Chicago drivers to see third gas tax increase in 18 months

Chicago drivers to see third gas tax increase in 18 months

Chicago leaders are using another gas tax hike to help fill a budget hole driven by pensions. Total gas taxes and fees are closing in on $1 per gallon.

Chicago drivers are again preparing to pay more at the pump after the City Council passed a new budget, which included a 3-cent gas tax increase.

The tax hike increases the local Chicago gas tax to 8 cents starting Jan. 1. On an average $2.53 gallon of gas, $0.91, or 36%, of the price is just taxes and fees, according to Illinois Policy Institute research. Put another way, the total effective tax burden on the raw price of gas ($1.82 per gallon) – including federal, state and local taxes – is 50%.

Chicago gas tax hike

Chicago drivers are also burdened by a 6-cent Cook County gas tax, state gas tax and federal gas tax – a total of nine different taxes and fees on every gallon of gas.

Mayor Lori Lightfoot’s office estimated raising the gas tax would generate $10 million in revenue.

However, many Chicago drivers can easily travel across the state line to Indiana for cheaper gas – saving 19 cents per gallon on Dec. 14. In the Metro East area, residents could save 30 cents per gallon by buying cheaper gas in the St. Louis area.

For Chicago drivers, this is the third time in the past 18 months the gas tax has been raised. On July 1, 2019, the state doubled the gas tax to 38 cents from 19 cents. On July 1, 2020, the state gas tax increased by 0.7 cents because the 2019 law imposed an automatic, annual inflation-based increase. That legislation signed by Gov. J.B. Pritzker in 2019 gave Chicago and certain Illinois counties the ability to raise the gas tax on their own.

DuPage County drivers will also be paying 4 cents more per gallon in 2021. Illinois drivers are each paying $100 more per year for gas since the first half of 2019.

Chicago taxpayers will also be hit with other tax increases. Chicagoans will be paying $94 million in higher property taxes and risk paying $38 million more in fees under Lightfoot’s plan.

Raising the gas tax, property taxes and fees will not solve Chicago’s fiscal troubles, however. Public pensions are the real problem choking Chicago’s budget and denying residents the services they expect. Chicago will be paying $1 billion more for pensions during Lightfoot’s term.

Lightfoot called on state lawmakers to pursue meaningful pension reform to help her city deal with this growing problem, but was not specific. Changing the Illinois Constitution is the only way for Illinois to truly fix the growing pension burdens on municipalities.

Lightfoot and city leaders should push for an amendment to the state constitution, just as former Mayor Rahm Emanuel did, that would makes changes to future, unearned benefits to create a more sustainable system. State lawmakers could fix their budget problems with that same remedy.

A pension amendment to control costs is the only real answer. Constantly dinking taxpayers, whether at the pump or on April 15, has and will fail to fix the city and state spending problems.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!