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Aldermen Fight Back On Proposed Property Tax Increase As City Tries To Fill $1.2 Billion Budget Hole

The tax hike is one tool Lightoot’s "pandemic budget" relies on to close an estimated $1.2 billion budget gap, but it’s drawn the most heat among aldermen.

Ald. Ed Burke was shut down by Mayor Lori Lightfoot at her first City Council meeting after taking office.
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CHICAGO — In a charge led by an old nemesis, Mayor Lori Lightfoot’s proposed $94 million property tax increase for 2021 was pummeled by aldermen from across the city Tuesday.

The tax hike is just one tool Lightoot’s “pandemic budget” relies on to close an estimated $1.2 billion budget gap, but it’s drawn the most heat among aldermen as Lightfoot attempts to secure 26 votes to pass the budget by the end of the year.

RELATED: Chicago Faces $1.2 Billion Budget Shortfall In 2021 Thanks To Coronavirus, Lightfoot Says

Ald. Ed Burke (14th), the former chairman of the Finance Committee who is now facing federal corruption charges, offered up numerous revenue suggestions to avoid the property tax increase, including increasing “annoyance taxes,” like the tax on grocery bags, and relying on money from a potential federal stimulus package. Burke, a Lightfoot critic, was speaking Tuesday during the committee’s virtual hearing on the tax levy.

But Burke dialed in on eliminating vacancies across city departments to prevent the property tax increase.

“What you’re hearing from these members in council is there’s great unease about the [property tax], and there should be some alternative,” he said. “It seems to me you still have some time to be a hero here and figure out how to avoid this.”

Lightfoot’s budget already relies on eliminating 1,921 vacant positions, including 614 from the Police Department, to generate savings of nearly $100 million. Further reductions would cut into the city’s ability to fill essential positions, city officials argued Tuesday.

Other aldermen picked up on Burke’s line of questioning, grilling Lightfoot’s budget team during a nearly three-hour meeting.

Ald. Leslie Hairston (5th) suggested the council not vote on the mayor’s budget until Lightfoot’s administration provides a full list of 2021 vacancies, including the total number for each department and how long they’ve been vacant.

Ald. Carrie Austin (34th), herself facing off a federal corruption investigation, suggested the salaries for all vacancies be lowered to $1 in the budget and only raised as they are filled.

Some of Burke’s other suggestions — like increasing the bag tax — were picked up by his peers. Ald. Samantha Nugent (39th) said the city should “look back at some of the annoying little taxes, like bags and things like that.”

However, increasing the city’s tax on plastic grocery bags from 7 cents per bag to 8 cents would raise just $840,000, city officials said.

Nugent and Ald. Susan Sadlowski Garza (10th) urged the administration to re-evaluate a potential tax on the delivery of goods by companies like Amazon or UPS, saying it could be sold as an environmentally-friendly measure.

“As far as I’m concerned, a $1.25 [tax] on a package coming to my door that I’m paying, I don’t think the consumer is going to see that,” Garza said.

City CFO Jennie Huang Bennett said the city has concerns about the legality of the delivery tax, and it won’t help the city close the budget gap if it’s challeneged.

Finance Committee Chair Ald. Scott Waguespack (32nd) said the delivery tax proposal needs time to work its way through City Council and would be unlikely to be in place by the end of the year, even if it stood up to legal challenge.

Ald. Andre Vasquez (40th) criticized the administration for its seeming lack of interest in exploring revenue options put forth by aldermen, including Ald. Matt O’Shea’s (19th) ordinance to temporarily legalize and tax video gaming terminals and a proposal to create a $16-per-employee tax on Amazon and other large logistics companies.

On Monday, those ordinances were sent to the Rules Committee by unsupportive aldermen, a parliamentary move akin to condemning the measures to purgatory.

“It appears to me that the body is not in favor of the [property tax levy] for the numerous reasons they’ve mentioned, and we’ve got people who put ideas up for revenue, but those get put in the Rules Committee,” Vasquez said before asking for a list of all the revenue ideas the administration evaluated.

Aldermen also pushed back on Lightfoot’s plan to tie future property taxes to rises in the consumer price index. Her finance team argued the yearly increases are necessary to keep up with escalating payments towards the city’s pension funds.

Ald. Tom Tunney (44th) referenced closed-doors meetings where Lightfoot allegedly told aldermen to vote for a property tax this year — or vote for one closer to when aldermen are up for reelection.

“You knew this was coming, and yet we clapped our hands last year, saying there was no property tax increase,” he said. “So now you’re doing a [yearly increase] where we should have been doing it before and making the tough vote in our first year of the administration, rather than this fearmongering about [how] the tax bill will come when the voters are trying to decide who the next alderman is. I find it a little disingenuous.”

Huang Bennett said the move isn’t being made due to fearmongering, but because of the pandemic.

Throughout the meeting, Lightfoot’s team argued the property tax was only presented after the administration exhausted other options, including those pushed by aldermen.

“We did look at the bag tax. We looked at sales taxes. There’s a lot of stuff we looked to …,” said Budget Director Susie Park. “The property tax was not an easy decision to come to.”

Burke suggested Lightfoot simply increase projected revenue estimates for 2021 and include a line item for anticipated funds from a potential — but long-stalled — federal stimulus package.

“… The city of Chicago is going to receive a significant amount of money from the federal government, there’s no one that doubts that,” Burke said. “Why not do that to avoid this toxic property tax we’re all hearing about?”

Huang Bennett said the mayor’s budget team would be the “happiest people” if the city received more stimulus dollars, but it isn’t prudent to bake it into the budget.

“The revenue forecasts are not looking great, in large part because we’re in a second wave, we don’t know that we have federal funding and we know” there will be more budget gaps in future years due to rising pension costs, she said.

The committee will meet again Wednesday to weigh the property tax levy and possibly vote on the measure. If advanced, the full City Council must also approve the measure before it would be implemented in 2021.

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