Lowering the "Tax Rate" doesn't mean lowering the amount of taxes you pay

By Ray Hanania

FREE/Understanding Tax Rate & Tax Levy/Sunday Dec. 8, 2024

If you are a homeowner and your municipality tells you that they are reducing your “Tax Rate,” it sounds like a good thing, right? Sounds like you are paying less money in property taxes. Not Always.

Most people think when a Village President or Mayor announces they lowered the Tax Rate (Tax Levy) that it is a property tax cut. It's not.

When a government reduces its Tax Rate, all that means is it is taking less from the pool of available taxes that are collected annually.

Worse though is that lowering the Tax Rate directly impacts your property exemptions, lowering them for Homeowners and for Seniors, most of whom are on fixed incomes.

Most likely, means you are going to pay more in actual property taxes to that government.

Here's what happens.

The Assessor, in this case, Fritz Kaegi, increased the property assessments on all homes in Cook County in order to help his pals in the business community, reducing their assessments. A lower assessment means lower property taxes. A higher assessment means higher property taxes.

Kaegi basically shifted the tax burden from businesses to homeowners. He doesn’t care because he knows most taxpayers and voters have poor memories for things like this and his re-election isn’t until 2026.

Every homeowner saw an increase in their assessment this past year, thanks to Kaegi, and it was record-setting in the Southwest Suburbs of Chicago.

That increase in property taxes was substantial. So, a community like Orland Park, for example, where the controversy-plagued Mayor Keith Pekau has been spending money like crazy on things like an entertainment center and gun range -- things homeowners don't need — will seen their taxes rise. Pekau need more money.

Let's use Orland Park and Mayor Keith Pekau as an example of how tax rate/levy taxation data is manipulated to sound better than it is.

Thanks to Kaegi, Orland Park taxpayers are going to get a lot more money in property taxes and that means the Village Government will get far more than what they got last year. In the face of the homeowner anger over their increases, Pekau responded not by confronting Kaegi on behalf of homeowners, but covered his on tail using a tax shell game.

Instead of taking ALL of the new higher amount of collected property tax money (the “pool”), Pekau takes less from that bigger pool, by reducing the Tax Rate, while still collecting more in property taxes. It's not less than what he took last year. It's actually more.

So, instead of saying, "We lowered property taxes" which can only be done by reducing government spending, he says instead "We lowered the Tax Rate" which doesn’t require lowering government spending at all. In fact, it often means they are spending more.

I used an actual tax bill on a typical home reassessed by Assessor Kaegi to help his business pals, a home that is now valued higher at $400,000. I compared the municipal spending in Orland Park for 2022 and 2023 (taxes are collected this year for the past year).

These numbers are from actual tax bills for 2022 and 2023.

In 2022, the Orland Park Tax Rate (Tax Levy) was 10.24 percent, which means that your Homeowner’s Exemption was $1,024.60. Your Senior Exemption was $819.68.

In 2023, Pekau “lowered” the Tax Rate (Tax Levy) to 8.297 percent, your Homeowner Exemption dropped to $829.70. And, the Senior Exemption was also dropped to $663.76 that year.

What did the Village spend in the past two years? Keep in mind we won't see the 2024 property tax bill until 2025, and the Village of Orland Park only recently filed its 2022 Annual Audit after it was sanctioned by Illinois Comptroller Susana Mendoza, and it hasn't yet filed its 2023 Annual Audit. Mendoza responded to my July column pointing out that the village failed to file its required, mandatory Annual Audit for 2022 and 2023.

In the 2023 Orland Village Budet (Page 7),"Village-wide budgeted expenditures total $115,942,791, an increase of $5,662,187, or 5.1 percent from the 2022 amended budget."

Let me clarify that for you. That's an increase of 5.1 percent in spending in 2023 over 2022. Where do you think that increase in spending came from? You, the homeowner.

In the 2024 Orland Village Budet (Page 7), "Village-wide budgeted expenditures total $127,956,464, an increase of $2,550,017, or 2.0% from the 2023 amended budget."

In each year, with the lowered Tax Rate, the Homeowner and Senior Exemptions dropped.

Basically, homeowners in Orland Park are paying more in property taxes even though it looks like the village is getting a little less of the overall pie (divided with other local governments like local schools and libraries, for example.)

By the way, Orland Park further penalized residents this year and increased their own taxes by increasing the village tax on electricity and on natural gas. And Orland Park increased the Sales Tax from 10 to 10.5 percent, making it the highest in the region.

(Pekau says 60 percent of Sales Taxes from from people who shop in Orland Park, but seriously I question that number. Regardless, Orland Park residents are paying a much higher tax on retail purchases in Orland Park, too. (I shop outside of Orland Park these days.)

Of course, it is an election year for Mayor Pekau and he is being challenged by a former Trustee, Jim Dodge, who better understands and has a better record on village finances. So Pekau needs to make it look like he cares about taxpayers, when he doesn’t.

Did Orland Park's taxes really go down when the Tax Rate was lowered? Clearly, no!

Look at your own property tax bills and compare the last two annual taxes and how much each government got. Look at the exemptions, too.

I promise you, it is worth it.