Experts: Expect future Chicago property tax hikes without pension reform
Chicago Mayor Lori Lightfoot earmarked $442 million to help pay down Chicago’s $46.9 billion pension debt. The Civic Federation said stop-gap measures will only delay future property tax hikes unless there’s statewide pension reform.
Mayor Lori Lightfoot’s $242 million pension prepayment plan and projected $200 million in new casino revenues will not be enough to stop future Chicago property tax hikes driven by pension debt, the Civic Federation warned.
Laurence Msall, president of the Civic Federation, said Oct. 4 routine property tax hikes in Chicago and other municipalities will continue until Springfield lawmakers consolidate and reform Illinois’ worst-in-the-nation pension debt.
Chicago currently owes $46.9 billion to the city’s eight public retirement funds, more pension debt than any other large U.S. city and worse than 45 states.
Msall said lawmakers’ inaction on pension reform has now forced local governments to choose between raising property taxes to improve core services or meet funding requirements for municipal workers’ retirements.
“It is not sustainable to have 25% – and in some cases, even more of your operating budget – going into your pension and pension-related debt,” Msall said.
Pension reform begins with the General Assembly, which he said dictates through state law “who the members are, what their contribution levels must be and what benefits” those retired city employees receive.
Msall said if Springfield politicians could put an amendment on the ballot this November to “prevent Illinois from ever being a right-to-work state,” then those same lawmakers could introduce an amendment for constitutional pension reform. His “right to work” comment was referring to Amendment 1, found at the top of the Nov. 8 ballot.
Passing Amendment 1 would lead to higher property taxes in Illinois, with the increase conservatively estimated at $2,149 for the typical household during the next four years.
That estimate is based on the long-run average growth rate of Illinois property tax bills. But Amendment 1 would likely accelerate that growth, expanding the bargaining power of government union bosses to negotiate over a near-endless array of subjects, ultimately forcing residents to pay the bill for costly contract concessions that carry more weight than state law.
Until lawmakers reform Illinois’ nation-leading pension debt, residents’ property taxes will continue to rise. Approving Amendment 1 would guarantee Springfield lawmakers face greater obstacles to passing the pension amendment that would let them curb pension debt and taxes.