Politics
Chicago Should Hike Property Taxes Annually to Keep Pace With Inflation, Budget Task Force Recommends
(WTTW News)
The Chicago City Council should automatically hike property taxes annually to keep pace with inflation to help close a projected $1.15 billion gap in next year’s budget and keep the city solvent, according to the first report from a task force charged by Mayor Brandon Johnson with finding solutions to the city’s fiscal crisis.
Unless the city’s largest revenue source starts to keep pace with inflation over time, officials will have no choice but to cut city services or hike other taxes, according to the interim report from the Chicago Financial Future Task Force released Tuesday.
The report offers “89 preliminary options to improve operations, generate new revenue, and pursue strategic opportunities, all while preserving city services” that could add between $1 billion and $2.1 billion to the city’s bottom line.
“If decisive action is not taken now to resolve this deficit, the consequences for city services — and for Chicago’s overall civic health — could be profound,” according to the report.
The report’s recommendations include long-discussed proposals that have proven to be either impossible for city officials to implement or deeply unpopular with elected officials and voters, like property tax hikes.
Other options presented by the task force would only chip away at the city’s massive shortfall, making those recommendations of little use to City Council members who must close the budget gap by the end of the year.
Chicago Urban League President Karen Freeman-Wilson, co-chair of the task force, said now that the working group has issued its initial report, it would turn its attention to crafting long-term solutions to the city’s fiscal woes, caused by soaring pension costs, spiraling personnel costs and a massive amount of debt.
“We know that we did not get to this budget challenge in a day, and we know that even 60 days or 90 days of very, very hard work won’t get us out of this challenge. There has to be a long-term approach.”
In all, the report identifies between $372.4 million and $455 million in cuts. Tax hikes, new fees and fines could generate $630 million and $1.65 billion in new revenue, according to the report.
Loop Capital CEO Jim Reynolds, the co-chair of the task force, told reporters during an online news conference that all of the city’s fines and fees should automatically rise annually to keep pace with the national consumer price index, which will help city officials “avoid hard decisions.”
Increasing the city’s property tax to keep pace with inflation would generate $56 million in 2026, according to the task force’s report.
That recommendation from the 24-member task force, made up of representatives of Chicago’s business, labor, nonprofit and academic organizations, was not unanimous. Any additional increase in Chicago’s property tax would decimate the city’s real estate sector, according to the dissent included in the report.
Johnson said in July he would not propose a property tax hike to help balance the city’s 2026 budget.
Johnson’s initial 2025 budget proposal, which included a $300 million property tax hike, was unanimously rejected by the City Council. The final package hiked a host of other taxes and fees, but not property taxes, to generate an additional $165.5 million, records show.
Chicagoans’ property taxes last jumped in 2021, when former Mayor Lori Lightfoot raised property taxes by $93.9 million and passed a budget that automatically hiked property taxes to keep pace with inflation.
Johnson campaigned against those automatic property tax increases, forcing Lightfoot to drop a proposal to hike taxes by $42.7 million in 2023, just months before she lost her bid for reelection.
Johnson’s first budget included no property tax hikes, even as the city’s expenses continued to outpace its revenues.
Nearly a year ago, Chief Financial Officer Jill Jaworski said the $300 million property tax hike would be equivalent to the increases Chicago property owners would have paid had their bills kept pace with inflation between 2019 and 2025, a period that included record-breaking increases in the cost of living as measured by the consumer price index.
It is unclear whether the City Council will approve a property tax increase of any amount to balance the 2026 budget.
The report also urges the City Council to hike the city’s garbage tax, which has not risen since it was imposed in 2016, and does not cover the cost of hauling away the city’s refuse.
“Given the serious fiscal situation facing the city, it can no longer afford to subsidize garbage collection,” according to the report.
While Chicago homeowners pay $9.50 per month, it costs the city $37.50 per month to haul away each home’s garbage, according to the report, which proposes a discount for seniors.
Like a property tax increase, it is unclear whether the City Council would approve any increase to the garbage tax, which would hit the poorest homeowners the hardest.
Johnson was elected in 2023 on a campaign platform that vowed to levy $800 million in new taxes on the wealthiest Chicagoans to fund new investments designed to benefit working-class Chicagoans, particularly on the West and South sides.
During the campaign, Johnson vowed to impose a $4 per employee tax on large companies. The mayor did not include that proposal in either his 2024 or 2025 proposed budgets.
That head tax, in place for four decades, was eliminated in 2011 by former Mayor Rahm Emanuel, who said lifting it helped spur millions of dollars of economic activity in the city and prompted dozens of companies to relocate to Chicago.
Reimposing that $4 per employee head tax could generate between $10.2 million and $25.6 million annually, according to the report.
The report also urges the city to impose a $0.50 tax on all wagers placed via online betting in the city, to generate $17 million revenue every year.
The City Council has the power to impose those taxes without a change in state law.
Most other revenue-generating proposals, like imposing a sales tax on services, not just goods, would require a change in state law. The report urges city officials to press state officials to allow them to impose that tax, which could generate $300 million annually.
Although the Chicago Police Department accounts for nearly 46% of Chicago’s discretionary spending, the report does not recommend making significant cuts to its budget, which totaled nearly $2 billion in 2026.
However, the report does recommend eliminating any sworn position that has been vacant for more than two years. In addition, employees of the city’s Department of Finance should be charged with enforcing the city’s parking rules while Chicago Department of Public Health employees respond to calls for help from Chicagoans experiencing mental health crises.
That could reduce CPD’s reliance on overtime, which cost taxpayers $273.8 million in 2024.
In addition, the City Council should consider imposing a one- or two-day furlough on non-union employees and negotiate with labor unions to impose one or two unpaid days on their employees, according to the report. That could save the city $18.8 million, according to the report.
The city should also maintain the current hiring freeze for all of 2026 and limit overtime as much as possible, according to the report.
Employees should also pay more for their health care coverage, in order to save as much as $52.2 million, according to the report. That recommendation was not unanimous, and must be negotiated with employee unions.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
