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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.

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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