Two months after property tax payments were supposed to be due, Cook County, Illinois, is still struggling to calculate and send out accurate bills for the second part of 2024.
That means local governments and school districts in the nation's second most populous county face delays in receiving a core tax revenue stream.
As of Tuesday,
"For some reason this happens more frequently in Cook County than anywhere I know in the country," said Richard Ciccarone, president emeritus at Merritt Research Services, an Investortools company. "It's spurred a lot of short-term borrowing in the past."
County bureau of finance spokesman Edward Nelson said the county's cash reserves will suffice to pay all its obligations during the delay.
In October, the county's finance team will be going to the board of commissioners to ask for authority to borrow up to $75 million from the county's working cash to service debt on outstanding general obligation bonds, which are secured by property tax revenues.
"We do not anticipate any challenges with getting this approved," Nelson said.
While the county can ride the delay out, some school districts and municipalities within the county may be pinched, Ciccarone said.
Many cities have diversified revenue sources, or the ability — if they're home rule — to levy new revenues. But school districts rely more heavily on property taxes.
Illinois school districts are allowed, under certain conditions, to transfer money in their working cash fund into the general fund, and can issue working cash bonds, Ciccarone noted. And most school districts in the county are in pretty healthy shape in terms of cash on hand.
"When you get the second bill, not everybody's in trouble," he said. "Does that mean no one's in trouble? It does not."
On Sept. 18,
The county is home
Through Friday, any political subdivision in the county except Chicago or Chicago Public Schools can apply for a loan through the fund if it has a lower bond rating than the county and less than 120 days cash on hand.
Nelson said the loans are interest-free, and they've received 10 applications so far.
"We believe the $300 million is sufficient based on our experience providing this assistance previously. However, if we do become oversubscribed, we would allocate the available resources in an equitable manner providing relief to our most vulnerable communities first," he said.
The county treasurer's office has blamed Tyler Technologies — the Plano, Texas-based software company providing a new system to replace the county's legacy one — for botching the original timeline, which would have had the county adopt the new software in May. Tyler has accused the treasurer's office of causing the delay, according to the
"Tyler has worked and will continue to work diligently with Cook County on all aspects of the software transition and implementation," a company spokesperson said by email.
The spokesperson did not respond to questions about when accurate bills might go out.
The Cook County project required Tyler to combine 10 different legacy systems — in use by the county assessor, treasurer and clerk offices — into a single system, and to convert 20 years of data from those systems. At one point, the county requested the data be converted back to the original system to comply with a board audit.
Helen Samuelson, a director at S&P, said property taxes only made up 14% of the county's general fund revenue in 2024, and the delay is more likely to hit credits with low liquidity and reserves, including the city of Chicago and Chicago Public Schools.
"We believe most entities we rate in the county have sufficient internal liquidity or access to external liquidity to manage significant payment delays," Samuelson said by email. S&P assigns Cook County GOs an A-plus rating; the outlook is stable.
Ashlee Gabrysch, Midwest region manager for local government ratings at Fitch Ratings, said the rating agency takes a holistic view of the late distribution of the property tax bills.
"If the county fails to make strides in remedying the late property tax bills going forward and should the lateness rise to an annual occurrence, this could indicate management weakness and thusly could have a negative impact on the rating," Gabrysch said by email.
"At this point, Fitch is not anticipating that this will be the case," she added.
Fitch assigns the county's general obligation bonds a rating of AA with a positive outlook.
Moody's Ratings rates the county's GOs Aa3 with a stable outlook.
A benchmark table of medians from Merritt going back to the mid-2000s shows Illinois school district liquidity conditions have improved over the years.
"Both cities and school districts in Illinois in recent years have accumulated relatively large fund balances compared to previous years," Ciccarone said. "It's reflected in not only higher fund balances, but higher days cash on hand, both for the general fund and for governmental activities."
But Cook County school districts have a higher reliance on property taxes than school districts across the state — the median is 58% of the governmental activities fund for county school districts, versus only 56% for statewide school districts, according to a Merritt peer group analysis of 89 Cook County school districts with a population of 15,000 and above.
Based on the most recent financial statements available — in most cases, fiscal year 2024 — school districts in Cook County are generally in better shape than their statewide peers. The median level of general fund days cash on hand for the county's school districts was 205 days, versus 194 days for school districts across the state.
For school districts in the county, the median level of general fund revenue that's made up of state sources is 31%, versus 37% for school districts across the state.
Many school districts are still running much larger days cash on hand balances than they were pre-COVID, thanks in part to federal pandemic relief funds.
However, Ciccarone flagged a short list of school districts with lower levels of days cash on hand, less comfortable fund balances and higher property tax reliance that are at risk — if not of default, then at least of dilution, where there is a depreciation in the credit's bond pricing.
"There's a confluence of problems, of potential impacts on their revenue sources," Ciccarone said. "Multiple revenue sources are in short supply. In addition to the delay in property taxes coming in — which looks like it's poised to be a significant delay — we're also likely to experience, particularly for less wealthy school districts, significant decreases in the amount of federal aid that they're going to get.
"They're going to get a double whammy, slicing into their revenues for the beginning of fiscal 2026," he said.
The school districts on that list include Dolton West School District in Riverdale, Chicago Public Schools, Prospect Heights, Evanston Community Consolidated School District 65, Homewood School District 153 and LaGrange School District 102.
The bottom four of those school districts have dipped very low in their debt service fund balances, Ciccarone said.
CPS, which has less than five days cash on hand in the general fund, according to Merritt, and less than seven days overall, has relied on tax anticipation notes and may do so again in this case.
"Once you go down the path of tax anticipation notes, you're at the next level," Ciccarone said. "When they had a credit crisis in 1979, it was the short-term debt that caused the biggest problem. They were rolling over their TANs at the end of the year instead of retiring them. They
In terms of municipalities, Ciccarone said municipalities like Chicago, Riverdale, Forest Park and Calumet City are on his radar due to generally weak liquidity or condition numbers.
"Most of the cities are in good shape; they don't depend on their property taxes very much for their operations," Ciccarone said. "The concern is the impact (late property taxes) have on their debt service or pension payments.
"The inner ring, older suburbs tend to be more reliant on property taxes," he added.
