Chicagoans: Brace for yet another tax hike

Chicagoans: Brace for yet another tax hike

A new property tax hike worth as much as $148 million is set to hit Chicagoans as part of the latest school funding proposal. That’s on top of the record-breaking property tax hikes Mayor Rahm Emanuel approved in 2015 and a litany of other city and county taxes and fees.

Chicagoans should brace themselves for yet another property tax hike. The school funding proposal passed by the General Assembly and signed by the governor authorizes Chicago Public Schools to hike property taxes yet again to pay for pensions, this time by as much as $148 million.

It’s the latest in a deluge of tax hikes city residents have faced as the state, the city of Chicago and Cook County attempt to tax their way out of their structural problems.

The General Assembly recently passed the single largest permanent income tax increase in Illinois history as part of the 2018 budget. And Cook County, CPS and the city of Chicago have all passed a laundry list of new taxes in the last three years.

These hikes were massive, uncoordinated actions designed to paper over each individual government’s budget crisis.

Each hike has taken a toll on Chicagoans’ income. The 2015 Chicago property tax hike alone costs the average property owner an additional $500 a year. That’s on top of the city’s new utility taxes, garbage collection fees and Cook County’s sales tax hike and new sweetened beverage tax that are all pinching Chicagoans’ strained wallets.

And when the education funding bill is signed into law, Chicagoans will likely have to add another CPS property tax hike to their already-heavy burden.

A deluge of tax hikes

Chicago enacted numerous tax increases over the past two years. Residents are being hit with a multibillion-dollar burden to shore up Chicago’s broken pension systems, not to provide new services. That burden includes:

  • A record $700 million-plus set of tax hikes in 2015, including:
    • A property tax hike of $318 million in 2015 that will rise to a total of $543 million a year by 2018. The tax is meant to partially pay for the city’s virtually insolvent police and fire pension funds.
    • An additional $45 million in property taxes to pay for CPS capital projects.
    • An additional $62.7 million from a new garbage collection fee.
    • $60 million in new fees on taxis and ride-hailing services, such as Uber and Lyft
    • $13 million from higher building-permit fees
    • $1 million from a tax on e-cigarettes
  • A $50 million increase on 911 fees, effective in 2015, to pay for city laborers pensions.
  • A new $9 million tax on plastic bags in 2017.
  • A new $12 million “Netflix” tax on movie streaming and other media in 2015
  • A tax on water and sewer utilities that will raise $56 million in 2017 and nearly $240 million annually by 2020.
  • The Chicago Park District also hiked parking, harbor and program fees by more than $1 million.

CPS officials, trapped in a financial crisis of their own making, have hiked taxes on Chicagoans as well. CPS increased property taxes by $272 million in 2016 to pay for teachers’ pensions. The new school funding proposal includes another property tax hike worth up to $148 million. And that doesn’t include the billions in future taxes Chicagoans are on the hook for due to CPS’ massive borrowing.

Cook County has also hiked a number of taxes over the past two years, including:

  • A new sweetened beverage tax expected to collect $67.5 million in 2017, and $200 million in 2018.
  • A $474 million, 1 percent sales tax increase in 2016. With the increase, Chicago’s combined sales tax rose to 10.25 percent, the highest combined sales tax rate of any major city in the nation.
  • A new $15 million, 1 percent tax on hotels. The new tax pushed the combined hotel tax burden in Chicago to 17.4 percent – among the top five highest rates in the nation.
  • $6.5 million a year from new fees on e-cigarette liquids and lawsuit filing.
  • A new $750,000, 3 percent amusement tax on ticket-reselling websites in 2016.

Overburdened and overwhelmed

Chicagoans have been under heavy strain over the past decade. They’ve faced increased violence, weak jobs growth and the incompetence of Chicago-area governments, from Cook County to CPS, residents continue to face higher taxes and fees – the highest in Illinois – as the dysfunction gets worse.

That’s forced residents of all stripes – from millionaires to middle- and working-class residents – to abandon the city in recent years. Not only did Chicago’s population shrink from 2000 to 2010, but the entire Chicago metro area has also shrunk for two years in a row. In all, Chicago’s population is at levels not seen since 1920.

But that decline matters little to politicians at both the state and city level. Lawmakers still find it easier to pass the bill to taxpayers than to actually tackle the reforms necessary to fix the fundamental problems with government in Illinois.

Adding insult to injury, Chicagoans know the new tax hikes aren’t dedicated to creating better schools, safer streets or a better jobs climate. Instead, almost all the money from the hikes is paying for each government’s pension crisis.

The more residents are burdened, the more likely those who can will leave to find better opportunities elsewhere.

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