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GAS TAX,
PROPERTY TAX, TICKET AND FEE HIKES ALL PART OF LIGHTFOOT BUDGET
Illinois Policy Institute/
Ben Szalinski
Chicago
Mayor Lori Lightfoot is trying to raise revenue to close large revenue
gaps partially brought on by the COVID-19 pandemic. |
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 Chicago’s
latest budget revolves around more taxes and fees to generate revenue, even as
residents struggle with lost income and COVID-19 restrictions continue to hurt
businesses.
Mayor Lori Lightfoot’s $12.8 billion budget calls for property tax hikes, more
tax increases and more fees to avoid layoffs. The Chicago City Council passed
the budget with a 29-21 vote.
It was accompanied by 41-8 vote to take on additional debt, including $1.4
billion to cover the first two years of a $3.7 billion five-year capital plan
and $1.7 billion in debt refinancing to help close the operating deficit.
The part of Lightfoot’s budget that will hit Chicagoans hardest is a $94 million
property tax hike. Residents with a median home value of $250,000 will be paying
$56 more. However, property taxes are now scheduled to automatically increase
every year based on the consumer price index.
The budget also includes a 3-cent gas tax hike, bringing the total city gas tax
to 8 cents. On an average $2.53 gallon of gas, $0.91, or 36%, of the price is
just taxes and fees, according to Illinois Policy Institute research.
A new tax will also be levied on cloud-based computer leases.
Fee increases are also a major portion of the revenue from the budget, with
Lightfoot aiming to generate $38 million from more fees.
That includes using controversial traffic cameras to ticket
drivers going 6 to 9 mph over the speed limit. A driver’s first offense
generates a warning, but a second violation results in a $35 ticket, as do all
10 mph violations. Tickets are $100 for speeding 11 mph or more.
Lightfoot also plans to install more parking meters and increase safety-related
ticketing, such as for illegal parking. Earlier this year, more than 35,000
parking tickets were given out in Chicago even after Lightfoot said residents
would be getting a break with so many losing their income from COVID-19 related
layoffs.
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Lightfoot’s budget has put residents on the hook
for $1.7 billion of city debt as well. The mayor is using a
financial tactic called a “scoop and toss,” which means the city
borrows more than it needs to after refinancing existing debt, but
defers payments on the new debt farther into the future. The tactic
leaves others responsible for picking up the tab and is an old
practice former Mayor Rahm Emanuel ended.
Layoffs were originally a part of Lightfoot’s plan
to save money. However, she will now borrow another $15 million from
marijuana sales taxes. This is part of a deal with the Chicago
Federation of Labor to avoid laying off 350 union employees, which
was originally the mayor’s plan. Most non-union employees making
$100,000 or more will still need to take five unpaid furlough days
in 2021. More than 1,900 positions that are currently vacant will
still not be filled.
The real problem choking Chicago’s budget is pensions. Instead of
trying to address this problem, Lightfoot’s budget further strangles
taxpayers at a time when they can least afford it.
In 2021, pensions are set to take up 14.2% of the city’s budget.
Starting in 2022, those contributions will be actuarially
determined, meaning investment losses will drive taxpayer costs
higher. This means pensions could grow to be an even larger part of
the city’s budget, in part because of losses from COVID-19.
Lightfoot called on state lawmakers to pursue meaningful pension
reform to help her city deal with this worsening problem, but did
not specify what reforms she wanted to see or call for a
constitutional amendment. Changing the constitution is the only way
for Illinois to truly alleviate the growing pension burdens on
municipalities.
The first-term Chicago mayor should support an amendment to the
state constitution just as former Mayor Emanuel did that would makes
changes to future, unearned benefits to create a more sustainable
system. State lawmakers should also champion the same remedy for
their increasing budget woes.
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