Chicago's 2.5% ($42.7 million) hike in property taxes for 2023 could have been higher

Mayor Lightfoot released Chicago's 2023 budget with a shortfall of $127.9 million and a property tax increase.

Photo by Scott Graham on Unsplash

(CHICAGO) Property taxes may be rising next year, but it could have been worse. Thanks to Mayor Lightfoot's automatic escalator model, property taxes could have risen by 5% or the inflation rate, whichever is the lowest.

With inflation reaching crazy levels (8.8% in July for the Chicago metro area,) the 5% hike would have kicked in. However, Lightfoot revealed the new budget cuts the 5% rate in half, to 2.5%.

Although, any tax hike is bad news for residents struggling to make ends meet with higher inflation.

Reduced budget gap

Additionally, the 2023 budget looks to reduce the budget gap by $127.9 million, an improvement from the last two years from the $733 million deficit in 2021 and the $1.2 billion deficit in 2020.

“The $128 million budget gap is the result of our dedication to remaining good financial stewards and not shying away from making tough choices. As a result, the City has reached major financial, economic, and social milestones during our COVID-19 challenge and our journey toward structural balance,” said Chicago Mayor Lori E. Lightfoot in a press statement. “Last year, in our 2022 Budget, we closed a $733 million shortfall without any new taxes, no reduction in City services, and no layoffs. As a result of our hard work, Chicago is now on a true path to financial recovery and financial stability.”

Chicago's overall tax levy is $1.6 billion. The 2.5% increase will amount to $42.7 million and will be put towards pension payments.

According to Illinois Policy, it's Chicago's pension fund debt that was driving up property taxes even before hardships from the pandemic hit. Illinois Policy says that Chicago has more pension debt than 45 U.S. states.

How much higher for the average homeowner?

Lightfoot put the property tax rise in terms of an Italian beef dinner for your family. "A homeowner with a house value at, say, $250,000 will pay an additional $34 a year, and to put that in terms that I can understand, that's about the price of an Al's Italian beef, hot, dipped, with extra cheese, for a family of four," Lightfoot said.

Although, according to Zillow, the average home value in Chicago is higher than $250,000 at $320,442.

The 2023 budget is not a done deal

The mayor's budget will need to head to negotiations with City Council members before formal budget hearings this fall.

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