Chicago’s higher property taxes hit March 2
Cook County’s first property tax payments are due March 2. In Chicago, property taxes have grown more than 3 times faster than inflation for 20 years.
“I am Taxman. Taxman I am. On March 2, I come again.”
March 2 marks Dr. Seuss’ birthday, a day that also turns Chicago residents a little green as local governments eat a little more of their property taxes than in the past. March 2 is when the first property tax payment is due in Cook County.
An extra $93.9 million in property taxes will be collected this year to support the city of Chicago. In November the Chicago City Council approved Mayor Lori Lightfoot’s proposal to boost property taxes and automatically tie future increases to inflation as a way to close a $1.2 billion deficit.
Lightfoot projected the city tax hike would be $56 on the median home valued at $250,000.
Chicago’s recent property tax story has been sad.
Property taxes rose at nearly triple the rate of inflation across Cook County between 2000 and 2019, according to a study released in October by Cook County Treasurer Maria Pappas. Wages in Cook County rose 57% during the period.
Chicago property taxes trended higher, up 115% on average, but residential property taxes alone ballooned by 164%. Some wards have seen much higher boosts, with Ward 3 jumping 431% over the past two decades.
Lightfoot’s own home in the Logan Square neighborhood has seen property taxes increase more than 300% since 2000. The most significant leap came a few years ago, when the $5,266 bill she and her wife paid in 2018, the year Lightfoot announced her bid for mayor, jumped to $9,215 in 2019. They paid $9,407 last year.
Former Mayor Rahm Emanuel oversaw the largest increase in city history in 2015 when he got the City Council to pass a $588 million property tax hike, largely for pensions and school construction.
Rising property taxes have done little to improve the city’s finances.
Chicago ranked next-to-last and was labeled a “sinkhole city” in Truth in Accounting’s recent report, “Financial State of the Cities.” Chicago’s net debt n 2019 was $36.4 billion, or $41,100 per taxpayer. Chicago’s debt per taxpayer increased by $4,000 from 2018 and was 5.5 times the average burden of $7,355 per taxpayer across all 75 cities.
Pension spending continues to crowd out city services as the debt grows. Of the nearly $94 million current property tax increase, $42.5 million is to meet shortfalls in pension funding.
The city’s eight pension funds – including the four funds to which the city contributes directly and four funds for related entities funded by the same taxpayers – have accumulated nearly $45 billion in debt, more debt than 44 U.S. states. Those pensions are only 35% funded overall, meaning they have 35 cents saved for every $1 in future promises.
Lightfoot recently opposed legislation passed by the Illinois General Assembly which would double the cost-of-living adjustment for 2,200 city firefighter pensions from 1.5% to 3%. Lightfoot called the increase, which is estimated to cost the city $850 million by 2055, “irresponsible” because it will “pass on a massive, unfunded mandate to the taxpayers of Chicago.”
Lightfoot has called for change and highlighted the seriousness of the pension problem but stops short of offering a specific plan. Near the end of his term, Emanuel endorsed a constitutional amendment to control the pension problems of the city and state.
Public pension reform received bipartisan support in 2013, but because of a decision by the Illinois Supreme Court the best way to achieve similar reforms for Illinois state and local governments is through a constitutional amendment. Pension reform that allows control of future cost increases can provide a secure retirement for public employees and protect spending on core services.
But just as important, pension reform can stop property taxes from pushing more residents out of Illinois. Without it, Chicago and Illinois can expect more of the same old story.
“I’ll tax you here. I’ll tax you there. I’ll tax your house until you despair.”