Lightfoot floats casino, real estate transfer tax plans with Chicago delegation ahead of fall veto session
Mayor wants effective tax rate on a Chicago casino cut from 72% to 45%, with casino license jointly owned by the city and state. She also wants a graduated transfer tax on commercial real estate sales.
Mayor Lori Lightfoot wants the Illinois General Assembly to reduce the effective tax rate on a Chicago casino to 45 percent, have the city and state “own the license” and authorize a graduated transfer tax that would apply to commercial real estate sales.
The mayor floated those plans during a private meeting over the weekend with members of the Chicago delegation.
The casino fix would reduce the effective tax rate on a Chicago casino from 72% to 45%. The state would get 51% of the tax revenue; the city would get the rest.
That’s not the only casino change floated by the mayor, according to Illinois House Majority Leader Greg Harris (D-Chicago).
“The casino [plan] proposed to have the city and the state own the license and the casino be operated by a private vendor. That’s a difference. We’ll have to see how people feel about that issue. I can’t predict how people will react,” Harris said Monday.
The mayor’s plan would create a five-member Chicago casino authority with two members appointed by the governor, two chosen by the mayor and a fifth, “non-partisan” member, Harris said.
Lightfoot’s decision to take on the concept of city and state ownership — amid a burgeoning corruption scandal that has spread from Chicago and the south suburbs to Springfield — comes as a bit of a surprise. Many expected her to keep a complicated subject simple and confine her request to the tax structure.
“Everything about casinos is complicated. To the extent that this is also complicated, I wasn’t really surprised,” Harris said Monday.
“Any casino bill is always a big lift in the legislature. We’ve seen that for years and years. So, we’ll have to wait and see. At least now there is a proposal for people to react to. That’s helpful.”
The graduated real estate transfer tax would apply to commercial property. That would allow the city to capture big money from the sale of downtown office towers, hotels and retail and industrial property citywide.
The mayor’s plan calls for a tax break for the 85% of real estate transfers valued at under $500,000.
Above that, real estate transfers would be taxed in four tiers: $500,000-to-$1 million; $1 million-to-$3 million; $3 million to $10 million; and over $10 million.
Chicago real estate sales are currently taxed at a rate of $5.25-per-$500 of the transfer price. The buyer is responsible for $3.75 of that; the seller pays the remaining $1.50-per-$500.
For the 85% of real estate sales under $500,000, the mayor’s plan would cut that $3.75 to $2.75-per-$500.
The maximum tax rate under Lightfoot’s plan is likely to be $7.75-per-$500, sources said.
The decision to apply the graduated tax to the sale of commercial property would push the annual take to $100 million-plus.
But a two-thirds-majority vote would be needed to have the law take effect Jan. 1. If passed only by a simple majority, the tax wouldn’t take effect until July1, reducing the city’s 2020 take to roughly $50 million.
“It’s good that it’s progressive, so that especially residential homeowners will not see an effect,” Harris said.
Another influential lawmaker, who asked to remain anonymous, predicted Lightfoot would have mixed results during the veto session.
“I’d be very surprised if we touched anything related to gambling. If we open up the bill for Lori, it’ll open the floodgates for everybody who has problems with it. It’ll cause unnecessary drama,” the legislator said.
“The real estate transfer tax stands a better chance. Ten years ago, we changed that statewide because the real estate people were complaining there was too much volatility in the market. If we change it back and give the mayor more authority and flexibility, that’s a reasonable request.”
Lightfoot and her administration “have recently presented some initial ideas” to “state leaders” before the veto session, “to both ensure the Chicago casino is viable and to generate new revenues,” the mayor’s office said in a statement.
During a radio interview last week, Lightfoot said a Chicago casino has the potential to become a “structural fix” for under-funded police and fire pensions and become a “transformative way to address” skyrocketing city payments to those funds.
But that could occur, she said, only if the tax on a Chicago casino is made more reasonable.
“People recognize that we’ve gotta change the structure. Now, we’re just thinking about, how do we do that,” she told WLS-AM (890) Radio.
“We’ve got two vehicles that we’re looking at. ... They’re very different. But, I feel like we’re in a good position headed into the veto session.”