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City Council Advances Mayor Lori Lightfoot's $12.8 Billion Budget Plan; Final Vote Set For Tuesday

CHICAGO (CBS) -- Mayor Lori Lightfoot's $12.8 billion spending plan for 2021 moved a step closer to passage on Monday, as the City Council set the stage for a final vote on the city budget on Tuesday, including a $94 million property tax hike.

After the mayor's property tax hike and revenue package advanced through the Finance Committee by a 21-12 vote on Wednesday, and her spending plan sailed through the Budget Committee on a 26-8 vote one day later, the full City Council has scheduled a final vote for Tuesday morning.

The mayor needs at least 26 votes to pass her budget plan, so it appears while the final vote might be very close, she likely has the support she needs.

Lightfoot has said she doesn't care about the margin of victory for her agenda, and isn't willing to horse trade for votes.

However, she made a number of concessions to get her budget plan through City Council, including cancelling plans for 350 layoffs by borrowing against future marijuana tax revenue, adding $10 million more in funds for violence prevention programs, expanded plans for a pilot program for a co-responder model for mental heath emergencies, and backed off plans to link the budget to a move to eliminate so-called "carve-outs" in the Welcoming City Ordinance.

Lightfoot was not scheduled to hold her standard post-council press briefing after Monday's procedural moves on the budget, but in a video posted on her social media accounts earlier in the day, she called the 2021 budget "the most challenging budget perhaps ever," due to the severe impact the pandemic has had on city finances.

"Putting together a budget is always like putting puzzle pieces together, but this year has been especially hard because of COVID-19's impact on core revenue streams for the city, particularly in our hospitality; hotels, tourism, restaurants," she said. "A lot of the revenue streams that are associated with people being downtown, all of those things have been significantly impacted because of COVID-19."

We are Chicagoans and we rise to the occasion.

We are Chicagoans and we rise to the occasion. Despite the challenges this pandemic budget presented, the 2021 Budget sticks to our values and doubles down on the investments that will improve the lives of Chicagoans. #Chi2021Budget

Posted by Chicago Mayor's Office on Monday, November 23, 2020

Lightfoot has said she faced no easy choices in how to eliminate a $1.2 billion budget shortfall, nearly two-thirds of it due to tax revenue lost because of the pandemic.

The mayor also defended her decision to propose a $94 million property tax hike to help balance the budget, which she had repeatedly said would be a last resort.

"We're in a last resort situation with this enormous budget deficit for 2021," she said.

Still, several community groups got together Monday morning for a virtual rally, fearing the proposed property tax hike will hurt those who can least afford it when landlords pass along the increase to their tenants.

"People were already struggling before the pandemic hit. I mean, people, especially in these gentrifying neighborhoods, they're having a hard time paying rent," said Gary Jimenez, a volunteer with the Logan Square neighborhood association. "I mean, they're having a really hard time paying these really high rents for really small apartments."

The mayor also faced significant pushback from many aldermen, especially from the Progressive Reform Caucus, for not considering a handful of budget amendments offered in an effort to eliminate or reduce the property tax hike.

Progressive aldermen had proposed a per-employee tax on large logistics companies like Amazon, Walmart, and Target; transferring $5.25 million out of the Chicago Police Department to pay for a pilot program for mental health professionals rather than police officers to respond to mental health emergency calls; forcing CPD to shut down its infamous Homan Square facility; shutting down a handful of special taxing districts early; and legalizing and regulating video gambling terminals in Chicago. However, all of those proposals were left to languish without a vote.

In addition to the $94 million property tax hike for next year, the mayor's budget plan includes annual property tax increases going forward tied to the consumer price index, although aldermen must approve those changes each year.

Her budget plan also includes a laundry list of new revenues from various increases or changes to existing taxes:

  • Increasing the city's gasoline tax from 5 cents per gallon to 8 cents per gallon, generating an estimated $10 million in revenue.
  • Raising the city's tax on cloud computing services from 7.25% to 9%, bringing in an additional $15 million in revenue.
  • Ending the practice of sending rideshare fees to subsidize the CTA, and keeping the $16 million in revenue within the city budget.
  • Eliminating a 50% tax credit offered to rideshare drivers to make trips to "underserved areas," which the mayor's budget team said does not actually create an incentive to provide those trips, and benefits only the companies themselves. The move will save the city $6 million.
  • Adding 750 more parking meters to bring in another $2 million in revenue.
  • Tying commercial refuse container fees to annual increases in the cost of living to create $270,000 in additional revenue.
  • Increasing harbor permit fees and fines for $15,000 in new revenue.

Lightfoot's budget plan also saves $106 million by eliminating 1,921 vacant positions, including 614 vacancies at the Chicago Police Department.

The budget plan also relies on saving $501 million next year by refinancing existing city debt by issuing $1.7 billion in general obligation and sales tax securitization bonds to take advantage of lower interest rates. In addition to the $501 million in savings for 2021, the refinancing plan is expected to generate $450 million in savings for 2020 and help close an $800 million budget gap for the current year.

Lightfoot also is declaring a $350 million in tax increment financing programs to help close the gap for 2021. The TIF surplus would provide $76 million for the city's corporate fund and $167 million for the Chicago Public Schools, but at the same time, Lightfoot is calling on CPS to reimburse the city for $40 million in school pension contributions the city typically makes for the district.

The city also will use $30 million dollars from the its rainy day fund to help balance the budget. Some aldermen had wanted to use more of the city's $900 million in available reserves, but the mayor's budget team said doing so would not be wise while the pandemic is still raging.

The full City Council will meet at 10 a.m. Tuesday for a final vote on the mayor's budget plan.

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