By Michael Romain
A recent study by the Urban Institute confirms what every Maywoodian already knows–Maywood’s property taxes are too high. However, knowledge based on personal experience and intuition is one thing; knowledge based on a comprehensive, contextualized comparison of property rates across the United States is something else entirely.
Before delving into the data, some qualifications are in order. First, to conclude simply that a municipality’s property taxes are high doesn’t necessarily say much by itself. For instance, just because a state’s property taxes are high doesn’t necessarily mean that it’s overall rate of taxation is high. Moreover, property taxes, as with all taxes, can’t be evaluated entirely by how high or low they are. The most important test of their effectiveness and efficiency is outcomes. What are you getting in return for your tax? This is the test that Maywood ultimately fails.
According to the Urban Institute study, Illinois now has the second-highest property tax rate in the nation behind only New Jersey. The study, which analyzes self-reported data compiled by the U.S. Census Bureau for its American Community Survey (2007-11), found that households in Illinois paid, on average, about $4,500 in property taxes (or 2.28 percent of the average home value) in 2012. For a striking comparison, Hawaii, the state with the lowest rates, property tax as a percentage of home value is 0.27 percent. In Alabama, the state with the lowest rates in the contiguous United States, it’s 0.46 percent.
Illinois’s high property tax rate, however, is only half the picture, since property tax rates within the state may vary considerably. As the study notes, the rate of property tax variation across counties is due in large part to a state’s laws and its relative “dependence on property taxes versus other state and local revenue sources.” But within states, the variation among counties may largely be due to the county’s relative dependence on property taxes as a source of revenue and aggregate housing values.
In short, municipalities with a high reliance on the property taxes and high housing values will tend to have high property taxes. For instance, this point was born out when I analyzed the property tax rate as a share home value of several randomly selected homes in Oak Park and River Forest, two villages with high housing values and, according to national standards, relatively high reliance on the property tax. The following charts are based on publicly available information. Note that, with few exceptions, these are the tax amounts that remained after various exemptions (i.e., homeowner, returning veterans homestead, senior homestead, etc.) were deducted.
So based on the limited data above, it would be reasonable to assume that property taxes in Oak Park and River Forest are high–both by Illinois and national standards. But the populations of Oak Park and River Forest have been pretty stable for more than twenty years, a rather strong indicator that, on the whole, these people seem to be more or less satisfied with what they’re getting for their high taxes. And what they’re getting is pretty obvious to their neighbors to the west. Good schools, safe and clean streets, you know, the basics.
Now, compare those randomly selected addresses in the tony suburbs of Oak Park and River Forest with several randomly selected addresses in Maywood and Bellwood–two communities that, like Oak Park and River Forest, rely rather heavily on the property tax, but where, unlike those two suburbs, home values are relatively low.
*No exemptions were applied to this household’s property tax amount.
As Figure II demonstrates, the property tax rate as a percentage of home value seems to be higher in Maywood and Bellwood, both places where home values are very depressed, than in Oak Park and River Forest. So Maywoodians pay higher property taxes both as a percentage of home value and likely also as a percentage of income than our neighbors to the east–indeed than perhaps most places in the country (see graph below)–and we get far less for what we pay.
Among the municipalities in Chicago’s West Suburbs and Proviso Township, Maywood is perhaps the one that relies on property taxes as a share of government revenue the most; the one that allocates the least amount of property taxes to its elementary and high schools and the one that collects the least amount of government revenue from service charges and fees (or money that municipalities get from things like restaurant inspections, parking, building permits and marriage licenses), and sales taxes. This last point is perhaps most troubling, since government revenue from sales taxes, building permits, restaurant inspections and parking is a decent indicator of the health of a village’s economic and business climate.
Figure III: Breakdown of a Typical Maywoodian’s Tax Bill (2012)
Figure IV: Maywood Governmental Revenues By Source (2010)
Source: Village of Maywood Financial Statement, April 30, 2010
Figure V: Percentage of Property Taxes to Municipality v. Schools (2012)
Any would-be savior (whether in the guise of a politician or private citizen) will have to seriously grapple with these structural deficits before making plans and promises. But in the meantime, as serious examination remains stalled, residents of this town will continue to vote with their feet. VFP