Lightfoot hopes to raise $25 million by getting tough on tax-delinquent businesses
City Comptroller Reshma Soni says data-sharing agreements with state and county will help Chicago cast a wider net for tax and fee delinquents doing business with the city
Before asking beleaguered Chicago taxpayers to cough up even more money, Mayor Lori Lightfoot needs to prove she’s doing all she can to collect the city’s outstanding debts.
That’s even though she has declared a moratorium on water shut-offs and cut scofflaws some slack — at a cost of $15 million — by reducing fines, expanding payments plans, stopping drivers’ license suspensions for non-moving violations and forgiving city sticker tickets.
On Tuesday, Lightfoot projected $25 million in savings from a new and improved plan for collecting outstanding taxes and license fees from companies doing business with the city.
Over the years, Chicago mayors have periodically threatened to get tough on deadbeat city contractors, only to have overdue taxes and license fees pile up again.
City Comptroller Reshma Soni argued this crackdown is different.
The Department of Finance has done an “accounts receivable tracking and monitoring assessment to help prioritize” collections. And the City Council is poised Wednesday to authorize the city to enter into “data-sharing agreements” with Cook County and the State of Illinois to help cast a wider net.
“In the past, we might have singled out specific revenue. Let’s say, cigarette tax revenue or revenue that a company [should have] paid in personal property lease tax. But we didn’t look at a comprehensive list of taxes that vendors and businesses owe,” Soni said.
City Hall has never before received any “huge pool of data” from other government agencies, Soni said. In the past, information was forwarded to City Hall only after a specific request about a particular business, she said.
“Let’s say with the Secretary of State, we can get data on companies paying hotel taxes or lease taxes ... or fuel taxes to the state. We can figure out if they owe something similar” to the city, the comptroller said.
Soni said Tuesday she has no idea how many contractors are behind on tax and fee payments to the city, or how much money is outstanding.
“This is the universe of the unknown,” she said.
But Soni callled the $25 million figure a “modest” projection that amounts to just over “one percent” of the total amount of business taxes and fees the city collects each year.
When the data-sharing ordinance was approved by the City Council’s Finance Committee last week, Ald. Tom Tunney (44th), owner of Ann Sather’s Restaurants, said he was “concerned about data ... I want businesses to stay open.”
Soni agreed with Tunney that a public awareness campaign is needed.
“We’re not trying to punish [businesses]. Some companies just don’t know if there’s a new tax or service charge that’s been implemented. They might not even know that they need to pay the city,” she said.
But if companies know what they owe and still refuse to pay, there are buttons to push, she said.
“If there is a suburban company doing business with the city, we make payments to them. But more than that, a construction company would get licenses from here. They might get permits to do work. Those are [things] we can use to leverage,” she said.
“It doesn’t mean they have to pay everything up front. We can get them on a payment plan.”
Next week, Lightfoot delivers her first budget address to the City Council. She will spell out what taxes she plans to raise and services she plans to cut to erase an $838 million shortfall.
The mayor has talked about the possibility of raising ride-hailing fees, but applying the increase to solo passengers in congested areas. She is also asking the Illinois General Assembly to authorize the city to impose a graduated transfer tax on the sale of high-end real estate.
Lightfoot has pointedly refused to rule out yet another increase in property taxes more than doubled by former Mayor Rahm Emanuel, even as she calls that option her “last resort.”