Chicago residents prepare for a day of reckoning. After years of delayed pension contributions, budget shortfalls, and structural deficits, Mayor Rahm Emanuel is proposing a $500 million property tax increase. The added levy will cost a typical owner of a home appraised at a value $250,000 around $500 more per year. Renters will not be spared. During a record tight rental market, landlords will likely pass some or all of the increase on to their tenants.
The increase would represent a 60% increase in the city’s property tax levy.
In addition to the property tax hit, property owners should expect to see a new bill in the mail from the Department of Streets and Sanitation. The Mayor is proposing a first ever universal garbage collection fee, expected to generate over $100 million. Sources in the Mayor’s office have revealed that the city will charge anywhere from $10 to $15 per household per month for trash collection. The fee is already commonplace throughout the suburbs and in other large cities like Los Angeles and Houston. In addition, larger buildings in Chicago have been paying a garbage collection fee to the city for years.
If that was not enough, the 2016 budget will also include a tax on electronic cigarette products, commonly known as vaping devices. The Mayor has spoken out against the proliferation of e-cigarettes in the past. Now he is taking action to raise the cost of the product to roughly match traditional cigarettes, meaning that the level of nicotine will be taxed at the same rate as a pack of traditional tobacco. Experts familiar with the smokeless tobacco industry, however, doubt that the tax will bring in expected revenue since few if any products and accessories are sold at brick and mortar stores within city limits.
Finally, Emanuel is expected to roll out the city’s first ever “Uber tax”. The city is expected to slap a $1 per ride fee to users of Uber, Lyft, Sidecar, and other ridesharing services. The tax is expected to be part of a broader regulatory reform package designed to level the playing field between traditional taxi cabs and ride-sharing companies. Tax medallion owners and cab drivers have for several years lobbied city hall to impose tougher restrictions on rideshare providers, while companies like Uber have been pushing the mayor to ease restrictions currently placed on the companies at Midway and O’Hare airports.
Combined, the property tax increase, garbage fee, smokeless tobacco tax, and rideshare fee will result in the largest tax hike in the history of Chicago.
Update: After taking heat for the size of the tax hike, sources close to the Mayor have revealed a plan that could potentially relieve some homeowners of the burden of the added property tax hike. Details are not yet clear, but owners of property valued under $250,000 may be spared from all or part of the increase. Any such plan would require support and approval in Springfield. Governor Rauner has stated that he will demand changes to the city’s union rules before going along with any of the Mayor’s requests.