Chicago mayor plans tax hikes, layoffs to fill $1.2B budget hole
Mayor Lori Lightfoot's plan includes raising property, gas taxes
{{#rendered}} {{/rendered}}Chicago Mayor Lori Lightfoot on Wednesday evening unveiled her plan to fill the city’s $1.2 billion budget deficit, the largest in its history.
The $12.8 billion plan includes a number of tax increases and cost savings to help fill the hole in the city’s budget that was exacerbated by the COVID-19 pandemic.
“Chicago’s 2021 Budget represents our city’s roadmap toward an inclusive and fiscally responsible recovery from the extensive challenges of the unprecedented COVID-19 crisis,” Lightfoot said in a statement.
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Lightfoot’s plan includes raising $94 million through property tax hikes, in addition to increasing the gas tax by 3 cents per gallon and the cloud-computing tax by 1.75 percentage points. Also included is an annual property tax increase that is tied to the consumer price index.
More than $537 million in savings are identified, including $106 million through layoffs, furloughs and the elimination of unfilled jobs. At least 350 workers are expected to lose their jobs beginning in March 2021.
{{#rendered}} {{/rendered}}Lightfoot's plan also calls for the city to refinance $501 million in debt to take advantage of historically low interest rates.
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Other revenue sources include $76 million of tax increment finance surplus funding and $30 million from the city's rainy day fund.
{{#rendered}} {{/rendered}}The budget provides $18.6 million in new investments, including an additional $5.25 million for community-based violence prevention and reduction efforts. Chicago homicides are up 53% so far this year versus last year, according to the Chicago Police Department.
Further community investments include $1.7 million for youth programming, $2 million for affordable housing and $7 million to support workforce training.
Lightfoot’s budget proposal comes as Chicago’s economy has shrunk 10% as a result of the COVID-19 pandemic.
{{#rendered}} {{/rendered}}The sharp drop in economic activity came as the city was just starting to get its fiscal house in order. Lightfoot last year identified more than $500 million in structural solutions, the most since 2012, to fill the city’s then-record $838 million gap.
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Even after the city's budget deficit is filled, Chicago must find a way to pay $46.5 billion of unpaid bills, according to a July 2020 report released by Truth in Accounting.