CAA Legislative Update

Advocacy News ,
Chicago City Council to Vote on 2016 Budget, Property Tax Increase
CAA Opposes Expanded Homestead Exemption


CAA recognizes the importance of improving Chicago's finances going forward. Addressing the City's structural deficit is essential to ensuring its economic future and making Chicago a desirable place to live, work and play. Improving Chicago's bond ratings are critical to this goal. However, we are very concerned about the negative impact of the proposed property tax increase. For these reasons, CAA takes the following positions on matters relating to Chicago's 2016 budget:


Matters Before the Chicago City Council

CAA will continue to educate Aldermen about the negative impact this property tax increase has on rents and affordable housing, and oppose efforts to provide relief to homeowners at the expense of apartments and renters
The increase in property taxes will have an impact on rents in Chicago and will further exacerbate the City's affordable housing crisis. The Mayor's proposed property tax increase for 2015 (assuming SB0777 passes and there is no increase in the homestead exemption) will cause rents to increase 12%. When you take into consideration the proposed property tax increases for 2016, 2017 and 2018 (using same assumptions for 2015) rents will increase by 13.5%. These increases will fall hardest on low and moderate income renters, who are least able to afford such increases. We will continue to promote initiatives that alleviate cost burdens on apartment owners, like amendments to the RLTO and changes to the Building Code. Read CAA's budget testimony here.

The City's operating deficit going into 2016 is $426 M, the City's added pension liability for 2015 for police and fire totals $328 M (assuming SB0777 is enacted) plus an additional $109 M for 2016 for police and fire pensions. The Mayor's proposal calls for a $328 M increase in the property tax levy for 2015 plus an additional $109 M for 2016. Property taxes are the only source of revenues the City has as its disposal to meet these financial obligations.CAA is neutral on the proposed property tax increase.
  
CAA supports passage of the residential garbage fee for those who receive city pick-up (1-4 units)
The Mayor has proposed a $9.50 monthly fee for refuse service provided to residential buildings of 1-4 units. This fee is expected to generate $62.7 M. The City presently spends $254 M per year on refuse collection and this new monthly fee will help ensure that at least a portion of this cost will be paid by the people who receive the service. Garbage fees are commonplace in suburban communities throughout the state. It will also level the playing field between owners of multi-family buildings (5 or more units) who presently have to pay for private refuse service and people who live in residential buildings (1-4 units that receive City service)
  
CAA will work with the Mayor and Aldermen to identify a source of funds for a homeowner rebate program provided it does not add to the burden of multi-family property owners
Depending on the home value and income levels that the City Council establishes for a homeowner rebate program, the Mayor's budget office projects that between $15 M and $30 M would be needed to provide rebates to homeowners. CAA has offered two potential funding sources to support a homeowner rebate program that will not impact multi-family property owners. The first is utilization of a portion of the City's skyway funds, which total $500 M. These funds were derived from the lease of the Chicago Skyway. The second source is the Guaranteed Home Equity Assurance program funds, which exceed $25 M. These funds were generated in three Chicago neighborhoods, one northwest and two southwest to reimburse homeowners who lost value on the sale of their home due to racial change. The City Council has authority to allocate Skyway funds for a rebate program, but would need legislation in Springfield to allocate funds from the Guaranteed Home Equity Assurance program for a rebate program.

Matters Before the Illinois General Assembly
  
CAA strongly opposes an increase in the homestead exemption
To minimize the impact of the proposed property tax increase on homeowners, the Mayor is pursuing an increase in the homestead exemption from the current $7,000 to $14,000. House Amendment 2 to Senate Bill 1488 was passed out of the House Revenue Committee last week. CAA testified against the bill, which would shift the property tax burden to multi-family, commercial and industrial property owners. Information CAA has indicates that this shift would result in a 38% increase in the property tax increase multi-family owners are already facing with the Mayor's proposed budget - an overall property tax increase of approximately 18%. Read CAA's testimony here and a coalition fact sheet here.

CAA is the only group that has consistently voiced support for apartment owners and renters, opposing tax breaks for homeowners at the expense of others, and pointing out the unfairness of the proposal.  Read the media coverage of CAA's position here.
  
CAA supports enactment of SB0777
SB0777 is a bill that gives the City an additional 15 years to achieve the statutorily required 90% funding for police and fire pension funds. This bill was passed by both the House and Senate last May, but was not sent to the Governor because early indications were he would veto the bill. The Mayor's budget proposal is based on SB0777 becoming law. If it does not become law, the property tax levy to fund police and fire pensions will increase from $328 M to $549 M. This would result in a 13.68% increase in a property owner's total tax bill. With passage of SB0777, this increase would be reduced to 8.4% increase in a property owner's total bill. Enacting SB0777 will reduce the property tax burden on multi-family property owners.