Now that all the election smoke has cleared out of Chicago’s political back rooms, it is time to start considering how the city is going to pay its $28-billion in pension debt.
And which mayoral candidate is going to be the savior for property owners who are facing the largest real estate tax increases in the history of the Windy City?
In 2018, the entire City of Chicago was reassessed and a spot survey by The Home Front column found assessment increases of 40% to 112% on a group of small North Side and Northwest Side “Ma and Pa” apartment buildings. Last week, 79% of Chicago referendum voters said they want a tax break for homeowners.
Most North Side apartment renters should expect hefty double-digit rent increases next year when landlords are hit with sharply higher second installment of the 2018 tax bill when it comes due in August of 2019, experts say.
Mayor Rahm Emanuel says the city needs to raise hundreds of millions in new revenue to pay for pension shortfalls for teachers, police and firefighters.
The Illinois Policy Institute reports that statewide pensions account for 45 cents of every extra dollar levied by school districts and local government between 1996 and 2016.
Green Street Advisors, a real estate research firm, has given Chicago the worst “fiscal health” score among top U.S. metropolitan areas because of its hefty pension debt.
The report noted that steep real estate tax increases lead to outmigration and even higher taxes—a “death spiral” for investors.
Although Chicago and Illinois already have hiked property and income taxes to cover budget shortfalls, Green Street warns that investors should brace for more hikes now that Democrat J.B. Pritzker beat incumbent Gov. Bruce Rauner in the recent election.
It’s time Chicago and Illinois face the inevitable catastrophic fiscal failure and think outside the box to raise the billions of dollars needed to balance the budget before property owners are driven out of town.
In a mid-August Home Front column this writer suggested several possible progressive solutions to the pension and real estate tax crisis in Chicago and Illinois, including the following:
• Casino cash. We need to build a world-class, Monte Carlo-style gambling casino in Chicago as a tourist attraction and tax it heavily. Many suburban gas stations, bars and golf club houses now have gambling machines in them. And, the casinos are everywhere but in Chicago. Why?
• Power of pot. We need to legalize marijuana for personal use both in Illinois and Chicago, grow it in greenhouses on vacant city lots, and tax it heavily. Let’s transform all the vacant storefronts in Chicago into licensed retail pot shops and affordable housing for the homeless.
Legalizing and taxing marijuana could have both an economic and anti-crime benefit. It could create jobs and lessen drug turf wars and street killing on the South Side and West Side.
Gery Chico, a surprisingly intuitive mayoral candidate, backs both the long-pursued casino, and legalized marijuana as a way to address the nearly $1-billion in additional annual payments needed to bail out the underfunded public employee pensions. He estimated that the casino could generate as much as $300 million in city tax revenue a year, while legalized marijuana could reap a $350 million to $700 million tax benefit for the city and state.
Chico, a 62-year-old attorney who has been a City Hall lobbyist, president of the Chicago Board of Education, head of the Chicago Park District, chairman of the City Colleges of Chicago, and chairman of the Illinois State Board t Education, says the “city’s financial crisis” needs to be tackled “head-on.”
Chico ran for mayor in 2011 and lost to Rahm Emanual. He also lost the Democratic nomination for the U.S. Senate in 2004, a race won by then state Senator Barack Obama.
To reduce crime, Chico said he would emphasize community policing, and called the proposed federal consent decree on police reform a “crucial step” in improving the Chicago Police Department.
Chico also favors clemency and expunging records of those previously convicted of marijuana possession once the state of Illinois also legalizes the drug.
Newly elected Gov. J.B. Pritzker also favors legalizing marijuana for recreational use. And, 88% of Chicago referendum voters last week said profits from marijuana sales should be earmarked for school funding and mental health.
Chico also said he will prioritize neighborhood economic development, while “obsessively” pursuing new corporate headquarters downtown.
Mayoral candidate Paul Vallas, an advocate of neighborhood development especially on the long-forgotten South and West sides, says he would redirect $1-billion of Tax Increment Financing money to minority neighborhoods and away from downtown.
Vallas this TIF money would generate $10 billion in new investment on the forgotten sides of town, and help solve the affordable housing crisis.
In the mid-August Home Front column, this writer made the following other progressive suggestions:
• Illegal weapons Crackdown. The city needs to stop the flow of illegal guns from Indiana to Chicago gangs. Chicago cops already have a computerized system of tracing gun activity in “hot” neighborhoods. What about National Guard checkpoints and searches for illegal guns at key intersections on the South Side and West Side? Last week, 90% of Cook County referendum voters said they favor state certification of gun dealers.
• Red-light District tax. Chicago should zone and legalize prostitution like Nevada and Amsterdam, license it and tax both the service providers and the receivers. Heaven knows there are enough hotel rooms and Airbnb apartments in town that could provide space for this kind of taxable action.
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.