Emanuel Proposes A Massive Collection Of Tax Hikes

By Kate Shepherd in News on Sep 3, 2015 6:53PM

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It's about to get more expensive to live in Chicago, but the city is hoping more fiscal stability is worth the tradeoff. Mayor Rahm Emanuel's upcoming budget is reportedly going to call for the largest property tax increase and the largest collection of fees and tax hikes in modern Chicago history.

In the wake of Moody's downgrade of Chicago's credit to junk status, Emanuel is at a crucial moment. He needs to raise $754 million in new revenue to balance his 2016 budget and to pay for police and fire pensions, according to the Sun-Times. He's determined to eliminate the city's structural deficit, stamp out Mayor Richard M. Daley's risky financial practices and leave the police and fire pensions on solid footing which requires raising a lot of taxpayer money, City Hall sources told the paper.

"Chicago is really at a crucial point here," Ty Schoback, a senior analyst at Columbia Threadneedle Investments, which manages about $30 billion in municipal bonds, including some Chicago debt, told Bloomberg. "It's going to be within Chicago's control to demonstrate to the market that they have the willingness to make the difficult but necessary fiscal decisions."

The property tax hike will likely be between $450-$550 million but Emanuel has not decided on a final number yet, according to the Tribune. Ald. Patrick O'Connor, estimated an increase of $450 million for police and fire pensions plus an additional $50 million for a Chicago Public Schools construction program.

A $500 million property tax increase would cost the owner of a home valued at $250,000 about $500 more each year.

The new city budget will also raise money through new taxes on garbage collection, ride-sharing services including Uber and electronic cigarettes.

The garbage tax will likely be about $10 to $12 a month for single-family homes and two flats, O'Connor told the Tribune. It should generate $100 million a year for the city.

A $1-per-ride tax on ride-sharing companies including Uber and Lyft, originally proposed by Ald. Ed Burke, will be in the budget, according to the Sun-Times. Emanuel's brother Ari (yes, the one that inspired Entourage's iconic Ari Gold character) is a major investor in Uber.

The tax increases will be hard for many voters to take after Emanuel's recent reelection but supporters argue that the increases are a necessary evil.

"We knew all along we were facing significant fiscal challenges," Ald. Joe Moore told the Sun-Times. "Without help from Springfield, our range of choices are pretty narrow. The choices are really between bad and worse."