It’s budget season again in Chicago. With an inflow of federal aid of $ 3.5 billion, taxpayers should be reassured – right?
Not as much.
Mayor Lori Lightfoot’s budget proposal calls for a $ 76.5 million increase in the city’s property tax, which would cost the typical Chicago family up to $ 180 a year. This follows a $ 94 million increase in property tax in Lightfoot’s latest budget and a nearly $ 600 million increase under its predecessor, Mayor Rahm Emanuel, in 2015.
This increase is driven by spending on the city’s public pensions, which rose 239% over the decade, although spending on city services rose only 18% over the same period.
The city and its mayor need to break new ground instead of following the same failed fiscal path. Chicago is the beating heart of Illinois and, like every other city in Illinois, is backed by state mandates for state pensions that drive down investment in services and drive up taxes.
If there was time to call for change, it is now.
Chicago’s retirement costs will gobble up more than $ 2.3 billion of the city’s budget over the next year. That’s 21.4% of the city’s own revenue, excluding state or federal grants. It’s a more than $ 967 million increase in pension spending since Lightfoot became mayor and $ 461 million more than last year, an increase that represents 63% of Lightfoot’s reported budget deficit of $ 733 million in August Dollars for the 2022 fiscal year.
And yet, Lightfoot’s budget address did not include a call for pension reform requiring Springfield to send a constitutional amendment to voters. This despite her statements in May that the pension crisis was the “biggest problem” of the city and “unsustainable in its current form”.
New polls show why Lightfoot should be encouraged to call for change in Springfield. A recent survey published by Echelon and commissioned by the Illinois Policy Institute shows that 61% of Illinois registered voters support pension reform through a constitutional amendment that would protect retirees’ benefits already earned while allowing changes in future benefits. This represents enough voters to pass an amendment if it were on a ballot.
It’s not hard to see why people want this solution. The pension reform would put an end to the continuous, painful and unpopular increases in property tax in the city. It would protect retirees in the city’s four pension funds, which are only 25% funded on average.
It would also ensure that the services that city dwellers want and need survive. Lightfoot’s new budget increases spending on a range of city services from the Chicago Police Department to affordable housing, expanded mental health services, and more by approximately $ 1.2 billion.
Unfortunately, this spending is backed by a one-off federal grant that expires in 2024, which means many programs will need to be funded or cut entirely with significant future tax increases, continuing the city’s downward trend in the quality of community services.
Despite his refreshing openness about the severity of the city’s pension crisis, Lightfoot has consistently not endorsed an amendment to the state constitution’s pension clause.
Changing the constitution to accommodate future growth in pension benefits for current workers and retirees is the only way Lightfoot or the many other mayors across the state struggling with pensions can control their budgets and tax burdens receive.
Only a long-term balanced budget can give city dwellers confidence. Programs continue and taxes are affordable.
The population is ready for politicians to tackle pension reform. At this critical moment in the city’s future, Mayor Lightfoot has an opportunity to bring pension reform to fruition and champion the only real solution that will allow Chicago to spend money on things that keep people here and the quality of life in the city Improve the city – instead of continuing to charge higher taxes to pay off pension debts.
Adam Schuster is the Senior Director of Budget and Tax Research at the Illinois Policy Institute.
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