Chicago alderman kicked off a series of budget hearings Monday to discuss Mayor Lori Lightfoot’s 2021 spending proposal, which includes an increase to the gas tax, higher property taxes, furloughs and possible layoffs.
The annual budget approval process typically takes a month, with hearings for each and every city department. But this year, everything is virtual due to the coronavirus pandemic. Here are a few highlights from the first day of pandemic budget hearings.
Property tax increases could continue in perpetuity
Even though Lightfoot has called property taxes a “last resort” when putting together her first two budgets, she’s asking aldermen to give themselves authority to increase property taxes based on inflation every single year going forward.
If inflation remains around what it is now, Comptroller Reshma Soni said the move would amount to an increase of roughly $19 each year for a home valued at $250,000. These annual increases would start in 2022, after the proposed 2021 increase, which Lightfoot’s administration said will amount to an additional $56 for a $250,000 home.
But the estimated increases only apply to the city portion of the property tax bill, not the entire amount.
“Any tax is hard and unfortunately, it’s not just the city. It’s based on all the other taxing bodies,” said Ald. Walter Burnett, 27th Ward. The public schools, public parks, community colleges, forest preserves and Cook County have separate authority to raise property taxes.
Many aldermen expressed concern about how these increases will hurt Chicagoans already struggling because of the coronavirus pandemic. Lightfoot said the move will provide “predictability” and “stability” to homeowners, instead of a “huge spike” every handful of years.
Her financial team repeated to aldermen what Lightfoot said last week: “Every year, there will be a vote on that property tax increase.”
Lightfoot raised property taxes by $17 million in 2020 to fund weekend hours at the Chicago Public Library. The mayor is proposing a $94 million increase in 2021, of which $16 million is expected to come from new property.
More parking meters coming to a neighborhood near you
The city intends to install 750 additional parking meters across the city to spaces that are currently free.
The new meters will help offset an annual payment the city has been making to the private company that purchased the meters in 2008. This payment, known as the “true-up” payment, is owed to Chicago Parking Meters LLC to cover the revenue lost when city events or parades take meters out of service temporarily. In past years, it has been between $14 million and $20 million.
“We have significantly reduced that ‘true-up’ over time,” said Chief Financial Officer Jennie Huang Bennett. “We believe that [2021] will be the first year where we will not have to make a ‘true-up’ payment, and we hope that we’ll actually start making money off of the parking meter contract.”
Bennett said the city has not determined where the new meters will be installed. Budget Chairwoman Ald. Pat Dowell, 3rd Ward, requested that aldermen whose wards may get more meters need to have input.
Refinancing debt will push payments out eight years
In order to close the city’s pandemic-inflicted budget gaps in both 2020 and 2021, city budget officials are planning to do a massive refinancing and restructuring of the city’s debt.
The $1.7 billion proposed refinancing and restructuring will involve several complicated steps that Ald. Michele Smith, 43rd Ward, compared to refinancing a mortgage and then taking out a second loan.
“It’s like refinancing your mortgage and taking the savings and using it to finance another component of a mortgage,” confirmed Bennett. To which Smith replied: “To pay for the furniture?”
“To pay for the furniture and pay for the food for the kids and so on and so forth,” Bennett said, continuing the analogy.
The city has about $25 billion in debt and annually makes hundreds of millions in debt service payments.
The “scoop and toss” borrowing deal will provide a $950 million windfall of cash right now to close the 2020 and 2021 budget gaps. But it will extend debt service payments out by eight years, Bennett told aldermen on Monday.
Private schools will not lose their crossing guards
Lightfoot’s 2021 budget moves the cost of about 900 crossing guards off the city’s balance sheet and onto Chicago Public Schools.
During Monday’s hearing, former school counselor Ald. Susan Sadlowski Garza, 10th Ward, asked if the shift would mean private schools would lose their crossing guards.
No, replied Budget Director Susie Park.
“Good, because those people pay taxes, as well,” Garza said.
Ald. Patrick Daley Thompson, 11th Ward, asked if the school system has the ability to absorb $14 million in additional costs, considering they already passed a budget over the summer.
“For 2021, we’re providing more than enough funds for them to cover that,” Park said.
That’s because the school district will get about half of this year’s TIF surplus, which will release $304 million from special taxing districts. Of that surplus, CPS will get $176 million.
Furloughs for non-union employees, but not police and fire
The city is budgeting to save $15 million through furloughs and layoffs. Of that, $5 million is expected to be from furloughing city employees that are not covered by union contracts.
However, this does not include non-union employees within the police and fire departments, according to Park. But budget officials did eliminate roughly 600 vacant positions in the police department and 30 vacant positions in the fire department.
The remaining $10 million will come from layoffs and other cuts identified with the help of labor leaders, Park said.
Several aldermen wanted to know what departments would be hit hardest by layoffs, but Park said unions have asked for more time to identify savings that would lessen the number of possible layoffs. Lightfoot’s administration estimates between 300 and 350 layoffs.
Becky Vevea covers city politics for WBEZ. Follow her @beckyvevea.