Typical Chicago family will see up to $180 property tax increase in new city budget

September 21, 2021

Chicago property taxes have grown 90% since 2010, while pensions eat up larger percentage of city budget


CONTACT: Melanie Krakauer (312) 607-4977

Typical Chicago family will see up to $180 property tax increase in new city budget
Chicago property taxes have grown 90% since 2010, while pensions eat up larger percentage of city budget

CHICAGO (Sept. 21, 2021) – Chicago Mayor Lori Lightfoot announced a $76.5 million property tax increase during her 2022 budget address Monday.

Analysis from the Illinois Policy Institute calculates this property tax will cost the typical Chicago homeowner between $72 and $180 per year on average on their property tax bills, depending on city location and individual assessments.

Residents in the north region of Chicago will see a $156 increase, bringing the typical property tax bill to $5,480 a year; residents in the central region will see a $180 increase, bringing their annual property tax bills to $6,317; and homeowners in the southern city will see a $72 increase on average, bringing property tax bills to $2,522 a year. Additional increases from other Chicago government units, such as Chicago Public Schools, could also follow.

Despite rising property tax bills, the city is not able to properly fund services Chicago residents want, need or expect. During the past decade, spending on pensions has increased 239%, while spending for city services has only increased 18%, the Institute found. Similarly, paying down debt has grown 27% and total city budget spending has grown 30%, when adjusted for inflation.

In comparison, Chicago property tax bills have grown 90% since 2010 in real terms.

The city is responsible for $29 billion in pension debt for its four pension funds that are, on average, only 25% funded. Pension contributions will cost nearly $2.3 billion this year, a $460 million increase from last year’s budget. Chicago taxpayers also pay into another four funds that have $17 billion worth of pension debt. All eight pension funds have less than 60% of the money needed to pay retiree pensions.

Illinois Policy Institute experts are available for video, phone and in-person interviews to discuss how much these taxes will hurt families and why the city should be using substantial federal aid for tax relief.

A quick look at Chicago’s city budget and finances:

  • Chicago’s property tax increase covers $22.9 million in automatic increases after Lightfoot pushed for inflation indexing, $25 million for the 2022 installment of Lightfoot’s $3.7 billion capital plan and $28.6 million from new property.
  • The city received $1.9 billion in federal aid under the American Rescue Plan Act that will be indirectly used to pay down debt and borrowing related to COVID-19 by covering revenue losses and service costs over three years. Federal laws allows the funds to be used to finance tax cuts.
  • Chicagoans face nearly $47 billion in pension debt. This is more total pension debt than 44 U.S. states hold.
  • Chicago's pension payments rose $460 million this year, driving the budget deficit. Pension spending in fiscal year 2022 will be nearly $1 billion more than Mayor Rahm Emanuel’s last budget. While Lightfoot said the funds are now all on actuarial funding, the statutory rules still violate best practices by targeting 90% funding, instead of 100%, by 2045.
  • Lightfoot's 2022 budget proposal also includes $500 in a universal basic income pilot program for 5,000 families.

Adam Schuster, senior director of budget and tax research at the nonpartisan Illinois Policy Institute, offered the following statement on Lightfoot’s address:

“Mayor Lightfoot’s commitment to additional investments in services such as mental health and homelessness are welcome in a city still struggling to recover from the economic and public health effects of COVID-19. But with joblessness still high and many struggling to afford rising living costs, it is unwise to raise taxes right now.

“This budget illustrates how Chicago’s poor financial health and unsustainable pension burden drive up property taxes while limiting resources available for investment in necessary services. In addition, the security of Chicago retirees’ pensions are threatened as most city funds cannot be salvaged without structural reform, which can only happen following a state constitutional amendment.

“Until Mayor Lightfoot accepts the realization her predecessor, Mayor Rahm Emanual, came to and makes a real push in Springfield to let people vote on pension reform, Chicago’s lawmakers and taxpayers will be handcuffed by rising property taxes, decreasing services, shaky retirement security and more and more fees.”

For bookings or interviews, contact media@illinoispolicy.org or (312) 607-4977.