Illinois Policy Institute experts available to provide reaction to tonight’s "State of the City"
Mayor Lightfoot has not ruled out property tax hikes to balance the budget. She faces $29.2 billion in Chicago-controlled pension debt, with pension contributions set to spike in 2021 and again in 2023 for an increase totaling as much as $1 billion. Last year, the city’s entire $1.3 billion property tax levy went to pensions and debt payments. The city’s population loss for the past four years means the next tax increase will be even steeper for Chicago’s shrinking tax base.
Experts from the nonpartisan Illinois Policy Institute are available to provide commentary on how to right the property tax and pension crisis.
WHAT TO KNOW:
- Since 2010, property taxes on the typical Chicago home have grown 188% faster, or almost three times, the rate of home price appreciation.
- Chicago’s real estate market has fared the worst amongst the 10 largest U.S. cities and has still not recovered from the collapse of the housing bubble. When adjusted for inflation, home values from 2007-2017 dropped 23% while property tax rates rose 62%.
- The typical homeowner in Chicago did not see the economy grow fast enough to keep up with the pace of their growth in property taxes. Property tax bills grew 55% faster than personal incomes from 2007-2017.
- In 2017, Chicago’s property tax rate was 1.51%, the fourth highest among the largest cities in the nation. Residents are also the most-taxed of any major city with high tax rates for many products and services including gas, alcohol, grocery bags and parking.
Quote from Orphe Divounguy, chief economist for the nonpartisan Illinois Policy Institute:
“Pensions are property taxes. Mayor Lightfoot faces two options: lead the charge for true pension reform through a constitutional amendment, or hike property taxes. Without actionable help from Springfield, unfortunately, Chicagoans will likely see their property tax bills go up yet again.
“When property tax increases are not going to essential public services, such as education or social services, and are instead going to pensions and debt, everyone who lives in the city suffers. We can expect to see the Chicago residential real estate market continue to cool, the job market continue to weaken and residents continue to leave the city. For Chicago to match the success cities around the rest of the nation are seeing, we must address pensions once and for all.”