The owners of a Chicago home worth $300,000 will pay about $35 more on their property tax bill this year than they would have if an obscure law had not sailed through the Illinois legislature last year.

And it all started with the administrator of a small school district in McHenry County.

Illinois’ new property tax “recapture” provision traces its roots to nearly a decade ago when Mark Altmayer, the chief financial officer for Huntley Community School District 158 in the Far Northwest suburbs, noticed his district typically collected less from property owners than what it taxed them.

“I learned very quickly that we’re all not collecting 100% of our tax bill and I was blown away when I got to understand the process a little better,” said Altmayer, who sits on the board of the Illinois Association of School Business Officials. 

Taxing bodies like cities, schools and park districts are on the hook each year to pay back property tax refunds that result from court rulings, decisions by the Illinois Property Tax Appeals Board and certificates of error, which are acknowledgements from governments that they didn’t charge the right amount in taxes. Unlike county assessors and boards of review, which grant thousands of breaks with enough time to be factored into the same year’s tax bill, those other refunds can take years to process and must be drawn from each district’s bottom line.

However, under a bill signed into law last August by Gov. J.B. Pritzker, each local government’s annual refund tab is now added to its levy on taxpayers the following year. The result was more than an additional $44.3 million tacked onto the various taxes affecting Chicago properties, including about $32 million by Chicago Public Schools, on the bills being sent to property owners this month. In all, Cook County’s 900-plus taxing bodies added more than $131 million in new property taxes.

Despite predictions by proponents that the tax burden will level off, the refund due to Chicago taxing bodies will balloon to nearly $70 million next year, according to new data published this week by the Cook County Clerk’s Office.

“Technically, when you look at a revenue recapture, everybody’s going to pay a little more tax,” Altmayer said. “But it’s really how much they should have been paying the prior year, if everything had been done appropriately in the first place.”

He noted that some property tax appeals can take years to resolve, sticking taxing districts with refund bills long after the taxes in question are due.

Altmayer argued the district wasn’t collecting as much tax as it was supposed to for illegitimate reasons.

“And at the end of the day, it’s our students who were suffering,” he said.

Illinois Rep. Michael Zalewski (D-Riverside), who shepherded the bill through the legislature alongside Sen. Don DeWitte (R-St. Charles) and Sen. Michael Hastings (D-Tinley Park), argued that the “macro effect” of local governments collecting all their budgeted revenues outweighs the “micro effect” of higher taxes.

“You’d rather have the taxing bodies being made whole than having to come up with all these big one-time payments,” Zalewski said. “That was the theory behind the bill.”

The problem stood out in some smaller suburbs, where one favorable tax appeal decision for a big commercial property could blow a multimillion-dollar hole in the school system’s budget, Zalewski said.

Taxpayers in many of those towns, particularly to the west and northwest of Chicago, are now in line to pay some of the steepest “recapture” refunds. Property owners in the Arlington Heights High School District 214 can blame the recapture law for more than $4 million in additional taxes this year. Kane County residents will owe more than a combined $4.3 million extra thanks to the law.

The new provision has been a boon and a source of budget stability for local governments, says Ares Dalianis, a property tax attorney who represents multiple Illinois school districts.

At the time, school district officials successfully pushed for the tax recapture to be automatic every year, rather than requiring local governments to publicly vote to accept it. County clerks also wanted the process to be automatic to prevent additional work on their end.

Still, Dalianis said several districts he represents have passed abatements to opt out of collecting the recaptured revenue.

“It keeps it a little simpler and cleaner if [the recapture] is automatically done by the clerk” of each county, he said. “But I can understand why people would say, ‘Hey, if you’re getting this additional amount in taxes, there ought to be some public awareness or board action.’”