Excerpts from the ChicagoTribune.com:
Mayor Rahm Emanuel is reportedly preparing to propose the most significant property tax increase in modern Chicago history. This move aims to secure funding for a major pension payment for police and firefighters in the coming year, according to sources close to the mayor and City Council leaders, as reported by the Chicago Tribune late Wednesday.
In addition to the property tax hike, the administration is considering new revenue streams, including a garbage collection tax, a per-ride fee on 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 long-standing budget shortfalls and reduce unsustainable financial practices, such as "scoop-and-toss" borrowing, where the city defers debt at higher costs.
Ald. Patrick O’Connor, representing the 40th Ward, emphasized that the goal is to shrink the city’s annual budget deficit and improve fiscal responsibility. The plan also includes stabilizing the police and fire pension systems, which have been under pressure due to years of underfunding.
The proposed property tax increase could range between $450 million and $550 million, with some officials suggesting a target of $450 million specifically for pensions, plus an extra $50 million for Chicago Public Schools construction. Aldermen would need to approve the CPS portion, while the Board of Education would finalize it.
Residents could soon face a monthly garbage fee of $10 to $12 for single-family homes and two-flat units. While this tax won’t fully cover the cost of waste removal, it's expected to significantly reduce the city’s expenses in this area.
Details on the e-cigarette tax and ride-hailing fees remain limited, though Ald. Edward Burke had previously suggested a $1-per-ride fee on taxi and ride-share services. Mayor Emanuel has not yet confirmed if this will be included in his upcoming budget proposal, set for release on September 22.
During his first term, Emanuel avoided large tax hikes, instead implementing smaller increases in fees and fines that effectively raised property taxes by 60% for the average homeowner. However, he was able to claim during re-election that he had not increased property, sales, or gas taxes during his time in office.
Despite this, the mayor did not allocate funds for the looming pension payments, which became due after a state law passed under former Mayor Richard M. Daley. This year, the city is paying out around $478 million in pensions, with next year’s payments expected to rise by $538 million under current law. Emanuel hopes Governor Bruce Rauner will sign a bill allowing for a more gradual increase, but the measure remains stalled in the legislature.
This potential property tax hike would surpass what the mayor once claimed was the largest in Chicago history. In 1987, under Mayor Harold Washington, property taxes rose by $79.9 million—equivalent to about $167.8 million today. In 2008, under Daley, the increase was $86.5 million, or roughly $96 million in today’s dollars.
For weeks, Emanuel has met with senior staff to find ways to meet pension obligations while reducing costly borrowing. Many aldermen believe a major property tax increase is likely to be a central part of the solution.
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