After watching for years as their city's financial troubles piled up, Chicago homeowners will be told this week that it's time for them to start paying the tab.
Mayor Rahm Emanuel is expected to propose a large increase in property taxes to help eliminate billions of dollars in pension and other municipal debt and to repair the school system's low credit rating. Residents also may face more taxes and fees on garbage collection, sugary drinks and other services.
The steps would help reverse the city's financial slide but could dent Chicago's reputation for a relatively affordable cost of living. Median home prices in the nation's two larger cities, New York and Los Angeles, are double Chicago's.
"There's no way around it," said Alderman George Cardenas of the additional taxes. "If we don't face the consequences, you pay more (later), your children will pay more and that's no way to run a city."
It's unclear how residents and businesses will respond. Emanuel has faced raucous crowds at public budget hearings, but the political fallout for the former chief of staff to President Barack Obama could be delayed because he doesn't face re-election until 2019.
Highest Sales Tax
Some homeowners, landlords and business owners complain they already pay more than other cities in gasoline prices, sales taxes and parking. Chicago's sales tax rate is 10.25 percent, the nation's highest.
"Paying for picking up garbage? That's ridiculous. That's what my taxes are for," said homeowner James Young, 48, who works for a textile company. "Your pay check doesn't increase every time the taxes increase."
However, there have been few signs the proposal would fail in the city council, which has largely been a rubber stamp for the mayor.
Chicago's property tax rates rank 12th nationwide, higher than Los Angeles and New York, but higher property values in those cities mean property owners pay thousands more a year, according to a Lincoln Institute of Land Policy study.
Laurence Msall, executive director of the Civic Federation, a tax and policy research organization, said the key will be persuading Chicago residents that the additional revenue will be used correctly.
"One of the biggest problems is not the tax increase but the reaction to the tax increase," Msall said. "If people don't think we're going to solve things, they will leave."
The city's financial problems have been mounting because of inadequate contributions to the pension system and questionable borrowing, mostly under former Mayor Richard M. Daley.
Chicago has the worst-funded public pension system of any major American city and a budget shortfall of at least $750 million. Illinois' governor, Republican Bruce Rauner, has even suggested that the city school district declare bankruptcy.
Emanuel has cut government costs and sought other ways to raise revenues, such as a bringing casino gambling to the city, but without success.
Emanuel's office has yet to release details of the new tax proposals, which will be presented Tuesday. Aldermen say the property tax hike could be from $450 million to $550 million, or roughly a 60 percent increase in the city's portion of the bill. It could cost a resident with a $250,000 home about $500 more.
Chicago saw property taxes rise in 2008, but the last major increase was in 1987.
The revenue push comes as Emanuel attempts to strike a softer image, conceding during his re-election campaign earlier this year that his bullish style turned off some people. The mayor dropped hints that he'll seek property tax exemptions for low income and elderly residents. But state approval is needed for the tax hike and exemptions.
"We are going to address our challenges, and I think when the governor looks at the whole budget he will see that we didn't leave any stone unturned," Emanuel said. "It is fair, it is equitable. It's progressive."
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