Daily Herald | Property tax appeals favor businesses in Cook County

Jim Tobin, President of Taxpayers United for America, is quoted in the following article by the Daily Herald.
Article updated: 10/5/2011 2:09 PM
By Jake Griffin
Many Cook County homeowners opened their tax bills this week to find the amount they owed went up, even though the assessed value of their property went down.
In the Northwest suburbs, one reason is that commercial property owners who appealed their assessments got bigger breaks than homeowners.
That shifts more of the tax burden onto residential property owners.
Northwest suburban commercial property owners who appealed their assessments received reductions averaging 14 percentage points more than residential property owners, according to a Daily Herald analysis of more than 377,000 property assessment appeals from the Cook County Board of Review.
Homeowners in Barrington, Elk Grove, Hanover, Maine, Palatine, Schaumburg and Wheeling townships averaged 10 percent reductions when they appealed their assessments last year with the Board of Review. Meanwhile, commercial property owners in those townships who appealed their assessments averaged 24 percent reductions in their property’s taxable value.
In Barrington Township, the disparity is even wider. Commercial properties owners who appealed saw a 31.3 percent reduction on average, while residential property appeals resulted in an average reduction of 10.1 percent.
“We don’t have a lot of commercial properties,” said Barrington Township Assessor Amy Nykaza. “What little we do have, when it goes down 30 percent, it’s going to have an effect on everyone else due to the fact that taxing bodies are relying on the revenue they receive from commercial properties.”
And even as homeowners see the value of their properties dwindle, they’re seeing their tax bills rise.
“The taxes aren’t going away, they’re just being shifted around,” said Tom Smogolski, Hanover Township assessor.
Dan Patlak is one of three commissioners on the Cook County Board of Review, which rules on assessment appeals. He represents suburban townships, including those in Northwest Cook County. Patlak, formerly the Wheeling Township assessor, said the board’s decisions are based on the evidence presented at the hearings.
“There’s no advantage for commercial properties,” Patlak contended. “A property should be assessed at whatever its value is and that’s what we do at the board.”
Patlak noted that Cook County — unlike other counties in the state — assesses commercial properties at a higher rate than residential properties. Commercial properties in Cook County are assessed at 25 percent of their actual value while residential properties are assessed at 10 percent. Residential property owners also are eligible for exemptions that lower assessments that commercial properties don’t get.
While taxpayers complain they are being forced to shoulder a greater tax burden, experts contend the county’s assessment and appeal process is the greater problem.
“It’s a mess,” said Cook County Treasurer Maria Pappas, “an unexplainable, complicated mess.”
Pappas’ office is one of essentially five layers of government that has its fingers in the assessment process. There’s also the county assessor, the board of review, the county clerk and individual township assessors. A 2010 report by the Civic Federation, a Chicago-based nonpartisan government finance watchdog group, called the county’s tax system “excessively complex” that “creates considerable economic distortion.” The Civic Federation recommends consolidating some of the duties of the various agencies.
“The lines of responsibility are nearly impossible for ordinary taxpayers to discern and politicians exploit this fact to their political advantage,” the report stated. “Decades of adding special treatments and revenue limitations have created a system that is fully understood by few individuals.”
Even township assessors have problems keeping up.
“It’s confusing as hell, to be frank with you,” Smogolski said.
To determine tax bills, the county uses an ever-changing “multiplier” that essentially triples the assessed amount. Two different agencies — the county assessor and the board of review — hear appeals from taxpayers who think their property is valued too high, but only at specific and separate times of the year.
“I’ve been doing this for 30 years and I have a hard time figuring all of this out,” said Jim Tobin, president of the Chicago-based Taxpayers United of America. “It’s extremely complicated.”
He’d like to see the state make the assessment process similar to how it’s done in California. Property owners there pay 1 percent of the purchase price. That system would reduce, if not eliminate, all of the appeals hullabaloo, Tobin said.
It’s not too late to appeal your property assessment, though it won’t affect this year’s tax bill.
The process has just started in some parts of the county, but not in the suburbs. The board of review has yet to set a date when it will start accepting complaints from suburban property owners. It’s up to the taxpayers to keep watch.
The online complaint form is located at Township assessors are available to help taxpayers gather details to support their appeals as well.
Some critics say the only way to fix the appeals process is to do away with it, and create an assessment system that’s fair and evenhanded from the start. As it stands, the appeals process invalidates the work that went into the original assessment, said Laurence Msall, president of the Civic Federation. Only those with the time and wherewithal to file appeals benefit.
“It’s one of the rare occasions where it starts with the premise that government is wrong,” Msall said.

Lawsuit Against Illinois Tollway Receives Massive Press Coverage

On Thursday, Sept. 22, TUA filed a Complaint in the Circuit Court of Cook County against the Illinois State Toll Highway Authority, it’s Chair Paula Wolff, and Electronic Transaction Consultants Corporation. The complaint seeks to roll back the recently adopted 90% toll tax increase. It also alleges the Tollway Authority has violated state law by failing to convert tollways to freeways and by failing to plan for its own dissolution, as required by law.
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USA TODAY | How state lawmakers pump up pensions in ways you can't

Bill Zettler, Director of Research, was quoted in the following USA Today article on public pension payouts.

By Thomas Frank, USA TODAY

Updated 9/23/2011 4:44 PM

At age 55, South Carolina state Sen. David Thomas began collecting a pension for his legislative service without leaving office.Most workers must retire from their jobs before getting retirement benefits. But Thomas used a one-sentence law that he and his colleagues passed in 2002 to let legislators receive ataxpayer-funded pension instead of a salary after serving for 30 years.

Thomas’ $32,390 annual retirement benefit — paid for the rest of his life — is more than triple the $10,400 salary he gave up. His pension exceeds the salary because of another perk: Lawmakers voted to count their expenses in the salary used to calculate their pensions.
No other South Carolina state workers get those perks.
Since January 2005, Thomas, a Republican, has made $148,435 more than a legislative salary would have paid, his financial-disclosure records show. At least four other South Carolina lawmakers are getting pensions instead of salaries, netting an extra $292,000 since 2005, records show.
Pension perks aren’t unique to legislators in South Carolina.
More than 4,100 legislators in 33 states are positioned to benefit from special retirement laws that they and their predecessors have enacted to boost their pensions by up to $100,000 a year, a USA TODAY investigation found. Even as legislators cut basic state services and slash benefits for police, teachers and other workers, they have preserved pension laws that grant themselves perks unavailable to voters they serve or workers they direct.
In some states, lawmakers add expenses, per diem allowances and stipends to their base salaries. That inflates the compensation that’s used to calculate retirement benefits, which are typically a percentage of final pay. In other states, legislators have written a special definition of salary that applies only to their pensions. Additional tactics include:

  • Basing pensions on salaries legislators are not paid or were paid in non-legislative jobs.
  • Collecting state pensions while also collecting legislative paychecks.
  • Retiring earlier — at a younger age or after fewer years — than other state workers, or with richer benefits.

“It’s mind-blowing hypocrisy,” says state Rep. Stephen Webber, a Democrat from Missouri. State lawmakers there meet for roughly five months a year and are paid slightly more on average than a state worker, but records show a typical lawmaker’s pension averages 30% more than a state worker’s. The reason: rules legislators wrote for themselves.
“The whole two-tiered system really encapsulates how we’ve operated here in Missouri and in the rest of the country,” he says. “Lawmakers treat themselves differently.”
The generous systems mean that at least 570 lawmakers in 19 states have qualified for pensions that will pay them as much as — or in one case 17 times more than — their base legislative salaries, USA TODAY found.
That represents nearly 10% of the 5,900 lawmakers in the 40 states with legislative pensions. About 450 are lawmakers in Mississippi, Kansas, South Carolina, Texas and New Mexico, a state where lawmakers receive no salary but can get a pension with five years of service.
More than 100 other lawmakers have collected about $15million total in state pensions while holding office, USA TODAY found. They serve in states that allow “double dipping” for legislators but bar or restrict other workers from getting state pensions while holding state or municipal jobs. Most of those lawmakers have retired from jobs such as state police officer or public school teacher, but others are drawing pensions solely for their legislative service.
For South Carolina’s Thomas, the choice to trade a legislative salary for a legislative pension was easy.
“You get paid more,” he says.
Perks are not always obvious
Most 55-year-olds don’t have pensions. Just 26% of people older than 55 get a retirement benefit from a former employer, according to the Employee Benefit Research Institute. The average pension in 2009 was $13,007 for private-sector retirees and $25,286 for public retirees.
In Congress, retiring lawmakers get pensions worth up to 80% of their $174,000 salary — or $139,200 — if they serve 32 years. The average pension for 455 retired federal lawmakers is $57,590, according to the Congressional Research Service.
Discerning the state lawmakers’ pensions isn’t so easy.
Legislators must reach a certain age — generally from 55 to 65 — or serve a certain number of years to get a pension. Many states deem an individual’s retirement records confidential, however, and will not release details about payouts.
Lacking that information, USA TODAY reviewed thousands of pages of laws from 40 states to understand how legislative salaries and pensions are computed. The newspaper calculated how much every legislator in the 40 states would get for a pension if he or she retired this year. Ten states do not pay lawmaker pensions.
Several states let lawmakers start collecting their retirement benefits while still in office.
Six years before he left the New York state Senate in December, Republican George Winner began collecting a pension for his legislative service. He was 55 when the pension began adding $80,000 to the roughly $90,000 salary he was getting to represent New York’s 53rd Senate District, state records show. In his final six years in office, Winner received $1 million in pension and salary.
New York state has barred legislators elected after 1994 from getting legislative pensions while in office. Nonetheless, 15 lawmakers who took office before 1995 are collecting a legislative pension and salary, state records show. Their earnings average $154,000 a year.
Other perks are shrouded in the minutiae of state law: Kentucky legislators add their annual allowance for stationery — up to $1,500 for senators and $750 for House members — plus another $15,000 to $17,000 a year in expense payments to the salary on which pensions are based. Mississippi legislators get two pensions that on average add up to 165% of their salary. Connecticut lawmakers can increase their pensions up to 50% by including mileage reimbursements that add as much as $15,500 a year to the salaries used to calculate their pensions.
“That’s just a small example of what’s wrong with the (pension) system and why it’s become unsustainable,” says Connecticut Rep. Lawrence Cafero, House Republican leader. The expense payments, mileage and leadership stipend he received in 2008-10 will add $26,341 to the $28,000 legislator’s salary used to calculate his pension, state records show.
In Illinois, lawmakers who move to lucrative state jobs can apply the higher salary to their legislative pension, which pays richer benefits than pensions for state workers. In July, Democratic former House member Gary Hannig began collecting a $123,057 legislative pension, even though his legislative salary was $86,902 when he left office in 2009. His pension, however, is based on his $150,228 salary as state Transportation director after leaving the Legislature.
“It’s legal corruption,” says Bill Zettler of Chicago-based Taxpayers United of America. At least 42 of 139 Illinois legislators retiring since 2000 have boosted their legislative pensions by taking higher-paying government jobs, USA TODAY found.
Some states play make-believe. Kansas calculates lawmakers’ pensions as if they were paid 372 days a year.
Texas pension calculations stray even further from reality. Lawmakers there haven’t raised their pay since 1975. They convene every other year and get a $7,200 annual salary. But because of a law they passed in 1981, their pension is based on whatever the lawmakers decide to pay Texas trial judges.
Since 1981, Texas lawmakers have nearly tripled a judge’s salary — and, by extension, their own pensions — raising the pay from $42,500 to $125,000.
Legislators also removed a sentence that limited their pensions to 60% of a judge’s salary. Now, the pensions can equal 100% of a judge’s salary.
The changes mean that state Rep. Tom Craddick, a Republican who took office in 1969, is guaranteed a $125,000 pension — more than 17 times his $7,200 salary. Another 58 state lawmakers are guaranteed pensions of more than $40,000, USA TODAY found.
“That’s just the way the system is,” says Craddick, who owns Craddick Properties, an investment business.
‘It’s hard politically to raise your own salary’
Some states offset part of the extra cost of legislative pensions by requiring lawmakers to pay more of their salary into the retirement fund than ordinary state workers contribute. But for the lawmakers who collect them and the taxpayers who fund them, pensions can prove more substantial than salaries because lawmakers often spend more time retired than in office.
Lawmakers say they have increased their pensions to make up for salaries that are meant to be a part-time wage. And they say voting to change an obscure law that hikes a pension payout gets far less attention than a vote to boost pay. “It’s hard politically to raise your own salary,” says Kansas Senate President Steve Morris, a Republican.
Texas’ legislative pension plan “acts more like deferred compensation,” said Texas former House member Talmadge Heflin, now advocating public retirement cuts as director of the Texas Public Policy Foundation’s Center for Fiscal Policy.
Although most states’ legislative sessions last just part of the year, legislative duties can be time-consuming.
“It’s a full-time job even if the Legislature is convening six months or four months in a year,” says Ron Snell, a pension analyst at the National Conference of State Legislatures.
Eight state legislatures have written special, expansive definitions of salary that apply only to legislative pensions. North Carolinapension law says the compensation of a retiring worker “shall not include any payment … for the reimbursement of expenses.” But for North Carolina legislators, “compensation means salary and expense allowance.”
Many legislative salaries include stipends that can pay up to $41,500. In seven states, more than a third of lawmakers get stipends for holding leadership positions or for chairing a committee. Illinois, with 177 legislators, increased the number of leadership stipends to 167 from 30 in 1987. Delaware, New York and Ohio also pay more than 70% of lawmakers’ stipends that cost taxpayers up to $2.5 million a year.
Although the bonuses are paid only while a legislator holds a special post, they enrich lawmakers for life when they get a pension.
“Legislators go around telling their constituents, ‘I’m only getting the basic salary,’ and they don’t say, ‘We’ve got all these other ways of getting compensation that I’m not telling you about,'” says Edward Zelinsky, a pension expert at Cardozo Law School in New York City. “There are some real manipulations that occur here.”
Adding days to the year to boost pensions
In Kansas, legislators have cast three crucial votes to boost their pensions far above the benefit they would get from a salary that pays $88.66 each day the Legislature convenes, or $7,979 for a typical 90-day session.
Lawmakers voted in 1973 to calculate their pensions as if they were paid every day of the year. The vote also declared that legislators were paid 31 days a month for 12 months — or 372 days a year.
“It’s a little shocking,” says Jane Carter, executive director of the Kansas Organization of State Employees, which represents 10,000 state workers. “Our members have to work every single day for their pensions.”
In 1982, Kansas lawmakers boosted their pensions again by adding per diem allowances to their salaries for pension purposes. They also pretended the allowances were paid 372 days a year when in reality they are paid only when legislators are in session. And they added to the pension equation the expense payments they get between legislative sessions.
But many lawmakers could not collect because they, like other state workers, needed 10 years of service to retire. “A lot of legislators in the past didn’t serve 10 years and weren’t eligible for a pension,” says Morris, the Kansas lawmaker.
The Legislature changed that in 2007, voting to let workers retire with five years’ service while requiring they pay more into the retirement fund. Though the lower retirement age helps all Kansas state workers, the effect on its 165 lawmakers was profound: an extra 44 of them instantly qualified for a pension. Now, 93 of the state’s 165 legislators have qualified for a pension, and another 15 will be eligible if they finish their current terms. Lawmakers now have an $85,821 salary for pension purposes and get a pension that exceeds their base pay by serving just six years.
“Until we find a way to increase compensation for the rank-and-file legislators, I think it’s OK,” Morris says of the pension plan. His 19-year tenure in the Senate qualifies him for a pension equal to three-and-a-half times his salary.
Kansas enacted a law this year, sponsored by Morris, that creates a commission to study several ways to cut the state’s pension costs. Evaluating legislative pensions “is not part of their charge,” Morris says.
The Legislature as ‘an aristocracy’
As legislatures have cut state worker pension costs, some have targeted their own benefits. Arizona and Wisconsin enacted laws this year that sharply increase how much legislators and other elected officials must pay into the state retirement fund and cut benefits for new lawmakers.
Seven states have never given their lawmakers pensions, and voters in three states eliminated legislative pensions in the 1990s. “Voters see this as a part-time, citizen Legislature,” says Nebraska state Sen. Jeremy Nordquist, a Democrat and chairman of the Legislature’s retirement committee. Not having legislative pensions made it easier for lawmakers this year to require state workers to pay more of their salary to their retirement, Nordquist says. “You’re not affected by the decisions you’re making.”
But when Pennsylvania raised retirement ages last year for state workers hired after Dec. 31, legislators kept a perk that let them retire 10 years before most state workers. Legislators in office last year still retire at age 50, vs. 60 for most state workers. New lawmakers retire at 55, vs. 65 for most state workers.
Since 1996, 67 retired Pennsylvania legislators have collected $7 million in pension checks that they could not have received if they’ had the same retirement age as most state workers, USA TODAY found. Another 40 who took early retirement also benefited from the younger retirement age.
Those benefiting include seven former state legislators now in Congress, earning $174,000: Democrats Chaka Fattah and Allyson Schwartz and Republicans Charlie Dent, Jim Gerlach, Tim Murphy, Todd Platts and Joseph Pitts.
Pitts began collecting a state pension as soon as he went to Congress in 1997, when he was 57. Since 1997, he has collected $1.3million from the Pennsylvania retirement system, state records show, in addition to $2.3 million in total congressional salary since 1997. That’s $245,000 a year.
“It’s galling that they get preferential treatment in their normal retirement age,” says Tim Potts, president of Democracy Rising PA, which advocates for government openness. “Our Legislature has become an aristocracy … granting themselves benefits that are unavailable to others.”
Pitts said Pennsylvania legislative pensions are “indeed generous,” but added that he paid up to 17% of his salary into the state retirement fund. Pitts’ pension includes credit for eight-and-a-half years he spent in the Air Force and as a public-school teacher before becoming a legislator.
Rep. Dwight Evans, a Democrat who sponsored the pension law last year, says he struggled to win support for any retirement cuts that would save taxpayers money. Lawmakers agreed to raise retirement ages, but only for new workers and only if legislators still retired earlier.
“I was fortunate enough to be able to get the changes we did,” says Evans, who was House Appropriation Committee chairman. At age 57, Evans could retire immediately and collect a $97,000-a-year pension for life — $17,000 more a year than his base legislative salary.
Florida’s Legislature also protected itself this year when it began requiring state workers to pay 3% of their salary into the state pension fund, the first time state workers have had to make contributions. Most states have long required worker contributions between 2% and 10% of salaries.
Florida’s legislators and other elected officials get a pension equal to 3% of salary multiplied by years of service. For state workers, the comparable figure is 1.6%.
“That is wrong — absolutely wrong,” says state Sen. Mike Fasano, a Republican who this year proposed lowering elected officials’ payout to 2%. “You lead by example.”
Fasano’s bill died in committee without a vote.
Compensating for cuts
Even legislatures that have reformed their own pensions have at the same time taken less-visible steps to offset cuts.
In 1989, the Indiana Legislature became the first to create a 401(k) plan for itself. Lawmakers taking office after April 1989 are shut out of the state’s traditional pension plan and instead get individual retirement accounts.
Each legislator’s tax-exempt account accumulates money that can be tapped upon retirement. Lawmakers divert 5% of their annual salary into the account. State taxpayers make a contribution that is a percentage of a legislator’s salary.
In creating their 401(k) plan and revising it in 2007, Indiana legislators broadened the definition of salary to include roughly $5 million a year they get in per diem allowances, expense payments and leadership stipends. Legislators also hiked their annual salary to $22,616 from $11,600 and tied their compensation to that of state trial judges, which increases regularly with little fanfare.
The result: By raising their salary and counting expenses and stipends as salary, Indiana legislators have forced state taxpayers to put an extra $7 million in their retirement accounts from 2004 through 2010, records show.
Some lawmakers have focused on improving retirement for a subset of legislators. In 2005, the Kentucky Legislature began allowing retiring lawmakers who held full-time state jobs to base their legislative pensions on that full-time salary, rather than on their relatively paltry legislative salary.
That’s a boon for two reasons. Their full-time salaries are typically higher. And legislative pensions are equal to 2.75% to 5% of the salary times the number of years of service. Regular state pensions are equal to 1.1% to 2.5% of salary times years of service.
Late last year, J.R. Gray started collecting a $132,252 legislative pension after 29 years in the Kentucky House, state records indicate. That’s $107,601 more than he was paid in his final year in the Legislature. The pension is based on Gray’s salary as state Labor chief, where he served after leaving the Legislature.
Kentucky legislative pensions are based on an individual’s average salary over the three years when their earnings are highest. Gray held the Labor post for three years.
“Obviously that was a consideration,” Gray, 73, says of his decision to retire last year.
The Kentucky law could benefit 20 incumbent lawmakers who hold or have held other public-sector jobs, USA TODAY found.
Kentucky House Speaker Greg Stumbo was in the legislature from 1980 to 2004, was state attorney general for four years and returned to the legislature in 2009. Most of his public service has been in the legislature, but Stumbo, a Democrat, can get a legislative pension based on his $110,346 attorney general salary rather than on his legislative salary and expenses, which were $66,000 last year. Stumbo has enough credit for a pension equal to 100% of his attorney general salary — $110,346.
A state report says the 2005 perk costs Kentucky taxpayers $1 million a year. State Sen. Dennis Parrett, a Democrat, introduced legislation this year to kill it. “My bill didn’t have a prayer,” Parrett says. “It didn’t even get a hearing.”



Taxpayers United Of America: (TUA). is a nonpartisan, 501(c)(4) taxpayer advocacy group. Founded June 27, 1976 in Chicago, Illinois by activist and economist Jim Tobin, TUA works on behalf of taxpayers to reduce local, state, and federal taxes. In the past forty years, TUA has saved taxpayers more than $200 billion n taxes and has become one of the largest taxpayer organizations in America. Check All posts. s.


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