Chicago budget hands $500 monthly to some, higher property taxes to others
Chicago will spend $32 million on the nation’s largest test of universal basic income. What happens after that year is one question, as is whether handing out cash will truly fix anything.
Chicago Mayor Lori Lightfoot’s $16.7 billion budget passed Oct. 27, handing some Chicago residents a property tax hike averaging up to $180 a year and giving low-income residents cash grants of $500 a month for a year.
The budget increases property taxes by $76.5 million, which an Illinois Policy Institute analysis shows will cost a Chicago homeowner between $180 and $72 per year on average, depending on where they live. Central city residents will see the $180 increase for a total bill of $6,317, while the south city will see a $72 increase to an average of $2,522.
Lightfoot is using roughly $32 million from temporary federal COVID-19 relief grants to fund a test of universal basic income in the new budget. The plan will give $500 a month to 5,000 low-income families for a year, but there is no plan for funding after the federal money runs out in 2024.
Universal basic income is a proposal to send no-strings-attached direct financial assistance to every citizen or resident of an area. It has been a popular idea among progressive and socialist members of the Chicago city council in recent years.
If Chicago lawmakers decide their pilot program was a success, they will struggle to figure out how to pay for it in the long run. They will struggle even more in trying to expand it to include additional families.
Families across Chicagoland were hard hit by the pandemic. In theory, a universal basic income program can help these families get back on their feet, but Chicago cannot afford it without structural changes to its failing finances.
Chicago must first address out-of-control pension spending and skyrocketing property taxes, which the new budget makes worse. The tax hike will hurt the economy and run counter to the programs Lightfoot hopes will boost the recovery.
Runaway pension costs are the driving force behind rising Chicago property taxes, as well as its declining municipal services.
Chicago recently ranked 141st out of 150 cities for municipal service quality. The primary reason for Chicago’s poor city services despite its high tax burdens is most of the money is eaten up by the pension crisis. From 2011 to 2021, spending on pensions has increased 239%, while spending for city services has only increased 18%.
Without structural changes to balance spending and revenue in the long run – starting with an amendment to the Illinois Constitution to allow pension reform – Chicago will continue asking its taxpayers to pay more to get less. Experiments with novel proposals such as universal basic income will either be impossible to sustain or come with an economically damaging price tag for already overburdened taxpayers.