|Wednesday, August 10, 2016
From the President’s Desk: The Tipping Point for Business – It All Adds Up
Chicago’s record high property tax bills hit mailboxes August 1 with a 13 percent average increase for homeowners. Some bills are much, much higher due to the double impact of the new property tax increase with the triennial property reassessment, which resulted in Chicago’s biggest jump in property values since the Great Recession.
Chicago businesses – many as business property owners anchoring their Chicago neighborhoods – are taking a disproportionate hit with the new property tax increase because Cook County’s archaic and unfair classification system assesses commercial and industrial properties at 2.5 times their residential counterparts. This makes the increased property tax on businesses even more challenging. Neighborhood-based businesses are particularly vulnerable.
As it turns out, this property tax increase is just the beginning. At $588 million, it is the largest property tax increase in Chicago’s history and will phase in over four years. It is dedicated to pension fund payments for policemen and firefighters, and for school construction.
Later this month, the Chicago Board of Education will vote to increase property taxes by $250 million to pay directly into the Chicago Teacher’s Pension Fund with a dedicated tax levy. This increase is part of a package of school funding passed with the state six-month stop gap budget.
Last week, Mayor Emanuel announced new water and sewer fees totaling $239 million by 2020 and 2021 to pay for the municipal employees’ pension. New and dedicated revenues to properly fund the City’s long-standing and neglected pension obligations are the only real option remaining in the City’s arsenal to fix its fiscal challenges built up over decades. But there is a tipping point for Chicago businesses – and we may be quickly reaching it.
The Chamber recognizes that viable, long-term fiscal solutions for the City will include cuts, new revenues, and economic reforms. But we are alarmed by the compounding effect of the multitude of new regulations in addition to new taxes and fees Chicago businesses now face, including: Chicago-only minimum wage and paid sick leave ordinances; the re-increased Cook County sales tax, a plastic bag ban, and an increased County hotel tax – all of which our government affairs team opposed and fought hard to stop or to minimize the impact. And it doesn’t look to be over as the City ($138 million) and County ($174 million) each project budget gaps for fiscal year 2017 that may again require new taxes and fees.
The cumulative impact of higher taxes and new regulations, rolled out one-after-another over a 2-year period of time, disrupts business growth and job creation. We are at the point when business owners are questioning if they can afford to start and operate a business in Chicago. Neighborhood-based business owners are the backbone of Chicagoland’s economic engine. We are asking too much of them to absorb these cumulative costs.
Now more than ever, the Chamber will question tax and regulatory proposals at the city, county and state level while forcefully advocating for smart, pro-business policies that encourage economic growth and new jobs. The business community has always been a partner in ensuring Chicago remains a world-class city, but cannot be asked to shoulder costly mandates, while simultaneously being asked to pay a disproportionate share of the property tax burden. We are at a tipping point.
Theresa E. Mintle
President & CEO
Chicagoland Chamber of Commerce