Property taxes in Oak Park are a contentious issue. Some think we are an affluent suburb, and we can afford nice things. Some think property taxes are spiraling out of control. Where does the truth lie? It’s complicated, but let’s follow the numbers.
Here they are for the last 20 years of Oak Park property taxes:
Data and charts are available here: 20 years of Oak Park Taxes - Google Sheets
If you are a numbers geek like me, you could stare at this for about 30 minutes. If you aren’t, I’ll have some pretty charts soon, stay with me. Astute readers will wonder where the library is (it’s rolled into the Village), and if D200 includes River Forest taxes (it does not). If you are wondering what each of these governmental bodies do, check out the details here: Introduction to Oak Park Government.
The CPI and AWI columns are included as a reference. CPI is the consumer price index, a basket of goods which are meant to track the general increase in prices in the US, otherwise known as inflation. AWI is a wage index maintained by the social security administration, it can be used to track increases in generally prevailing wages.
Here’s all that data in chart form:
We can see in the chart the cumulative impact of seemingly small yearly increases. For 2019, Oak Parkers paid $201 million dollars in taxes. 20 years ago we paid $75 million. This is an increase of $126 million, or 167%. Does the ‘spiraling out of control’ crowd have a point? Let's dig in to the details and see.
Breaking down the increase
If we take a look at the ‘Increase’ row in the data table, we can get a sense of how much each taxing body has contributed to this $126 million dollar increase in levy.
Even though the Park District has had a whopping 470% increase in their levy, they started from a very low base, and contribute very little over the last 20 years. It’s really all about the Village and the two school districts. The school districts are D200 and D97, the high school and elementary school districts respectively.
We spend a lot of money on the schools
Together the school districts account for $85 million of the 20 year increase, about 2/3rds of the total. The schools are a major driver of our property tax increases.
Looking into D97, we can see that increased enrollment is a big driver, they’ve added 1,100 students since 2002 (Oak Park Elementary School District #97: State Report Cards | Teaching & Learning (op97.org))
The following chart shows the per student D97 levy.
Adjusted for enrollment increases the levy has increased over 80% since 2002 (blue line), that's still a rather large increase. But over that long a period of time we must, in some way, account for inflation, and the best way to do that is with the AWI. Remember that the AWI is an index of wage inflation.
The red line above makes this adjustment, and we can see that adjusting for both salary increases and enrollment increases brings the percentage increase since 2002 down to about 15%.
Increased wages and enrollment explain almost all the D97 levy increase over the last 20 years. So, not really spiraling out of control, just trying to keep up with a large increase in students and teacher salary increases.
What about D200? They have had slightly smaller increases in enrollment, but as D97 is the feeder district for D200, the increase has been substantial, and combined with salary increases can explain much of the increase in the D200 levy.
The School Tax Spiral
Perhaps we can convince ourselves that increases in school funding are justified given increases in prevailing wages and enrollment. Maybe we shouldn’t worry about it then?
We should. We didn’t gain 1100+ new students through population growth. We gained them through demographic shifts. That is, more people with school aged children moved here specifically because of the schools. I am one of those people myself.
But what’s wrong with that? To answer that question, we have to ask, who did all those families with kids displace? They replaced taxpayers who didn’t have kids in the schools. Because education is so expensive, those are the kinds of taxpayers we want, people who are paying into the system but not taking much out. But those people are being rapidly replaced with school aged families.
Further, most people don’t realize that their yearly property taxes don’t come close to covering what the schools spend on your kids. Not for one kid, definitely not for 2+ kids. We depend on people who don’t have kids in the schools to pick up our tab. This is the social contract.
Ideally over the long term we ourselves pay back into the system, we move to a place and pay taxes before we have kids, then pay taxes while our kids are in school, and then as empty nesters we continue to pay taxes back into the system.
But this breaks down when property taxes become so high. We get what people pejoratively refer to as ‘renting the schools’. A family moves here with school age kids, or just before, and then moves away after the last child leaves the high school because they can no longer justify the cost.
When a family does this, they can extract $100k+ more in school funds than they pay into the schools in property taxes. Here’s a simple calculator that estimates the difference between what you pay into the system and what the schools spend on your kids: Educational Tax Calculator
Play around with this for a bit and you’ll realize that everybody leaving after their kids graduate is unsustainable, and property taxes simply must go up to cover the difference.
This can become a self-reinforcing spiral. The demographic shifts and ‘rent the schools’ behavior drive up property taxes, which make it increasingly uneconomical for people without school age kids to live here. They leave to be replaced with school aged families and the cycle intensifies. Wash. Rinse. Repeat.
The Village Budget
What about the other big offender, the Village? It accounts for 24% of the 20 year increase. Here you can’t make a population based argument, the population of Oak Park has shrunk over the last twenty years. But you can make a better argument that in a 100+ year old village, municipal maintenance, salary increases and pensions can start to catch up with you.
The Village budget is sprawling and complex, but I’ve done my best to pull out some major drivers of the increase, comparing the 1999 budget to the 2019 budget. The following table is in millions of dollars.
Key drivers of the increase are water/sewer, capital improvements, and police pensions, all of which have increased by over 200% in the last 20 years. These increases cannot be explained by price inflation or overall wage inflation, which have increased by only 53% and 71% respectively over the last 20 years.
Another factor at play here is that the property tax levy is not the only source of village revenue. In 1999, the levy was only 22% of the total village expenditures. Unfortunately however that percentage is on the rise. In 2019 the levy was 27% of total village expenditures. So not only is the Village spending more money than it used to, it’s relying more and more on property taxes to pay for it.
The result is that the Village has the largest overall percentage increase in property tax levy.
The future and fiscal sustainability
Maybe you think our tax increases over the last 20 years are justified by better municipal services and better schools, and welcome all the new families. We still have to address the question of sustainability. When taxes go up 167%, but wages go up only 71% over the same period of time, how long can this continue?
The average yearly levy increase over the last 20 years has been 4.6%. This means the levy doubles about every 16 years. Wages increase at about 2.7% a year, doubling every 26 years. Property tax increases are far outstripping our ability to pay.
You could argue that there’s been a broad increase in Oak Park income levels as more affluent folks have moved in, renovated and upgraded, but I’d argue if that’s been a trend, it’s likely now stopped.
If the levy more than doubles in the next 20 years, there’s not another wave of gentrifiers to replace us. If current trends continue, your $12.5k tax bill will become over $30k in 20 years. I hope there’s some millionaire to buy my place and pay that, because I won’t be able to.
And what about renters? Typically their incomes are not going up as much as they are for the owners of single family homes. Further, property taxes are regressive. They burden lower income folks more than they do high income folks. High income residents tend to spend less as a percentage of their income on housing than do low income residents.
Even though you may have been able to afford the last 10 years in tax increases, there are many in Oak Park who could not. Fritz Kaegi’s recent new property tax reforms have accentuated this issue, as they’ve shifted property taxes from homeowners to commercial properties in an attempt to properly value those commercial properties. This will, of necessity, result in higher rents.
Another 20 years on the current trend will result in an Oak Park affordable only to the rich and the subsidized. We often talk about sustainability in the context of the environment or climate, where our actions extract resources at an unsustainable rate from the natural world. It’s hard to see the impact of our small, individual contributions, and how they accumulate over the decades.
Similarly we must start to see our municipal financial situation in terms of fiscal sustainability. We must realize how each one of our governmental bodies is contributing to cumulatively unsustainable growth.
