In the past month, Mayor Lori Lightfoot has hinted at what might be in the new budget: such as a higher tax on luxury real estate sales and possibly a hike in property taxes. In a special address on Wednesday, the mayor laid out details of a plan that didn’t require a steep increase in property taxes—something that many residents spoke out against.
The mayor was tasked with closing an $838 million deficit in the city’s 2020 budget. Restructuring and merging city departments, like data operations and neighborhood services, has closed more than 60 percent of the gap and saved about $538 million, Lightfoot said. The other half of the plan raises nearly $352 million through higher taxes on ride-hailing services, property transfers, restaurants, and debt restructuring.
While there are tax increases and millions in new revenue, the mayor emphasized that her administration’s choices were careful and forward-thinking.
“These new sources are rooted in progressive economic, financial, and social policy. They include reforming Chicago’s ‘real estate transfer tax’ which is a tax that applies to anyone selling or buying a home,” Lightfoot said. “This is exactly the kind of policy we want to be doing here. Policy that is fiscally sound, and also helps our communities grow.”
The real estate transfer tax will be based on the “progressive tax structure,” proposed in the budget plan. The city expects it to generate an additional $125.6 million in 2020.
Affordable housing and resources for homelessness are also addressed in the budget. There will be a 36 percent increase in funding for homelessness prevention programs, more than $10 million for affordable housing, which includes 520 new units for low-income residents.
“And let me say this to the developer community, whether for profit or community-based, we need you to step up in partnership to help us meet this crisis head-on,” Lightfoot said.
There were a couple other tweaks that shifted funds and will provide more relief to vulnerable homeowners.
Chicago Public Libraries are partially funded by a portion of the city’s property tax levy—now CPL will get a larger share (an extra $8 million) so local branches can stay open seven days a week.
Lightfoot also introduced a new Utility Billing Relief program that she estimates about 20,000 low-income households will be eligible. The program will “cut water utility taxes, end the threat of water shut-offs, stop any referral to collection agencies,” and shift water bills to a monthly cycle instead of twice a year for all residents.