unveils new budget deficit, tax hike – Chicago Tribune | Vette Leader

Chicago Mayor Lori Lightfoot on Wednesday presented a budget deficit of $127.9 million, by far the smallest deficit of her term as she seeks a second term.

The city is also considering a $42.7 million property tax hike as part of its policy linking Chicago’s annual property tax increase to consumer price increases. That’s less than the $85.5 million increase her formula could have yielded, but it’s unclear if the cut will be enough to satisfy critics.

Lightfoot attributed the budget deficit as a result of their efforts to put the city’s long-struggling finances on a stronger footing.

“As a result of our hard work over the past three and a half years, and despite a global pandemic, the resulting economic meltdown and associated loss of revenue, we have persevered, stayed true to our values ​​and cleared the city’s budget of decades of deferred liabilities,” said Lightfoot. “In other words, we are now living within our means and have embarked on the true path to financial stability and recovery.”

Politicians typically try to avoid big tax increases or significant budget cuts during election years, and Lightfoot’s 2023 spending plan will likely aim to avoid upsetting residents ahead of the city’s February election. But the property tax hike could still cause her problems, although Lightfoot argued it’s a modest increase and necessary to fund city pensions.

“Ultimately, a $250,000 homeowner pays $34 in a year,” Lightfoot said. “That’s about the price of Al’s Italian Beef Sandwiches — hot, dunked, and with extra cheese — for a family of four.”

Sign up for The Spin to get the top stories in politics delivered to your inbox on weekday afternoons.

Initial projections from city officials estimated the gap would be $867 million in 2023. In May, Susie Park, Lightfoot’s budget director, said tax officials cut that number by more than $500 million. The city used a variety of means, including federal COVID-19 relief dollars, “structural solutions” and increased revenue, to close the gap to about $306 million, Park said.

The sunny year-end numbers for 2021 were finalized in the city’s annual comprehensive financial report, released in late July. The city ended 2021 with a total fund balance of $679.1 million, more than double the prior year. Spending was $107.2 million lower than expected thanks to carryover COVID grants and “overall operational efficiencies,” the report said.

Transaction taxes levied on real estate sales have been particularly high, exceeding budgeted amounts by more than $200 million, although budget officials have previously warned this is unlikely. State income tax receipts were also $228 million over budget given strong employment. Transportation revenue – which includes fees charged in parking garages and for taxi and ride-hailing apps – fell, as did some non-tax revenue such as fines.

The deficit announcement sets the table for the start of budget negotiations, where Lightfoot will negotiate with city council members on spending priorities, potential cuts and taxes. Some councilors are already moving to scrap the mayor’s proposed property tax hike.

Around this time last year, Lightfoot announced the city’s deficit would be $733 million and called its 2022 spending plan the city’s COVID-19 “recovery budget.” This shortfall accounted for 5.7% of the total budget for the previous year. During last year’s forecast speech, Lightfoot highlighted a more promising business environment and the beginning of a recovery in major cities’ revenues.

Lightfoot filled that gap — and part of last year’s gap — with a portion of the $1.9 billion in federal COVID-19 aid that Chicago received, a one-time revenue stream.

The budget has provoked some of Lightfoot’s most contentious battles with councillors. Lightfoot’s first spending plan passed the city council 39-11, with much of the opposition coming from progressive councilors who argued it does not go far enough to deliver on the mayor’s campaign promises on issues like the reopening of mental health clinics.

Lightfoot responded by launching a website that shamed Chicago councilors who voted against their first budget, which they said was a civic tool for the public, though they criticized it as petty and bullying.

In 2020, Lightfoot struggled to generate support for its budget, which was opposed by some councilors for making modest cuts to the police budget and others who objected to a $94 million property tax increase. The mayor threatened not to help councilors with projects in their districts if they voted against the budget, telling them, “Don’t come to me about s—” if they didn’t support their budget.

The mayor had a much easier time getting last year’s budget through the council, in large part because it was buoyed by an inflow of $1.9 billion in federal COVID-19 relief funds. This has enabled her to spend significant sums on anti-violence programs, affordable housing, mental health initiatives, and other community projects that appeal to many city councillors.

The city’s gross property tax has increased an average of $78 million a year since Lightfoot’s first budget, from $1.53 billion in its 2020 budget to $1.71 billion this year. The city has in the past opted to increase the levy to capture new properties that are being built and are phasing out as tax increase financing (TIF) counties. During the tenure of former Mayor Rahm Emanuel, the levy increased by an average of $80 million. This includes the massive multi-year property tax increase that he pushed through in 2015.

In her speech Wednesday, Lightfoot laid out the steps she has taken to bolster the city’s finances, including her push for a Chicago casino, which she said will generate $2 billion over time will bring in the city and $2 billion for the state, though the facility will take years to build one way.

Lightfoot also highlighted a deal she struck with Joliet to sell water to the Lake Michigan suburb.

“Our continued willingness to work together has enabled us to achieve so much despite all the challenges of the past few years,” said Lightfoot. “It’s that same commitment to working together that will allow us to move towards an even brighter future financially.”

Leave a Comment