Finance Committee rejects bid to repeal property tax hikes tied to inflation
CHICAGO (CBS) -- Aldermen on Monday voted down an effort to repeal Mayor Lori Lightfoot's policy of tying automatic annual property tax hikes to rate of inflation.
The City Council Finance Committee voted 17-11 against a proposal from Ald. Brendan Reilly (42nd) to repeal the mayor's policy of raising property taxes every year at the same rate as the increase in the consumer price index, capped at 5% a year.
Lightfoot convinced aldermen to pass the automatic property tax hikes through 2058 as part of her 2021 budget plan, in order to help shore up the city's underfunded employee pension systems.
While the mayor agreed to skip the automatic property tax hike in 2023, amid surging inflation, she has said it was a one-time deal.
Not satisfied with that one-time break, Reilly sought to end the policy entirely.
Reilly said Chicago taxpayers are already struggling with higher bills on everything from groceries to gasoline, due to inflation, as well as higher property tax bills.
Reilly said the policy of tying annual property tax increases to inflation is just "a ruse and smoke and mirrors … to allow this administration and future administrations to hide behind when they want to justify future property tax increases on Chicagoans."
He said, even if the automatic property tax hikes were repealed, any Chicago mayor could still balance the city's annual budget by cutting spending, or by justifying a tax hike to the City Council in any given year.
But the mayor's chief financial officer, Jennie Huang Bennett, said tying annual property tax hikes to inflation provides predictability and stability in property tax levels each year so taxpayers have a better idea what will be happening with their property tax bills, rather than hitting them with much larger property tax hikes every few years.
Bennett said the city is still "digging itself out of a history of poor financial decisions" that tanked the city's bond rating in recent decades, and increased the cost of borrowing.
The mayor's budget team also argued that the automatic property tax hikes are an important tool to ensure the city is properly funding its employee pension systems. She said, without the guaranteed annual revenue stream generated by annual property tax increases, the city won't be able to keep up with ever-growing pension obligations.
"Not paying our pension obligations is not an option for the city" Budget Director Susie Park said.
Ald. David Moore (17th) and Ald. Nicholas Sposato (38th), who both voted against repealing the automatic property tax increase, said the city' can't afford to "keep kicking the can down the road" when it comes to increasing revenue going to the city's employee pension funds.
Sposato said the choice is to either "pay a little now or pay a lot later" to keep those pension funds properly funded.
The mayor's budget team also noted that, as they did for the 2023 budget, the mayor and aldermen can always skip a given year's automatic property tax hike if there is enough revenue in the budget to cover pension costs without a tax increase.