Chicago Mayor-elect Lori Lightfoot has hit the pause button on controversial tax subsidies for two huge real estate developments.
The tax packages totaling $2 billion would have subsidized infrastructure for the Lincoln Yards development on the North Side and The 78 development in the South Loop.
The City Council Finance Committee was supposed to vote Monday on the proposals, but Lightfoot and Mayor Rahm Emanuel both made calls to delay that vote. Wednesday now marks the earliest possible day for a vote.
Lightfoot said in a statement the development process needed more community input and greater transparency.
Meanwhile, Gov. J.B. Pritzker is pushing hard for a graduated state income tax.
With a progressive agenda at the heart of plans from Lightfoot and Pritzker, what is the economic outlook for the city and state?
Edward Stuart, professor emeritus of economics at Northeastern Illinois University, is positive about the future.
“I think Lightfoot is going to make things a lot better,” he said. “More even development, better public education, more evenly funded public education. I’m a resident of Lincoln Park. We don’t need Lincoln Yards and $2 billion in subsidies for profitable commercial real estate. What we need are more schools and parks and so forth on the West and South Sides.”
Stuart also backs Pritzker’s push for a graduated or progressive income tax.
“Gov. Pritzker understands that what we need is education – primary, secondary and higher education,” Stuart said. “We need a more stable source of funding and a more business-cycle friendly source of funding – which is the progressive income tax. This is not radical. California’s done it. Minnesota’s done it. And there economies are in better shape than ours. The Rauner administration was just horrible. Everything they did was either ineffectual or just backwards.”
But Michael Miller, associate professor of economics at DePaul University, sees things differently. He thinks that over-regulation and higher taxes will ultimately drive people and businesses away from Chicago and Illinois.
“Illinois has so many issues and now the legislature is trying to pass a piece of legislation (HB3394) that every publicly traded firm in Illinois has to have women and blacks on their boards and stuff – which could lead companies to leave,” Miller said. “Corruption in Illinois is always a problem. If you look at the Midwest it’s okay, but I just think that we have so many problems locally in terms of a corruption tax. And now we have a situation where the whole state government is controlled by one party – I wouldn’t want that to be true even if it was the Republicans controlling the state. It’s not good for business.”
Miller is also concerned that the state’s unfunded pensions will ultimately bring an economic reckoning.
“I don’t know how you deal with the pension disaster that is looming. You can’t take them away, these people have been promised them their whole lives … but what do you do when you have a pension plan that is only 25-percent funded?”
Miller also believes higher taxes will make Illinois less competitive with surrounding states.
“It looks like we are going to move to a graduated income tax which I think will hurt. I’m not retired yet but I do know one thing about Illinois is that retirement income is not taxed and I know that is coming because that’s one place that is an untapped source of money. But I can assure you that were I to retire now and they were going to tax my retirement income then I would go to a state where they don’t tax retirement income,” Miller said. “That’s the kind of thing that hurts the economic vibrancy of an area. I think Illinois and the local Chicago economy is in trouble.”