Lightfoot plans to increase Chicago’s property tax levy by $76.5M in 2022, aldermen told
The levy increase covers $22.9 million for the automatic escalator tied to the consumer price index; $25 million to bankroll the 2022 installment of Lightfoot’s $3.7 billion capital plan; and $28.6 million captured from “new property.”
Chicago’s property tax levy will rise by $76.5 million in 2022, but Mayor Lori Lightfoot will hold the line on all other taxes, fines and fees thanks to a once-in-a-lifetime avalanche of federal stimulus funds, influential aldermen have been told.
Last year, Lightfoot raised property taxes by $94 million and persuaded a divided City Council to follow that with annual increases tied to the Consumer Price Index.
On the day she unveiled the three-year financial plan that included a $733 million deficit, Lightfoot said, “It’s my hope that we will not need to raise taxes — and by taxes, I assume you mean property taxes. It’s our hope that we will not need to use that tool.”
A few hours later, Budget Director Susie Park acknowledged that Lightfoot’s declaration did not mean property taxes would be frozen.
“It is not our intention to increase the property tax for the upcoming budget. However, the CPI that was approved in the last budget remains. … I think it’s around $20 million-ish,” Park said.
It turns out that neither declaration was quite accurate.
A PowerPoint presentation distributed to influential aldermen in advance of the mayor’s 2022 budget address to the City Council on Monday shows Chicago’s property tax levy will actually rise by $76.5 million.
That includes $22.9 million for the automatic escalator tied to the consumer price index; $25 million to bankroll the 2022 installment of Lightfoot’s $3.7 billion capital plan; and $28.6 million captured from “new property.”
Downtown Ald. Brian Hopkins (2nd) said he has no problem with the “new property” portion of the levy increase. It’s always been considered “an addition to the levy — not a true property tax increase,” the alderman said.
He’s also willing to swallow the $25 million property tax increase for the capital plan on grounds there is “very little argument about the need.”
But at a time when beleaguered Chicago property owners are already reeling from skyrocketing reassessments, Hopkins said the automatic escalator needs to be repealed.
“It’s very modest in terms of the totality of our revenue picture. But it prevents us from being able to reassure residents that we’re doing everything we can to hold the line on property taxes,” Hopkins said.
“People are just so fed up with skyrocketing property tax bills. There’s a psychological impact to that where it’s one of the decisions people claim motivates them to leave Chicago. We really heard a lot of pushback last year when the automatic increase provision was adopted. People don’t like it. We need to seek alternatives.”
Far South Side Ald. Anthony Beale (9th) said Chicagoans have “no tolerance for another property tax increase” of any size for any purpose — not even for capital.
“The people of this city are hemorrhaging [money]. … We need to continue to cut and find other ways other than constantly hitting the people over the head,” said Beale, one of Lightfoot’s most outspoken City Council critics.
“We’re getting enough funds from the federal [government] where we should not have to hit people upside the head for a capital increase.”
Last fall, aldermen were told the massive borrowing would be bankrolled by a mix of tax increment financing, a first-year bond issue backed by property and/or sales taxes and “interim financing and cash-flow management” in anticipation of future state and federal funding.
That wasn’t good enough to satisfy Civic Federation President Laurence Msall.
“It’s very hard to see how the city could afford to go to market for a $3.7 billion capital plan without a new revenue source to back it up at the same time they’re looking to restructure their existing debt merely to free up room in the current operating budget,” Msall said then.
“The city is very highly leveraged. It has a very low credit rating. And to undergo that type of additional borrowing without a new revenue source would be very expensive. And it might not be feasible.”
When Lightfoot was asked how the city could afford $3.7 billion in additional debt without a new, clearly identified funding source, her answer was that Chicago “can’t afford not to.”
“The need is there. We have to figure out a way to move forward and not just say, `It’s too much. It’s too big.’ We got the same blowback when we said we’re gonna start the process [of replacing] lead service lines. That can’s been kicked down the road so many times, it’s unrecognizable,” she said.
“I’m here to solve big problems, and I’m not gonna shy away from them. We have to be committed to … taking on the needs of our city. And having a rational, long-term capital plan is a critical part of who we must be. ... That means we’re creating jobs and jobs is something that we all desperately need.”