enough already, it has been made significantly worse by the massive investment losses pension funds have absorbed during the ongoing financial crisis. During good times, strong investment returns can allow city governments to avoid property tax increases to pay pension obligations. That’s not possible in an environment like today where billions have been lost and safe investment returns are low.
While Palatine and other cities in Illinois have been raising property taxes to keep up with pension and health-care costs for many years, the tax increases being requested this year are unprecedented.
Unions who represent city workers aren’t denying that pension costs are increasing. However, they feel that part of the problem is that municipalities didn’t fund the pension funds at the levels they should have during the boom years.
Other cities across Illinois have been trying to avoid property tax increases to pay for pensions by borrowing from reserves and cutting back on operating expenses and staff.
Still other cities have moved aggressively to reopen union contracts in order to cut back on benefits and increase the amounts that workers must pay for pensions and healthcare. Those efforts have faced still resistance from some unions.
Illinois lawmakers also recently approved a law to increase the retirement age of police and firefighters from age 50 to age 55. That bill is still under review by the governor.
To address this growing burden, Palatine officials recently voted to raise property taxes by 4% - the largest increase taken in five years. That increase was driven primarily by pension costs. If it had not been for pension costs, no property tax increase would have been required.
If you live in Palatine, and want to avoid rising property taxes, find out if your Cook County property tax assessment is too high by using ValueAppeal.