Property tax pains in Maine Township, Illinois

By: Ted Dabrowski and John Klingner

Like most people, Steve Schildwachter was initially too busy to figure out why his property tax bills kept going up. For a while, the Park Ridge resident and marketing executive simply paid his taxes and moved on. But as his property taxes nearly doubled, Steve vowed to understand his tax bill.

“People think that appealing their property assessments solves the problem. But all that does is push the burden away from you and onto your neighbors. It doesn’t do anything to lower overall taxes or slow down spending, driven largely by school districts. The real problem is spending. Governments decide how much they want to spend and then they just give you your share of the bill.”

Steve is right. In Park Ridge, property values still haven’t recovered from the effects of the Great Recession, yet local officials continue to tax more and more, especially to pay for schools and local pensions.

School district costs

In Park Ridge School District 64, for example, property values are down 21 percent compared to 2009, yet the district has hiked taxes by more than $10 million, or 17 percent, over the same period. That hurts since taxes for schools typically make up 60 to 70 percent of a resident’s property tax bill in Illinois.

Part of those higher property taxes go to pay for increasingly expensive compensation. Forty percent of the district’s full-time employees made more than $100,000 last year. The highest paid of all were the district’s administrators. The top five all received between $140,000 and $300,000 in total compensation.

Those six-figure compensation packages will translate into multi-million dollar pensions when those bureaucrats retire, not just at Park Ridge, but also at Maine Township’s other districts.

The top 20 retirees from Maine Township’s four main school districts are below. If they live to their full life expectancy, they’ll each receive between $4 to $7 million dollars during their retirements, depending on their starting pensions.

All the above creates a vicious cycle. High salaries drive up pension costs for the state, leaving less state education funding available for classrooms. That, in turn, drives up local property taxes for education. Wirepoints covered that cycle in a special report: Administrators over kids: Seven ways Illinois’ education bureaucracy siphons money from classrooms.

Public safety pensions

Residents of Park Ridge have also been forced to spend more on the city’s rising local public safety pension costs. Today, the city – meaning taxpayers – puts in five times more money into police and fire pensions than it did in 2005.

But the debt burden on Steve Schildwachter and other residents has grown despite all that extra funding. In 2005, the public safety pension shortfall was just $26 million. Tens of millions in taxpayer contributions later, and residents now owe more than $43 million.

All that additional money hasn’t improved the overall health of the funds, either. In 2005, Park Ridge’s public safety pension funds had just 67 cents for every dollar they needed on hand to pay out future pension benefits. Today, the funding ratio is still stuck at just 67 percent.

The pressure on taxpayers will only get worse as pay rises and more public safety workers hit retirement.

A decade ago, Park Ridge had 1.27 active members paying into the pension fund for every one beneficiary taking money out. Now, the situation is upside down – there are only 0.94 active workers for every beneficiary.

With fewer workers putting money in and more retirees drawing benefits, expect Park Ridge residents to be forced to make up the difference.

Property taxes in Maine Township and beyond

Park Ridge’s property tax problems aren’t unique. Its pension and school district spending issues are shared by its neighboring communities in Maine Township.

And the area’s overall property tax burden is very similar, with residents in all four major Maine Township cities paying effective property tax rates of about 2 percent.

That’s nearly identical to the state’s average effective rate, which is one of the highest in the nation, according to data from the Tax Foundation.

Residents in Park Ridge are paying property tax rates a third higher than those in Iowa and double the rates of Indiana and Kentucky. Illinois’ neighboring states do more with less, and yet there’s very little demand from residents for Illinois government to do the same.

And now there’s the sticker shock coming from new Cook County assessment process, as homeowners see their assessments jump by incredible amounts.

Steve wants to see spending reforms happen as soon as possible. And controlling spending means more than just stopping budgets from growing. Structural pension reforms, starting with a constitutional amendment, and changes to Illinois’ overly-restrictive collective bargaining rules are both needed to bring property taxes down. Local officials have long been handcuffed by state mandates that limit their ability to control costs.

Steve recognizes it took him a while to understand how the whole system works. Now he’s hoping he can help others shortcut the learning process.

“You always have a right to complain about property taxes. But you’re wasting your breath complaining until you get engaged and vote. You won’t change anything until you vote for school representatives that control spending.”