Chicago property tax increase for pension payments
1000L Blow Molding Equipment,Good Quality Molding Equipment,Large Storage Blow Molding Machine Weifang Yuyang plastic machinery co,.ltd, , https://www.yuyangmach.com
In recent developments from the Chicago Tribune, Mayor Rahm Emanuel is reportedly planning to propose one of the largest property tax hikes in modern Chicago history. This move aims to generate sufficient funds to cover a significant pension payment for the city's police and firefighters scheduled for next year. According to City Council floor leader Ald. Patrick O’Connor and a City Hall insider, the proposal is set to address longstanding financial challenges faced by the city.
The mayor’s plan includes introducing a new garbage collection tax, imposing a per-ride fee on taxis and ride-sharing services like Uber and Lyft, and introducing a tax on electronic cigarettes and smokeless tobacco products. O'Connor mentioned that these measures are intended to reduce the recurring budget deficit and rectify certain questionable financial practices, such as "scoop-and-toss" borrowing, which delays debt repayment at an inflated cost. Additionally, the administration seeks to stabilize the police and fire pension systems.
Mayor Emanuel is contemplating a property tax increase ranging between $450 million and $550 million, specifically earmarked for the police and fire pensions. However, the final amount remains undecided. O'Connor suggested a $450 million allocation for pensions, with an additional $50 million directed toward a Chicago Public Schools construction initiative. Aldermen would approve the CPS property tax increase, with the Chicago Board of Education following suit.
Chicago residents may soon face a garbage hauling fee similar to those in many suburban areas. O'Connor estimated this tax could reach $10 to $12 per month for single-family homes and two-flats. Although it won't cover the full cost of garbage collection, it will significantly alleviate the burden. Details on the e-cigarette tax and new fees for taxis and ride-hailing services remain sparse. Previously, Ald. Edward Burke proposed a $1-per-ride fee for taxis and services like Uber and Lyft, a suggestion Emanuel referenced when discussing potential taxes in his upcoming September 22 budget announcement.
During his initial term, Emanuel steered clear of substantial tax hikes, opting instead for incremental adjustments in taxes, fees, and fines. Collectively, these amounted to a 60% rise in property taxes for the average homeowner. Yet, during his reelection bid, he assured voters that he hadn't raised property, sales, or gas taxes during his tenure.
Despite this, Emanuel neglected to allocate funds for the impending spike in police and fire pension payments, mandated by state law since Mayor Richard M. Daley's era. Pension contributions this year total approximately $478 million, with next year's payments set to increase by $538 million under current legislation. However, Emanuel hopes Governor Bruce Rauner will sign a bill allowing for a more gradual implementation of these higher payments. The legislature passed this bill in late May but hasn't forwarded it to Rauner due to ongoing political gridlock.
The proposed property tax increase surpasses even Emanuel's previous claims of the largest such hike in Chicago's history. In 1987, under Mayor Harold Washington, taxes rose by $79.9 million, equivalent to $167.8 million today after adjusting for inflation. In 2008, under Daley, the increase amounted to $86.5 million, or $96 million adjusted for inflation.
For weeks, Emanuel has convened private meetings with key advisors to strategize funding solutions for pension obligations while aiming to curtail costly borrowing practices. Many aldermen anticipated a significant property tax increase as part of the solution.