The Illinois Department of Revenue recently announced the 2016 final property tax equalization factor of 2.8032 for Cook County.
This final equalization factor is a 5.05% increase from the 2015 final factor of 2.6685. It's also a 2.1% increase from the 2016 tentative state equalization factor of 2.7455 that was issued earlier this year. The reason for the additional increase stems from assessment reductions by the Cook County Board of Review that were not previously part of the calculation.
How the Equalization Factor is Determined
The Department calculates the final equalization factor by comparing the actual selling price of individual properties with the assessed value of those properties by the county assessor and adjusted by the board of review for the prior three years.
If the median level of assessment for all property in the county varies from the 33 1/3% level required by law, an equalization factor is assigned so assessments meet the legally mandated level.
Presently, the prior three-year average level of assessment (weighted by class) for Cook County property is 11.89%. Therefore, the legally state mandated assessment ratio of 33 1/3% divided by Cook County’s three-year average level of assessment of 11.89% equals the 2016 final state equalization factor of 2.8032 for Cook County.
Disproportionate Tax Burden
The equalization formula along with the assessment classification system in Cook County places a disproportionate tax burden on commercial and industrial properties. Currently, the three-year Cook County average level of assessment on commercial properties is 23.95%. For industrial properties, it is 22.14%. (See table below.)
When the 2016 final Cook County state equalization factor of 2.8032 is applied to commercial and industrial properties, the resulting average equalized assessment level is 67.14% and 62.06% for commercial and industrial properties respectively. This is significantly higher than the state mandated assessment level of 33 1/3%.
This example also assumes that all commercial and industrial properties are assessed uniformly and fairly, which is rarely the case. The actual tax burden could be much higher for an individual commercial or industrial property taxpayer if they have not reviewed their actual assessment lately.
Tax Rates Rise
If the 2016 average local tax rate goes up by an estimated 3% to 5%, say 4% countywide, the combined average estimated equalized tax rate increase will be slightly more than 9% with the equalization factor increase.
Some taxing districts could see even higher 2016 equalized tax rates. The City of Chicago and the Chicago Public School system are still struggling with budgetary shortfalls this year. The rate increases may be the highest in Cook County’s south suburban townships, where the taxable valuation base is generally lower, but the demand for local government expenditures still continues to grow greater than the annual rate of inflation.
Local tax rates will be multiplied by the final state equalization factor on each taxable property to determine the final taxes for 2016 when the Cook County second installment tax bills are issued this summer.