Welcome to 2017—Year of the “Rahm-Father Taxman” in Chicago. The New Year’s heavy tax burden is already is upon us.
Chicago property owners will need to dig deeper into their frayed and near empty pockets to help pay Mayor Rahm Emanuel’s $8.2 billion city budget.
Home, condominium, small apartment building owners and renters will feel a squeeze on their already thin wallets from rising real estate taxes, and a new 7.7% surcharge on the recently hiked utility tax on water, sewer and garbage collection.
Chicagoans will be hit with a potpourri of other taxes including higher parking meter fees (boosted to $4 an hour from $2 near Wrigley Field), a new Cook County tax on sweetened beverages ($1.44 more for a 12-pack of Diet Coke), a 3.5 percent amusement tax on the full value of sporting-event tickets, and a new seven-cent tax on paper and plastic grocery bags.
One wonders if there soon will be a tax on the air we breathe in order to help pay the pension funds for city municipal workers, police and firefighters.
But don’t inhale too deeply because the stench of airplane fuel is in the air on the Northwest Side from those low-flying jets landing at the new East-West runways at O’Hare Airport.
Experts say the total property tax increase in 2017 for the city and Chicago Public Schools will total $376 million. That’s in addition to the $427 million tax bite for the city and schools in 2016.
In 2017, it will cost the owner of a $250,000 home an extra $348 per year in real estate taxes. Add the estimated $53 increase for new water, sewer and garbage taxes, and the typical homeowner will pay about $400 more in 2017.
On the city’s North Side, where many homes are valued at more than $500,000, that translates into an annual tax increase of more than $750 per homeowner.
The average Chicago family will pay nearly $1,700 more to the city and the schools than they did before Mayor Emanuel took office in 2011, reported the Chicago Tribune. This includes a series of property tax hikes, water and sewer rate increases, new garbage hauling fees, a 911 phone tax, vehicle-sticker fee increases, plus a tax on cable television.
In 2016, Chicago homeowners’ real estate tax bills rose an average of 12.8% as a result the 2015 tax hikes. However, tax-bill increases ranged from 25% to 50% or more on the wealthy Gold Coast, and in River North, Old Town, Lincoln Park, and “hot” neighborhoods such as Wicker Park, Bucktown and Logan Square.
For example, the owner of a brick Victorian 3-flat in the Old Town Historic District was slapped with a 2015 real estate tax bill of $24,849, up 42% from $17,488 in 2014.
After tax appeal, the owner won a 12.9 percent assessment reduction that reduced the tax bill to $21,645, resulting in a final tax increase of 23.8% for 2015.
Unfortunately, the tax-shocked owner also is anticipating a tax increase of at least $1,700 when the second installment of the 2016 tax bill arrives in late July of 2017.
In 2001, the tax bill on his Old Town 3-flat was $12,091, so the owner’s taxes have skyrocketed a shocking 79% in 15 years.
As if the real estate tax bite for schools and pensions is not enough, property owners already are burdened with a new $239 million utility tax on water and sewer bills starting with a 7.7% tax in 2017.
The proposed utility tax would jump to 14% in 2018, and rise to 21% in 2019. The tax surcharge would top out at 28% in 2020-2021. Chicago’s 66,000 senior citizens who live in single-family homes are exempt from the new tax.
With an annual use of 7,500 gallons of water, the average Chicago household currently pays $686 a year for water and sewer services. The new utility tax is expected to cost the typical homeowner $4.43 more a month, or $53.16 a year in 2017. In the fourth and fifth years, the added tax burden is expected to grow to about $226 a year.
In spring of 2016, Mayor Emanuel also launched the city’s new “garbage fees” program. Single-family homeowners now pay a garbage fee of $19 every other month, or a total of $114 a year. Small rental apartment owners also pay $19 every other month for each unit in their buildings.
So, the garbage fee for the owner of a 3-flat is $57 every other month, or $9.50 per dwelling unit. The 3-flat owner is billed a total of $342 per year for garbage pickup.
Refuse fees are now included in the city’s first unified utility bill, which reflects two months of water, sewer and garbage charges. With the new 7.7% utility tax in 2017, the owner of a 3-flat will pay an additional $26 every other month just for garbage pickup, or $158 more for the year.
All these tax increases assume the rate of inflation stays the same and there are no more budget surprises to be sprung on bewildered and battered Chicagoans.
Starting on June 1, 2017, annual water rates can be adjusted upwards, based on the previous year’s rate of inflation. However, any such annual increase in the water rate is capped at 105% of the previous year’s rate.
The Chicago property-tax wallop comes at a time when Illinois already is posting the highest median property tax rate in the nation, not to mention the highest sale-tax rate in America.
Maybe that’s why Illinois’ population is shrinking faster than any other state in America. Illinois lost 37,508 residents between July 1, 2015 and July 1, 2016, the U.S. Census Bureau reported. And, a whopping 114,000 Illinois residents fled to other states since 2010.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.