Our perspective: Chicago should use all federal COVID funds before hiking taxes for housing problems

Our perspective: Chicago should use all federal COVID funds before hiking taxes for housing problems

Before asking voters to approve a “mansion tax,” why not tap unspent federal pandemic aid dollars to reduce homelessness?

Chicago Mayor Brandon Johnson is pushing an increased real estate transfer tax he said will raise an estimated $100 million a year to combat homelessness, although he’s fuzzy on the details.

Here’s a question: Why doesn’t the city use federal COVID-19 aid money first? From WTTW:

“Chicago spent just 29% of the federal relief funds officials promised to use to strengthen the city’s tattered social safety net and provide direct aid to Chicagoans struggling to recover from the COVID-19 pandemic by the end of 2023, according to a WTTW News analysis.

“In all, Chicago spent less than $160 million on a host of programs including affordable housing, mental health, violence prevention, youth job programs and help for unhoused Chicagoans through Dec. 31, according to the most recent reports filed with the U.S. Department of the Treasury as required by federal law. 

“Chicago’s entire budget for the federally funded programs is approximately $550 million, records show.”

  • Chicago has millions it can spend on homelessness already. The city has fairly broad discretion to use these funds as needed. Chicago got nearly $1.9 billion in total from the feds. They used $1.2 billion to bolster revenues, citing revenue loss because of COVID.
  • LA shows “mansion tax” hurts everyone for little revenue gain. Chicago voters will decide the fate of Johnson’s real estate transfer tax on March 19. Los Angeles recently implemented a similar policy, which has generated a fraction of the money projected and is hurting commercial property and rental property owners.
  • The proposal would hit Chicago’s mom-and-pops hard. This damage extends far beyond “the rich” Johnson claims will be affected by his so-called “mansion tax,” including many relatively modest properties small business owners are banking on for retirement funds.

“The city of Chicago still has hundreds of millions of dollars in unspent federal funds from the American Rescue Plan Act. The city should fully leverage the resources made available by the federal government before asking taxpayers to approve yet another tax hike. The fact that only a fraction of these funds has been spent after years does not inspire confidence that Mayor Brandon Johnson’s latest $100 million tax hike proposal will be effectively deployed to combat the city’s homelessness crisis, especially when many of the federal funds available could be deployed for these purposes but have not been put to use.” – Bryce Hill, director of fiscal and economic research at the Illinois Policy Institute 

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