With inflation on the rise, an inner-city councilmember wants to end Mayor Lori Lightfoot’s policy of tying Chicago’s annual property tax increase to rising consumer prices.
Days after the Tribune reported that Lightfoot’s property tax increase for 2023, linked to the consumer price index, will total $85.5 million if you choose to take it all, Ald. Brendan Reilly, 42nd, introduced an ordinance at the City Council meeting calling for the mayor’s tax formula to be reversed.
Reilly represents the Loop, Magnificent Mile, River North and other areas of Chicago hit hardest by property taxes thanks to their large commercial properties and expensive residences.
His brief ordinance simply states that the inflationary property tax policy approved by Lightfoot as part of his 2021 budget “is repealed in its entirety.”
Reilly was one of 21 councilmembers who voted against Lightfoot’s 2021 budget that first included the inflation-linked tax, which automatically increases the city’s tax rate based on the rate of inflation or 5%, whichever is minor. He said he always “questioned the volatility (of the consumer price index) and the potential exposure of taxpayers to runaway inflation and was not satisfied with the answers” he got from the Lightfoot administration.
“As opponents like myself pointed out when this was debated, even the mayor’s ‘safeguard rail’ of the 5% cap would still result in a massive property tax increase at a time when residents and small businesses are struggling to pay their bills,” Reilly said in a statement. Wednesday. “Contrary to the Administration’s previous assertions, it turns out that the CPI is, in fact, anything but predictable these days.”
Only nine other councilmembers joined Reilly in sponsoring the proposal, which was sent to the council’s Finance Committee for consideration. That makes his chances of getting majority support from the 34-member committee or 50-member council look unlikely.
Still, with Lightfoot and the council members closing in on re-election early next year, Reilly’s move could highlight which of them support ending the annual tax increase and which don’t.
Lightfoot cast his decision nearly two years ago to peg property taxes to the rate of inflation as a boon to both the city and taxpayers that showed he had the political discipline his predecessors lacked.
Inflation for most of the previous two decades had hovered around 3% or less. Enacting those kinds of relatively reasonable annual increases would move Chicago away from the traditional yo-yo effect of mayors raising taxes in large amounts immediately after winning an election, only to enact more austere budgets that don’t require such increases when their terms are almost up, Lightfoot argued.
For this year, the inflationary property tax increase was $22.9 million, based on a 1.4% inflation increase between December 2019 and December 2020.
But inflation between December 2020 and December 2021 hit 7%, as the US entered its worst inflation crisis in at least two generations. Even with the 5% cap going into effect, that would increase taxes by $85.5 million next year.
Lightfoot is not required to take the full amount. Faced with the difficulty of getting councilmembers to vote on an election year budget with a sizable property tax increase, she might decide to ask them for a smaller amount or no tax increase.
That might open her up to criticism from mayoral hopefuls that she lacks the political backbone she touted by adopting the tax increase policy, but that might be preferable to defending the decision to raise taxes on hard-pressed residents.