CHICAGO — Some alderpeople want to avoid a property tax increase in next year’s city budget, saying too many Chicagoans can’t afford any more strain on their finances in the ongoing pandemic.
The City Council launched its 11-day, marathon budget hearings Friday to dissect Mayor Lori Lightfoot’s budget proposal for 2022. The mayor’s $16.7 billion spending plan is aimed at powering the city’s economic recovery from the coronavirus crisis.
Lightfoot’s plan is propped up by $1.9 billion in federal relief dollars that allows the city to scrap a costly long-term borrowing plan approved last year, avoid a sharp increase in property taxes and spreads hundreds of millions dollars worth of aid to struggling Chicagoans — all while plugging a $733 million deficit and boosting the Chicago Police Department budget by almost $200 million.
But aldermen wondered if even a modest property tax was necessary given the strains of the pandemic, and if the investments in new social programs were a one-off or could be sustained. Some also wanted strict rules imposed on themselves over how to spend a new $100,000 fund Lightfoot has proposed giving alderpeople to dole out “microgrants” in their wards.
In 2021, City Council approved a $94 million property tax increase that included a provision annually raising taxes at a rate tied to the Consumer Price Index. This year’s hike would be 1.4 percent, determined by the increase from December 2019 to December 2020.
In the proposed budget, property taxes will go up $76.5 million in 2022. That includes the $22.9 million increase for inflation, $25 million to pay the first installment of a capital infrastructure bond, and $28.6 million collected from new developments.
Although City Council won’t be asked to vote on new property taxes above what’s been previously agreed to, alderpeople wanted to know if they could scrap the taxes tied to inflation altogether.
“What a lot of us are hearing is that our residents can’t afford new property taxes, period,” said Ald. Daniel La Spata (1st).
Ald. Harry Osterman (48th) said the salaries of property owners might not have risen to keep up with inflation.
Last year’s budget ordinance “allows for us to do that, but the question is, given the financial conditions of where we are as a city, the question is should we do that,” Osterman said. “Regardless of where they’re at financially, it’s a tricky thing. People get priced out of their homes and they have to move.”
Ald. Matt O’Shea (19th) said the city should balk at the annual increase tied to CPI.
“We should be exploring other ways to get this increase out of this budget because obviously people are struggling right now,” O’Shea said.
Jennie Huang Bennett, the city’s chief financial officer, told aldermen the annual CPI rise “is not something that the City Council has to increase” but it would be prudent to keep it in place.
“The issue is that for many years the taxes don’t increase, which creates structural imbalances and difficulties within the budget, and then a very large catch up,” Huang Bennett said. “So from a taxpayer perspective, what we heard is that predictability and stability” helps property owners.
What happens when the federal dollars run out?
Chicago will receive $1.9 billion from the American Recovery Plan, a federal stimulus fund to pump money into the nation’s pandemic recovery.
Lightfoot’s plan sets aside about $1.3 billion to offset revenue loss in 2020, 2021 and 2022, and avoid embarking on a costly long-term borrowing plan approved in the 2021 budget. The rest will be pumped into social programs to help struggling residents, expand violence prevention efforts, increase arts funding and promote small businesses and the city’s tourism industry.
The plan to spend liberally on social programs received little push back Friday, but aldermen were concerned that once the city opens up the spigot of the spending, it would be hard to rein in and the city wouldn’t have the federal money to fall back on.
“I think there’s a lot of great things in this budget that grassroots movements have been organizing for,” Ald. Andre Vasquez (40th) said. “I fear that in years to come we’re going to be looking back figuring out what to cut and that puts us all in a bad position.”
“What are we going to do in 18 months, in 24 months when those federal dollars aren’t there? How do we make sure…that they will be able to sustain themselves down the road,” O’Shea said.
Huang Bennett said much of the social program funds is one-time spending. The city is looking for other funding to sustain some of the programs long-term, officials said, including finding “external” dollars, likely from non-profit organizations or corporate grants.
$100,000 ‘slush fund’ is ‘ripe for abuse’
City officials had no firm answers for how aldermen should spend the $100,000 Lightfoot wants to give each alderperson to provide “microgrants” in their wards.
“It’s ripe for abuse,” Vasquez said. “If we’re getting that kind of fund in each ward, I could see people interpreting that as some sort of slush fund, which could lead to potential problems.”
Osterman said there should be a “very clear set of guidelines that we can follow to a “t,” so that alderpeople can award the money in a way that is “ethical and appropriate.”
Budget Director Susie Park said the guidelines for the spending will be worked out throughout the budget process, but the funds should be aimed at community organizations in each ward and award amounts will be up to aldermen.
Even if there’s a set of strict guidelines, Ald. Walter Burnett (27th) was skeptical the grant-making power would be beneficial to alderpeople, who will be at risk of upsetting certain groups if they are left out of the awards.
“We like being Santa Claus, but my thing is, I never give anything unless I can give it to everybody,” he said.
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