Chicago Budget Forecast Includes 2.5% Property Tax Increase – Chicago Sun-Times | Vette Leader

Chicago property taxes will rise by $42.7 million — half what an automatic escalator allowed — thanks to a $127.9 million budget deficit for 2023, the lowest on record, Mayor Lori Lightfoot said on Wednesday.

By exercising fiscal discipline and making “tough decisions,” Lightfoot managed to reduce the deficit in a budget that is set to serve as a platform for her re-election from $733 million last year and $1.2 billion during to reduce the peak of the pandemic.

The automatic escalator, which mayoral challenger Paul Vallas and others have promised to repeal, will allow Lightfoot to raise property taxes by 5% or the inflation rate, whichever is lower.

But with inflation now rising to levels not seen in 40 years — 8.5% in July versus 9.1% in June — the mayor had promised to “put up some guardrails” to help Chicago’s beleaguered homeowners and businesses to protect and prevent the city from doing so Total.

On Wednesday, City Hall announced that these “guard rails” would halve the automatic property tax hike tied to consumer price hikes.

“We will not aim for a CPI of 8.5%. We are not aiming for a 5% CPI. Instead, we will give taxpayers a much-needed rest and lower the CPI to 2.5%, which is in line with the five-year CPI average,” Lightfoot said during a lengthy campaign-style address at the Chicago Cultural Center.

“I believe – we believe – that this is the right thing to do.”

Mayor Lori Lightfoot releases the city's 2023 budget forecast during a news conference Wednesday at the Chicago Cultural Center's Grand Army of the Republic Hall in the Loop.

Mayor Lori Lightfoot releases the city’s 2023 budget forecast during a news conference Wednesday at the Chicago Cultural Center’s Grand Army of the Republic Hall in the Loop.

Since the city’s total property tax is $1.6 billion, that would still translate to a sizable $42.7 million earmarked solely for pension payments.

That’s in addition to the $40 million upfront payment the mayor required from Bally’s before accepting the company’s $1.7 billion plan to build a permanent casino in River West and a temporary casino at the Medinah Temple in River North .

Lightfoot argued that the 2.5 percent increase would only cost the owner of a $250,000 home $34 more per year.

“To put it in terms I can understand, that’s about the price of an Italian beef from Al’s — hot, dunked, with extra cheese — for a family of four,” the mayor said.

“The average house price of $250,000? An additional tax of $34? I think people can live with that. I think that’s reasonable. … Nobody wants to pay taxes. but [if] The choice being non-delivery of city resources, laying off city workers, or a modest tax hike, most people would say, “Okay, Mayor. I get that. I might not like it. But I understand it.'”

Lightfoot said she expects the city’s spending to increase by $228.2 million from the $16.7 billion included in its 2022 budget. That budget marked an unprecedented 30% increase in city spending thanks to an avalanche of federal funding for the coronavirus relief fund.

The mayor said she expects backlash from the same city council members who opposed the automatic escalator the first time. However, she argued that the annual trigger makes sense because it gives home and business owners the “predictability” they crave.

“For years, the mayors of this city failed to get the difficult decisions about pension funding right, leaving pensions severely underfunded. We would skip the property tax hikes every year. And then suddenly, year after year, the highest property tax increase in the city’s history. That didn’t help anyone. And it certainly didn’t help the City Council members who had to do those difficult votes,” she said.

“In an election year, it’s easy to say, ‘Let’s do nothing.’ But our pension obligation is growing every year. So if we don’t do something, rest assured taxpayers, they’ll be back for you later.”

Chicago’s $1.6 billion in property tax collection nearly doubled between 2012 and 2021.

Chicago mayors have a history of inflating budget deficits after an election — and raising taxes, fines and fees immediately after confronting voters. They then have historically low deficit projections ahead of mayor and council elections, allowing incumbents to face voters without raising taxes.

Automatic escalator Lightfoot persuaded a reluctant council to approve that equation within their 2021 budget, a little, but not by much.

The $127.9 million budget gap is likely to be filled without further significant increases in taxes, fines and fees.

As always, the 2023 budget forecast, which replaces the city’s preliminary budget, also includes forecasts for the next three years.

If Chicago’s economy flies high, the forecast projects a deficit of $306.1 million in 2024 and $265.7 million in 2025. If there is a “negative” outlook, the deficit that Lightfoot or her successor will inherit, rising to $951.3 million in 2024 and a staggering $1.4 billion in 2025.

Attendees received an infographic on the city's proposed 2023 budget during a press conference Wednesday at the Chicago Cultural Center.

City officials released details of the city’s 2023 budget forecast with graphs at Wednesday’s news conference at the Chicago Cultural Center.

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