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Cook County Considers Property Tax Payment Extension To Oct. 1
Bank Escrows Make Measure Tenable For Taxing Districts

Tuesday, May 19, 2020
Journal and Topics Online
by Tom Robb

 

Cook County Considers Property Tax Payment Extension To Oct. 1

Bank Escrows Make Measure Tenable For Taxing Districts

By Tom Robb | on May 19, 2020

Cook County commissioners are expected to approve an ordinance allowing property taxpayers to delay paying their second installment of taxes 60 days without additional interest or penalty.

The proposed COVID-19 Property Tax Relief ordinance, announced Wednesday, May 13 by Cook County Board President Toni Preckwinkle, would move the due date for payment of the second installment of property taxes from Monday, Aug. 3 to Thursday, Oct. 1 without the 1.5% penalty which would typically be imposed after the Aug. 3 deadline.

The bill has bipartisan support and is expected to pass, said the bill’s author Cook County Commissioner Larry Suffredin (D-13th), Democratic bill co-sponsor Commissioner Scott Britton (D-14th) and Republican co-sponsor Commissioner Peter Silvestri (R-9th).

Suffredin said the county is somewhat limited in what it can provide for relief given frameworks set by legislators in Springfield, but added he hopes this provides some relief.

“It’s a good benefit to the community, getting a break during this challenging time,” Silvestri said.

“The Cook County treasurer collects over $12 billion annually on behalf of over 2,200 jurisdictions that include all underlying municipalities, school districts, park districts, libraries, and other taxing districts,” a county press release said.

Cook County acts as a pass-through for those 2,200 taxing jurisdictions, forwarding collected property tax funds determined by individual jurisdictions’ property tax levies after county officials ensure local taxing districts are not awarded more taxes than are allowed under property tax cap laws.

Suffredin said there is typically a lag rate of about 5% in property tax payments from property owners. He fears this year’s lag rate could be anywhere from 15 to 20 or even 30% as unemployment, which saw first-time claims since the outbreak of COVID-19 in March reach 36 million nationally, causes property owners to miss mortgage payments and prevents renters from paying landlords.

 

Suffredin said there are provisions in state COVID orders preventing evictions and further added that courts which process evictions and foreclosures are not meeting during the crisis. Cook County Sheriff Tom Dart has also stopped his officers from executing evictions. He said when those courts reopen, there could be a wave of new evictions and foreclosures from the backlog.

Suffredin said taxes on 730,000 property parcels, about two-thirds of all the taxed property in Cook County, are paid through escrow accounts managed by banks.

In an escrow account, the property owner pays one mortgage payment to the bank each month including the cost of property taxes already figured in. The bank then pays the property tax to the county on behalf of the mortgage holder.

Suffredin said it would be prohibitively complicated for banks to change all those escrow accounts, meaning he expects property tax payments from escrow accounts to come in on or before Aug. 3.

Given that two-thirds of property taxes are expected to come in on time, top administrative and elected officials for taxing bodies from the villages of Niles and Elk Grove Village, the Niles-Maine District Library, Glenview Park District and Glenview School Dist. 34 report they have enough money in their reserve accounts so that the one-third of property tax receipts, which may be late, would not have any significant impact on budgets.

Silvestri said mayors he spoke with supported the measure once they learned about the escrow factor.

Elk Grove Village Mayor Craig Johnson said because so many small and medium-sized businesses are located in the village’s six-square mile business park and likely do not pay property taxes through escrow accounts, those later payments could be somewhat higher than in other communities. He added that the village is in sound financial shape and would easily be able to weather those later payments.

Elk Grove Village recently enacted a $2.8 million relief package for residents and businesses paid for with a $3 million budget surplus remaining from last year’s budget. Several large developments, including a 66-acre Microsoft project in the village’s new technology park, are in the works, generating additional revenue for the village.

Eric Miller, Glenview School Dist. 34 assistant superintendent for business said, “We’re fine, (with reserves to cover any shortfall until October) but it starts to make me nervous.”

He said in the longer term, property tax revenues to the school district are expected to be impacted.

Under tax cap laws, schools are allowed to increase their property tax levy, the amount of money they ask Cook County to collect for them in property taxes, only by the Consumer Price Index (CPI, or the inflation rate) and the amount of new property coming on the tax rolls for the first time, often called “new growth.”

Miller said in the coming next few years he expects the economic impact of the COVID-19 pandemic to lead to CPI being flat or even negative in a period of deflation and for there to be little to no new growth.

“We projected deficits two months ago for 2022 and 2023, but with very low CPI, we could see those deficits double,” Miller said. In the longer term, the retirement of the Glen Tax Increment Financing District by 2023 could offset some of those losses.

Additionally, voters in Dist. 34 approved a $119 million bond issue in the Tuesday, March 17 Presidential Primary Election, which will go toward $149 million in projects to update the district’s eight schools. With one exception all were built in the 1940s, ‘50s, and ‘60s. He said about half of the district’s reserves were being put toward those referendum projects.

Belt-tightening in the district along with school closures due to the pandemic has saved the district $1.2 million. The district may end the year with an operating $2 million surplus, said Miller. Because of projects and other losses of revenue, however, the district could see a total budget deficit of $3 to $3.5 million.

Miller said in the coming next few years he expects the economic impact of the COVID-19 pandemic to lead to CPI being flat or even negative in a period of deflation and for there to be little to no new growth.

“We projected deficits two months ago for 2022 and 2023, but with very low CPI, we could see those deficits double,” Miller said. In the longer term, the retirement of the Glen Tax Increment Financing District by 2023 could offset some of those losses.

Additionally, voters in Dist. 34 approved a $119 million bond issue in the Tuesday, March 17 Presidential Primary Election, which will go toward $149 million in projects to update the district’s eight schools. With one exception all were built in the 1940s, ‘50s, and ‘60s. He said about half of the district’s reserves were being put toward those referendum projects.

Belt-tightening in the district along with school closures due to the pandemic has saved the district $1.2 million. The district may end the year with an operating $2 million surplus, said Miller. Because of projects and other losses of revenue, however, the district could see a total budget deficit of $3 to $3.5 million.

 



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