With the city, state, and county pension systems in dire financial straits—taxes at all three levels could be on the way up. The first out of the gate to propose a tax increase is Cook County Board President Toni Preckwinkle, who today defended her push for a 1 percent hike in the county portion of the sales tax. This comes two years after she repealed a 1 percent hike passed under her predecessor Todd Stroger. Why the flip?
Preckwinkle says it’s the county’s struggling pension situation that is necessitating the need for this tax increase.
It would raise Chicago’s sales tax from 9.25 percent back up to 10.25 percent—where it was under former president Todd Stroger before Preckwinkle defeated him in 2011, largely on a pledge to remove that tax hike. The bulk of the new revenue from this expected $308 million windfall will go to pensions, with 25 percent going to paying down debt and 10 percent to infrastructure. Preckwinkle says she had to act, because Springfield has failed to do so on her proposal to save some money on county pensions.
“Because we didn’t get pension reform last year or this year, we’re $365 million further down,” Preckwinkle said. “We have a $6.5 billion unfunded liability in our pension funds, and we’re accruing greater liability at the rate of roughly $1 million a day. That can’t continue. I’m trying to be a good steward of county government, and that means we have more resources to fund our obligations.”
As to the irony that she is now proposing to reinstate the tax she campaigned on repealing (and then followed through on repealing), she says these are different times. And she says the math doesn’t add up on any other proposal.
“I got to get nine votes among the board of commissioners for it, and it was clear that there was no appetite for a property tax increase,” she said. “And we went through all options: higher amusement taxes, higher alcohol taxes, hotel taxes. There’s no path to getting a property tax increase, but there is a path to a sales tax increase, so that’s what we’re going to do.”
We spoke with several commissioners who say she likely will have the support she needs to pass the increase. Some stalwarts have come out in support already like commissioners Deborah Sims and Joan Murphy. Others like Republican Commissioner Tim Schneider, who is near the border of the county, is opposed, as is Richard Boykin, whose territory includes the West Side of Chicago and Oak Park. He says the sales tax hits the poor the hardest and will drive business out of the county.
“This tax makes us less competitive with DuPage County, Lake County, Will County,” Boykin said. “There are other revenue options to be considered. It’s my understanding that the president didn’t want to fight the lobbyists on things like the amusement tax, and things of that nature. Why would we put this on the backs of poor people? That’s the wrong approach.”
And the hike would put Chicago at 10.25 percent (with some areas at 11.25 percent that are taxed by Navy Pier and McCormick Place as well) meanwhile base level taxes in DuPage County are 7.25 percent, 8 percent in Lake County, and 7 percent in Will County.
Former President Todd Stroger has done what seems like a victory lap in the media, saying “I told you so.’’ But Preckwinkle says removing that tax was still the right thing to do, before attempting to bring it back.
“We never would’ve made county government more efficient if we’d kept the penny sales tax. There would’ve been no pressure to do anything,” Preckwinkle said. “We would’ve been in the same place we are now, with the penny sales tax in place, and then we’d have to look for additional revenue somewhere else. I think Todd Stroger’s wrong.”
The matter will be taken up with the full county board next Wednesday, July 1, and she will be on our show that evening to talk about it. If passed, the increase would go into effect January 1, 2016.
Watch the full interview with Preckwinkle.