EDITOR'S NOTE: This is part one of our series Property Taxes: Follow the Money. For Illinoisans, property taxes are a sore spot. Illinois has the second highest property taxes in the nation, and McHenry County is in the top 10 for highest property taxes in the state. Illinois also ranks first in the country with nearly 7,000 taxing districts, which makes examining one's tax bill a confusing exercise. While taxpayers are annoyed by the price tag, property taxes are also a primary source of revenue for local taxing bodies. This series examines some of the issues in Illinois for residents and taxing bodies.
Property taxes drove Cook County Sheriff’s Deputy Brian Driscoll out of McHenry County, and will drive him out of Illinois altogether and into Texas when he retires at the end of the year.
The property tax bill on his home in Lake in the Hills was $8,000 when he sold it – today the bill is now more than $10,000. Driscoll moved to a townhome in Lakewood, but moved again when his property tax bill hit $4,400.
Driscoll doesn’t need official numbers to tell him he is far from alone in his decision to leave.
“When I went to the [police] pension board, I ran into at least six other people who are leaving the state. They just can’t put up with the taxes, the cost of living and the mismanagement,” Driscoll said – and Illinois does not tax pensions and retirement income.
Brian Smith of Huntley also is counting down the days, albeit more of them, before he leaves McHenry County for Texas.
Smith, a sales manager, pays $8,000 a year in property taxes for a 3,400-square-foot home on a quarter acre. The assessment letter he got in November from Grafton Township increased his property’s value by 22 percent. Once his son graduates next spring from Marian Central Catholic High School, the family is leaving the state.
“They’re saying my house is worth $309,000, and at least a third of our subdivision has recently turned over with short sales and foreclosures. If the township would like to buy my house for $309,000, I’d gladly sell it to them today,” Smith said.
Driscoll’s and Smith’s stories are only two of many.
From official government analyses to annual reports of truck rentals by moving companies, Illinois consistently is at or near the top for people leaving for other states, and taking their incomes, their intellectual capital and their businesses with them. While winter weather may be an easy scapegoat, a study earlier this year revealed most people leaving Illinois are settling in neighboring states.
People tell a much more compelling story than numbers do. While those who are leaving McHenry County expressed disgust with Illinois in general – its income and sales taxes, its rampant mismanagement, its $110 billion and climbing unfunded pension liabilities and its infamous corruption – a property tax system they consider crushing and unfair is at or near the top of their lists for moving.
“This is the last straw. Illinois is so broken that we’re fleeing. But McHenry County over the past couple of years has contributed to that as well,” Smith said.
‘Everyone wants to leave’
Two sets of data from the Tax Foundation, a Washington, D.C.-based think tank with conservative leanings, paint a bull’s-eye on McHenry County taxpayers.
Illinois has the second-highest average annual property tax burden in the nation at 2.32 percent of home value, just behind New Jersey – the Land of Lincoln steadily has been catching up with the Garden State and soon could overtake it for the questionable top honor.
When broken down by county, the Tax Foundation ranks McHenry County’s average property tax burden as the 29th highest nationwide as of 2010.
It’s a fact McHenry County Board member Andrew Gasser, R-Fox River Grove, is known for reciting before any spending vote.
Gasser, since his 2014 election, regularly goes door-to-door in his heavily suburban district, which also includes all or large parts of Cary, Barrington Hills and Algonquin. He estimates knocking on at least 1,800 doors since September. Property taxes are almost always the top topic, often seasoned with unprintable words, Gasser said.
“Almost without exception, everyone wants to leave Illinois. They don’t understand why local governments continue to raise their taxes. They don’t understand it at all,” Gasser said.
The short answer to the question is because they can. Ironically, local government’s main ally is a law that was originally enacted to protect people in the Chicago suburbs from being taxed out of their homes.
State lawmakers in 1991 enacted the Property Tax Extension Limitation Law, known as the tax cap, on the collar counties to help rein in tax bills that were increasing by double-digit percentages. The law limits the annual increase taxing bodies can receive over their previous year’s extension to either the rate of inflation or 5 percent, whichever is less.
The law did its job for the most part when home values were increasing, especially in McHenry County’s white-hot housing boom. When the housing bubble burst in the late 2000s and housing values plummeted – a scenario lawmakers never imagined – the tax cap became the taxman’s friend and the taxpayer’s enemy. The law now guarantees taxing bodies can collect that increase.
While some taxing bodies have voluntarily rejected it, many others have raised their rates each year to make sure they collected it to prevent the shortfall they otherwise would have suffered because of lower property values. That is why Woodstock residents Ferdinando and Patricia DiMaio are leaving.
The DiMaios were shocked in 2012 when their property taxes leaped despite their home losing so much of its value. They appealed their township assessment and convinced the county Board of Review to lower it, but their tax bill ended up increasing because their taxing bodies raised their levies, which in turn raised tax rates on falling property values.
They decided enough was enough. Ferdinando, months later, got a job transfer to Fort Myers, Florida, where they own a condo. The DiMaios still own the 4,200-square-foot home on a half-acre of land — and the $9,154 property tax bill that comes with it — because they have a son still attending school at the Illinois Institute of Art in Schaumburg. Once he graduates in December, the house goes on the market. Patricia DiMaio said they don’t care about the loss they’ll take. They just want to be done with McHenry County and Illinois.
“Politicians are raping the people actually paying the taxes. They never go down. For 30 years, all we hear is, ‘We need more money, more money, more money,’ and where are our [school] test scores? In the toilet,” Patricia DiMaio said.
Gasser said he is livid other taxing bodies don’t follow his government’s lead. The McHenry County Board has rejected the inflationary increase for four straight years, and last month voted to eliminate, for at least one year, the $3 million levy for Valley Hi Nursing Home, which has accumulated enough of a surplus to finance three years of operations.
“It’s unfair and disingenuous that other taxing bodies inside McHenry County are raising their levies on the backs of the McHenry County Board,” Gasser said.
‘Thank God I left’
Fixing the crushing property tax burden, or even enacting the tiniest of reforms, is no small challenge.
The Land of Lincoln is also the Land of Governments; Illinois has almost 7,000 units of government, far more than any other state. The sheer number makes it almost impossible for taxpayers to keep eyes on them all, much less pressure them to resist raising taxes.
Some state lawmakers, such as Republican Rep. David McSweeney and Democratic Rep. Jack Franks, have realized the extent of the problem and attempted over the years to pass legislation reining in taxing ability. They have a new and more powerful ally in Gov. Bruce Rauner, who has identified property tax relief as a top priority and has sought a multiyear statewide freeze as part of his “Turnaround Agenda.”
The state’s thousands of local governments, however, have a very powerful lobbying presence in Springfield. Groups such as the Illinois Municipal League, the Illinois Association of School Boards, Township Officials of Illinois, and many others have the ears of lawmakers, many of whom got their start in local government and are historically averse to passing bills tying their financial hands.
These lobbying groups get their funding from membership dues paid by local governments, meaning they come from taxpayers. In short, part of property tax bills or the other taxes are spent by local governments to make sure their power to tax is not diminished.
Franks, who has butted heads with such groups on more than one occasion, finds the practice abhorrent.
“It should be against the law. It’s just so wrong on so many levels that it’s insidious,” said Franks, D-Marengo.
Franks, who champions government consolidation, said he believes true property tax reform will come one day. He said the main priority should be fundamentally changing how education is funded in Illinois, given that schools make up the largest average percentage of property tax bills.
Even if major reforms are enacted, they would be too late to bring people back.
Patti Poplin was born and raised in McHenry. Her ancestors first settled in the Ringwood area back when people moved with horses and covered wagons.
Taxes slowly drove her family out. Her parents and her sister moved to Alabama. Her husband’s family — his mother and his two brothers and their families — moved to Minnesota.
Eight years ago, Patti and Don Poplin also moved to Minnesota, ending her family’s long McHenry County history. That made her feel bad, she said, but the taxes made staying in Illinois a losing proposition.
The Poplins now pay $1,700 in property taxes to live in a 4,400-square-foot home with two large outbuildings on 10 acres. That’s a fraction of the $9,000 they paid to live in a 3,000-square-foot home on 1 acre in Wonder Lake – a tax bill that has undoubtedly increased since then for the new homeowner.
Patti Poplin now looks at Illinois with regret over what’s happening to it, but said she is very happy she made the choice.
“Thank God I left. The whole state is going to hell in a handbasket. They’re now giving out IOUs if you win more than $600 in the lottery. My brother-in-law travels back there and says it’s just a mess. The roads, everything,” she said.
“I wish I would have left years before.”