Rahm's Budget Calls For $588 Million Property Tax Hike And Garbage Collection Fee

By Kate Shepherd in News on Sep 22, 2015 3:47PM

2015_rahm_emanuel.jpg

Chicago's massive property tax hike is even bigger than expected. Mayor Rahm Emanuel asked the City Council today to raise property taxes by $588 million by 2018. His new tax proposal will also include for a monthly garbage fee of $9.50 per household.

Raising property taxes has long been viewed as a last resort, but Chicago would become "unlivable" without the hike, Emanuel said in his address to the City Council. The budget is a huge political risk but the City Council must rise to the occasion and support the proposal in order to lay down a strong foundation for the city's future, he said.

The hike will be phased in over a four-year period and pay for police and fire pensions and school construction, the Sun-Times reported. For the owner of a $250,000 home, the increase will cost them an extra $588 per year.

The $9.50 garbage collection fee is expected to raise $60 million in revenue and is actually lower than Berwyn's fee. The fee will be tacked on to water bills for owners of single-family, two-, three- and four-flats. Senior citizens will only pay half the fee.

The controversial garbage fee is likely to divide the rich and the poor in Chicago even more, according to Reuters. Chicago was one of three major American cities, the others are Boston and New York City, to offer free garbage collection for most residents. Homeowners who refuse to pay will even still get their garbage picked up. In the low-income areas of Chicago, residents are worried about paying more for their already unreliable garbage service.

Janie Sims, a resident of the South Lawndale neighborhood, told Reuters that vagrants often still garbage containers in her alley so she usually doesn't even have anywhere to put her trash. Sims doesn't expect many of her neighbors to pay the fee.

"I'm hearing a 'no' on property taxes and a 'hell no!' on a garbage tax," Ald. Ricardo Munoz (22nd) told Reuters. Emanuel's opponent Jesus "Chuy" Garcia won that ward, which includes Little Village, with 80-percent of the vote in April's mayoral race.

The budget also includes a tax on e-cigarettes, a .50-cent per ride surcharge on taxis and ride-hailing services like Uber, a 15-percent increase in cab fairs and a $5 Uber surcharge for pickups and drop-offs at O'Hare, Midway and McCormick Place, according to the Sun-Times. There's no sign of the soda tax proposed by Ald. George Cardenas (12th) in the budget.

City Hall defends the controversial plan by arguing that the city cannot meet its state mandated payments for police and fire pensions without it, unless they were to drastically cut the most critical city services. There's also the city's fiscal crisis and junk bond rating to fix.

"Look, it's a lot easier and a lot quicker to be downgraded than it is to be upgraded," an anonymous member of the mayor's finance team told the Sun-Times. "But we think this budget will set us on a path to improve the credit rating of the city."

This isn't even the end of Emanuel's property tax hikes. He also proposed a $170 million property tax increase to pay for teacher pensions, as long as teachers accept the equivalent of a 7-percent pay cut and the state agrees to pay for normal pensions costs. So we'll have to wait and see if they ever reach an agreement.