Excerpts from the Chicago Tribune:
Mayor Rahm Emanuel is expected to announce a significant property tax increase, potentially the largest in modern Chicago history, aimed at covering a major pension payment for police and firefighters next year. This information was shared by the mayor’s City Council floor leader and a City Hall source late Wednesday.
In addition to the property tax hike, the administration is also considering new taxes on garbage collection, a per-ride fee for taxis and ride-hailing services like Uber, and an additional tax on electronic cigarettes and smokeless tobacco products. These measures are part of a broader strategy to address the city's long-standing budget deficit and reduce unsustainable financial practices.
Alderman Patrick O’Connor, representing the 40th Ward, explained that the plan aims to tackle the annual budget shortfall and eliminate problematic borrowing methods, such as "scoop-and-toss" debt, where the city rolls over short-term obligations into more expensive long-term loans. The goal is also to stabilize the police and fire pension systems.
The proposed property tax increase could range between $450 million and $550 million, with some sources suggesting a figure closer to $450 million specifically for pensions, plus an extra $50 million for Chicago Public Schools construction. While the aldermen would need to approve the CPS tax, the Board of Education would have the final say.
Residents may soon face a monthly garbage fee, estimated at $10 to $12 for single-family homes and two-flats. Although this tax won’t cover the full cost of waste removal, it would significantly reduce the burden on the city's budget.
Details on the e-cigarette tax and taxi fees remain limited, but Alderman Edward Burke had previously suggested a $1-per-ride charge for Uber and Lyft, a proposal that Emanuel hinted at during recent discussions about his upcoming budget announcement on September 22.
During his first term, Emanuel avoided large-scale tax increases, instead opting for smaller fees and fines that effectively raised property taxes by about 60% for average homeowners. Despite this, he was able to claim during re-election that he hadn't raised property, sales, or gas taxes during his time in office.
However, he did not set aside funds for the upcoming pension payments, which have been a looming issue since a state law passed under Mayor Richard M. Daley. This year’s pension costs total around $478 million, and next year they’re projected to rise by $538 million under current law. Emanuel is hoping Governor Bruce Rauner signs a bill that would allow for a slower phase-in of these payments, though the legislation has yet to reach the governor due to legislative gridlock.
If approved, the proposed property tax increase would surpass what Emanuel once called the largest in Chicago history. In 1987, property taxes rose by $79.9 million (equivalent to $167.8 million today), and in 2008, under Daley, the increase was $86.5 million ($96 million in today’s dollars).
For weeks, Emanuel has been holding private meetings with top advisors to find a way to meet pension obligations while also reducing the city’s reliance on costly borrowing. Many aldermen have long anticipated a major property tax increase as a key component of the solution.
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