City of Chicago

Chicago Property Taxes Hiked As School Budget Passed

There are so many new and increased fees, fines, and taxes being proposed and implemented around the Chicagoland area these days, it’s hard to keep track of all of them. But here’s one Chicago tax hike that’s just been approved that’s making local headlines. Juan Perez, Jr., reported on the Chicago Tribune website last night:

Mayor Rahm Emanuel’s school board on Wednesday unanimously approved a budget that relies heavily on borrowed money and the hope of a nearly $500 million bailout from a stalemated Springfield, with the specter of disruptive cuts in January if that help fails to materialize.

The $5.7 billion spending plan contains another property tax hike — an estimated $19-a-year increase for the owner of a $250,000 home — as well as teacher and staff layoffs. The Chicago Board of Education also prepared to go to Wall Street to issue $1 billion in bonds and agreed to spend $475,000 so an accounting firm can monitor a cash flow problem so acute that Chicago Public Schools mulled skipping a massive teacher pension payment at the end of June…

(Editor’s note: Bold added for emphasis)

My old neighbors on the city’s Northwest Side, in their single family homes that are selling just south of the $350K-mark on average these days, probably aren’t too thrilled to hear about this latest tax hike.

Oh, but it gets “better.” Perez added:

To help patch over a budget gap the district said exceeds $1.1 billion, CPS raised its property taxes to the maximum amount allowed under state law. But CPS may not be done — [Chicago Public Schools chief Forrest] Claypool has floated the idea of restoring a property tax levy dedicated to teacher pensions that would generate an estimated $170 million

(Editor’s note: Bold added for emphasis)

Keep in mind this is just the school’s portion of the Chicago property owner’s tax bill we’re talking about here.

Once again, a couple of bucks here, a couple of bucks there, and all these new and increased fees, fines, and taxes from various levels of government will have Chicago taxpayers going bonkers soon enough.

And Illinois taxpayers- note that bit about:

The hope of a nearly $500 million bailout from a stalemated Springfield…

You too could be on the hook for this debacle.

Head on over to the Chicago Tribune website here to get the full story on this latest tax hike.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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My Thoughts On Chicago’s Financial Crisis

I know I’ve been blogging a lot about Chicago/Cook County/Illinois lately. Which should come as no surprise to regular Survival And Prosperity readers considering I’ve talked about how I was born on the West Side, was raised around that area, and lived on the Northwest Side until I moved to the northwest suburbs two years ago.

Both the Chicagoland area and Illinois have been on my mind a lot recently. I fear we’re on the verge of some major upheaval stemming from decades of fiscal mismanagement by policymakers from both sides of the political aisle (some might think this blog only targets Democrats- over the years I’ve demonstrated everyone’s “fair game”). And by verge, I mean in the coming weeks. Focusing on Chicago today, what might kick it off (regular observers have witnessed the crisis growing for some time now)? I suspect the following. From the Chicago Tribune website back on July 31:

At a news conference this week, the mayor would not rule out a politically unpopular property tax hike, saying he’ll wait to show his hand until September, when he rolls out “a full budget with all parts in there.”

(Editor’s note: Bold added for emphasis)

A good portion of the coming pain is going to be felt by the Chicago taxpayer. What kind of “pain” am I talking about? That which I’ve been blogging about for a couple of years now- new/higher fees, fines, and taxes, coupled with reduced government services. Last night’s post about potential revenue generators Chicago Mayor Rahm Emanuel and the City Council are mulling over (hat tip Fran Spielman of the Chicago Sun-Times) should give Chicagoans a better picture of what’s headed their way (a property tax hike and garbage collection fee look likely). Concerning cutbacks in government services, I think that’s already begun. For example, the manpower shortage in the Chicago Police Department (hat tip Second City Cop) that’s existed for some years now. Down the road, I predict the average Chicago taxpayer will find it increasingly difficult to afford living in the city, let alone doing it safely as local government struggles to provide effective, efficient services to constituents.

Now, it’s bad enough Chicago/Cook County/Illinois are in real financial trouble. But then there’s the legitimate concern of a slowing economy/recession being right around the corner, never mind that coming financial crash I started blogging about back on Memorial Day Weekend 2007.

So what’s a Chicago taxpayer to do? This former Chicago resident picked up and left the city limits in 2013. Concerned about future tax and public safety liabilities, my girlfriend and I reluctantly departed our “suburb in the city” and moved into a house in a not-too-far away authentic suburb. Granted, we’ll still be on the hook for county and state problems, but it’s what makes sense for us in the short-term.

As much as I blast Chicago on Survival And Prosperity (“tough love”), I’m not convinced the city’s going to go “belly-up.” I think there’s a good chance it could be run by something similar to the Emergency Financial Control Board in New York City from 1975 until 1986 (talked about here back in April), but even a setback like that won’t be the end of the “City By The Lake,” just like it wasn’t for the “Big Apple.” I do predict city life is going to get real hairy once the “balloon goes up,” but I think that will be the case in a lot of urban areas nationwide.

That’s my two cents on Chicago’s financial crisis- for now. Chicago readers of this blog- what are you planning to do about the crisis? Or, what are you already doing? Maybe you don’t think a crisis exists? Please share your thoughts or experiences in the “Comments” section of this post, as I’d really like to talk more about this going forward.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Source:

Dardick, Hal. “Emanuel needs $754M more to make ends meet.” Chicago Tribune. 31 July 2015. (http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-chicago-budget-shortfall-met-0801-20150731-story.html). 21 Aug. 2015.

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Chicago Taxpayers To Be Hit With Property Tax Hike, Garbage Collection Fee?

Chicagoans- think all the recent talk of new/higher fees, fines, and taxes is garbage?

You’re right, in a way.

I just finished reading some material from Chicago Sun-Times City Hall reporter Fran Spielman over on that paper’s website.

Chicago taxpayers had better be prepared for their pocketbooks to take a hit in the coming months.

Spielman talked Sunday afternoon about the City’s need for $754 million in new revenue, and the options submitted by City Council to Mayor Rahm Emanuel to help “generate” it. That included:

• Property tax hike
• Garbage collection fee
• Ride-hailing companies (Uber) surcharge
• Congestion fee
• Bicycle license
• Gas tax hike
• Sales tax hike
• City income tax

Which ones stand a good chance of being put into play by City Hall? Spielman wrote:

Ald. Carrie Austin, outspoken chairman of the City Council’s Budget Committee, put Emanuel on the spot during the mayoral campaign when she called a post-election property tax hike inevitable. But she was right — especially now that a Circuit Court judge has overturned Emanuel’s plan to save two of four city employee pension funds.

The only question is, how much will property taxes be going up?

Emanuel has already offered to raise property taxes by $225 million for the Chicago Public Schools, provided teachers accept the equivalent of a 7 percent pay cut and the state reimburses CPS for “normal” pension costs…

(Editor’s note: Bold added for emphasis)

In a separate Sun-Times piece from last night, Spielman added:

Ald. Pat O’Connor (40th), Emanuel’s City Council floor leader, said it’s no longer an issue of whether Chicago will have a garbage-collection fee. The question is, how much?

“That’s where the real discussion will take place. It will be around the cost, rather than the enablement. We need to see the numbers that show how much we’ll save and how much it would generate,” he said…

(Editor’s note: Bold added for emphasis)

Property tax hike. Check. Garbage collection fee. Check.

Waiting to see what actually transpires. In the mean time, Chicago taxpayers might want to check out those Spielman articles to get a better idea of what might be in store for them shortly.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Property tax hike, garbage fee, congestion tax all on the table.” Chicago Sun-Times. 16 Aug. 2015. (http://chicago.suntimes.com/news/7/71/876236/chicago-budget-revenue-tax-ideas). 20 Aug. 2015.

Spielman, Fran. “Chicago homeowners likely to pay for garbage pickup soon.” Chicago Sun-Times. 19 Aug. 2015. (http://chicago.suntimes.com/news/7/71/891070/garbage-collection-fee-looks-likely-chicago-homeowners). 20 Aug. 2015.

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Chicago Requires $754 Million In New Revenue, Cuts To Balance Books

For a couple of years now, regular readers of Survival And Prosperity have witnessed me blog about higher fees/fines/taxes and reduced government services as Chicago’s financial reckoning day draws closer.

I fear the pace of all this is about to pick up.

Hal Dardick reported on the Chicago Tribune website late Friday afternoon:

Mayor Rahm Emanuel must come up with at least $754 million in new revenue and budget cuts to balance the city’s books, according to preliminary 2016 budget estimates the administration released Friday.

A little less than half — $328 million — would cover increased payments to the police and fire pension funds that Emanuel and aldermen did not account for in this year’s budget. That number could be even higher if the mayor doesn’t get the pension relief he’s seeking from Springfield.

In addition, City Hall must figure out how to close a projected $426 million hole in next year’s budget, an annual financial analysis showed. The shortfall comes as Emanuel has been borrowing at high interest rates to keep the city afloat.

Unlike previous years, Emanuel is not taking a property tax increase off the table. At a news conference this week, the mayor would not rule out a politically unpopular property tax hike, saying he’ll wait to show his hand until September, when he rolls out “a full budget with all parts in there.”

(Editor’s note: Bold added for emphasis)

Chicago property owners are probably hoping for an endless summer- considering what could be in store for them next month.

A significant property tax hike in and of itself might not be enough to make Chicagoans think about moving out of the city. However, sustained pressure on household finances from all applicable fees, fines, and taxes could do it, particularly if government services (public safety comes to mind here) steadily erode.

You can read the entire piece on the Tribune website here (registration required).

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Crain’s Chicago Business: Pension Reform Ruling Could Cost Taxpayers Extra $200 Million A Year Through End Of Decade

In my Sunday post about Chicago’s pension reform legislation being ruled unconstitutional, I blogged:

Chicagoans- let that last line from Dardick and Pearson sink in real good:

“Taxpayers could eventually be on the hook for hundreds of millions of dollars more in annual payments to those city funds — before the even worse-funded police and fire retirement accounts are factored into the taxing equation…”

How many hundreds of millions are we talking about here?

Greg Hinz wrote in his blog on the Crain’s Chicago Business website Monday:

The court decision throwing out a deal to refinance two Chicago pension funds appears to be among the most costly in the city’s history, in some ways ranking right up there with the Great Chicago Fire.

Exact figures are not available and vary some depending on who’s doing the estimating. But based on statements by city officials and documents filed by the pension funds themselves, it’s likely that the decision by Cook County Circuit Court Judge Rita Novak will cost city taxpayers around $200 million a year through the end of the decade—and will keep rising for decades thereafter.

“You’d have to go back to either the Depression or the Great Fire to find a comparable situation in which the city faced either greater challenges or more painful decisions,” Civic Federation President Laurence Msall said. “It’s clearly going to result in increased taxes and reduced services.”

(Editor’s note: Bold added for emphasis)

Remember, that additional $200 million hit to Chicago taxpayers would come on top of addressing fire and police pensions. And bailing out the Chicago Public Schools, which had its credit rating reduced to junk status today by Fitch Ratings. In May, I noted Moody’s downgraded the Chicago Board of Education (the primary debt issuers of CPS) three notches to junk.

You can read Hinz’s entire blog post on the Crain’s Chicago Business website here. If I were still a Chicago resident, I’d probably find it disturbing. But at least I’d be clued in as to what could be coming down the line.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Judge Rules Chicago’s Pension Reform Legislation Unconstitutional

Here’s the latest on Chicago’s public pension crisis. Hal Dardick and Rick Pearson reported on the Chicago Tribune website last night:

Mayor Rahm Emanuel’s administration said it will appeal a Cook County judge’s decision Friday that ruled unconstitutional a state law reducing municipal worker pension benefits in exchange for a city guarantee to fix their underfunded retirement systems.

The 35-page ruling by Judge Rita Novak, slapping down the city’s arguments point by point, could have wide-ranging effects if upheld by the Illinois Supreme Court. Her decision appeared to also discredit efforts at the state and Cook County levels to try to curb pension benefits to rein in growing costs that threaten funding for government services.

The issue of underfunded pensions, and how to restore their financial health, is crucial for the city and its taxpayers. The city workers and laborers funds at issue in Friday’s ruling are more than $8 billion short of what’s needed to meet obligations — and are at risk of going broke within 13 years — after many years of low investment returns fueled by recession and inadequate funding.

Without reducing benefits paid to retired workers, or requiring current workers to pay more, taxpayers could eventually be on the hook for hundreds of millions of dollars more in annual payments to those city funds — before the even worse-funded police and fire retirement accounts are factored into the taxing equation

(Editor’s note: Bold added for emphasis)

Chicagoans- let that last line from Dardick and Pearson sink in real good:

“Taxpayers could eventually be on the hook for hundreds of millions of dollars more in annual payments to those city funds — before the even worse-funded police and fire retirement accounts are factored into the taxing equation…”

And the City’s response to the ruling? Mayor Emanuel’s Press Office countered Friday:

Statement of City of Chicago Corporation Counsel Stephen Patton on SB1922

“While we are disappointed by the trial court’s ruling, we have always recognized that this matter will ultimately be resolved by the Illinois Supreme Court. We now look forward to having our arguments heard there. We continue to strongly believe that the City’s pension reform legislation, unlike the State legislation held unconstitutional this past spring, does not diminish or impair pension benefits, but rather preserves and protects them. This law not only rescues the municipal and laborer pension funds from certain insolvency, but ensures that, over time, they will be fully funded and the 61,000 affected City workers and retirees will receive the pensions they were promised.”

As to the City of Chicago’s credit rating possibly getting whacked after the decision? Timothy W. Martin reported on The Wall Street Journal website Friday afternoon:

Moody’s said Friday’s ruling had no effect on Chicago’s bond grade. But rival Standard & Poor’s Ratings Services, which currently has an investment-grade rating for the city, said that “regardless of the ultimate outcome” of Mr. Emanuel’s pension law, it “will likely lower” its Chicago rating in the next six months, unless city leaders chart out a solution to address its pension problems.

(Editor’s note: Bold added for emphasis)

Like I’ve been saying for a couple years now, that proverbial brick wall keeps approaching for Chicago.

Since City Hall can’t get its affairs in order, Chicagoans might want to look at straightening out theirs if they intend to stick around for the long haul.

Sources:

Dardick, Hal and Pearson, Rick. “Judge finds city’s changes to pension funds unconstitutional.” Chicago Tribune. 24 July 2015. (http://www.chicagotribune.com/news/local/politics/ct-chicago-pension-ruling-met-20150724-story.html). 25 July 2015.

Martin, Timothy W. “Chicago’s Pension Overhaul Plan Tossed Out by Judge.” The Wall Street Journal. 24 July 2015. (http://www.wsj.com/articles/judge-rules-2014-law-to-reduce-chicago-pension-shortfall-unconstitutional-1437754525). 25 July 2015.

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Crain’s Chicago Business: City’s Rising Fees, Fines, And Taxes Look To Continue

Chicago readers of Survival And Prosperity might want to read two articles that recently appeared on the Crain’s Chicago Business website concerning rising fees, fines, and taxes in the city. In a piece entitled “Chicago’s expanding appetite for new taxes,” Thomas A. Corfman wrote Saturday:

While Mayor Rahm Emanuel has held the line on property taxes, revenue from other local taxes has climbed nearly 20 percent since he took office.

A strengthening economy explains much of the surge. But Emanuel has fueled the growth by raising taxes on things such as cable TV and parking…

Keep in mind that “line on property taxes” may soon be breached. Significantly. Corfman added:

While property tax revenue has fluctuated slightly since 2011 after accounting for new construction, that’s likely to end soon. The badly undercapitalized police and firefighter pension funds are supposed to receive a state-mandated $550 million payment next year. Property taxes will likely account for the bulk of the increase, says Ald. Roderick Sawyer of the South Side’s 6th Ward

(Editor’s note: Bold added for emphasis)

This comes on the heels of another Corfman article entitled, “How much could Chicago pension payments jack up your property bill? Try 30%”. He wrote on July 4:

Even as Mayor Rahm Emanuel warns about a property tax hike of up to $250 million for the cash-strapped Chicago Public Schools, another big wave of increases likely is coming to rescue the pensions of police officers and firefighters.

A massive payment due to those retirement plans next year could drive up Chicago property taxes by more than 30 percent, according to a Crain’s analysis. And if the current logjam in Springfield continues, it could be a lot worse

(Editor’s note: Bold added for emphasis)

As I wouldn’t steal Crain’s thunder, you can read Corfman’s July 18 article here and his July 4 piece here.

And as always, my intention is not to scare Chicago residents/businesses by blogging about such material. Rather, as a former Chicagoan this is something I feel my former neighbors should be made aware of, especially if they plan on staying in the “Windy City.”

Got to figure out some way to keep ahead of those rising fees, fines, and taxes and eroding public services.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Latest On Chicago’s ‘Routine Military Training Exercise’ Over The Next Week

This Monday, I blogged about Chicago hosting a “routine military training exercise” over the next two weeks.

Here’s the latest on the event, per the City of Chicago Office of Emergency Management and Communications website earlier today:

The City of Chicago is providing continued support for a routine military training exercise in and around the Chicagoland area over the next week. This routine training is conducted by military personnel in cities across the country, designed to ensure the military’s ability to operate in urban environments overseas, as service members meet mandatory training certification requirements and prepare for upcoming deployments worldwide.

As part of this training, residents can expect to see increased aircraft activity, including helicopter flights. All training activities have been pre-coordinated with federal, state and city officials, and these locations have been carefully selected to minimize the impact on the daily routine of residents.

The training is not open to the public and the sites will be secured to ensure the safety of residents and the participants.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Thursday, July 16th, 2015 Government, Military, Training No Comments

Chicago Hosting ‘Routine Military Training Exercise’ Over Next 2 Weeks

As posted on the City of Chicago Office of Emergency Management and Communications website before the weekend:

The City of Chicago is providing support for a routine military training exercise in and around the Chicagoland area over the next two weeks. This routine training is conducted by military personnel in cities across the country, designed to ensure the military’s ability to operate in urban environments overseas, as service members meet mandatory training certification requirements and prepare for upcoming deployments worldwide.

All training activities have been pre-coordinated with federal, state and city officials, and these locations have been carefully selected to minimize the impact on the daily routine of residents.

The training is not open to the public and the sites will be secured to ensure the safety of residents and the participants.”

The Chicago area is no stranger to these “routine military training exercises.” I’ve blogged about such events in 2012 (April) and twice in 2013 (April and July).


“Military helicopters flying low over Chicago River”
YouTube Video

I wrote back on April 16, 2012:

Now, I’ve heard the U.S. military has been busy developing its urban warfare training program for some time already. Spencer Ackerman wrote in the Wired.com blog Danger Room back on January 18, 2011:

American soldiers spent seven years patrolling the urban neighborhoods of Iraq; its troops battled insurgents there block-by-block and house-by-house. Now that the Army is getting out of Iraq, it wants to make sure its urban combat skills don’t wither away. So it today it gave Lockheed Martin a contract worth up to $287 million to build Urban Operations Training Systems — essentially, giant simulation facilities and modules to help soldiers get ready for life in the big, bad city.

Versions of those training systems can be as simple as shipping containers tricked out to resemble multi-story houses and arranged in village formations, so soldiers can practice how to seize a building without causing needless damage. The Army’s got an entire 1000-acre facility in Indiana it uses to train soldiers in urban combat.

As for the Marines? From the CBS Channel 2 (Los Angeles) website on January 25, 2011:

A 1,560-building mock city has risen in the Southern California desert.

The $170 million Marine Corps urban training center at the Twentynine Palms military base, some 130 miles northeast of Los Angeles, is roughly the size of San Diego.

The Marine Corps Air Ground Combat Center facility uses mock cities and role players to prepare Marines and sailors for urban terrain missions.

If our armed forces already have such resources, what’s with the urban warfare training in American cities then?

The question still stands today…

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Monday, July 13th, 2015 Government, Military, Training, War No Comments

S&P Cuts Chicago’s Credit Rating Twice In Less Than 2 Months

Surprise, surprise. The City of Chicago’s credit rating was lowered yet again.

This time, it’s Standard & Poor’s that did the cutting.

Karen Pierog and Tanvi Mehta reported on the Reuters website last night:

Standard & Poor’s Ratings Services cut Chicago’s credit rating one notch to BBB-plus with a negative outlook on Wednesday, citing the windy city’s nagging structural budget deficit and the lack of a plan to close it.

S&P analyst John Kenward said the U.S.’ third-largest city needs “a credible, public, detailed plan” to deal with budget gaps projected to grow to $588 million in fiscal 2017, largely due to escalating contributions to its police and fire fighter retirement funds.

S&P also warned Chicago’s general obligation bond rating may fall further if a credible plan does not surface within six months…

(Editor’s note: Bold added for emphasis)

According to the S&P website, “BBB” indicates:

Adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

It was less than two months ago that Standard & Poor’s last downgraded the City of Chicago’s credit rating. I blogged on May 17:

Standard & Poor’s joined in on the downgrade parade later in the week. From a press release Friday:

Chicago, IL GO Bond Ratings Lowered To #A-# From #A+#, Placed On CreditWatch Due To Short-Term Liquidity Pressure
CHICAGO–15 May–Standard & Poor’s

CHICAGO (Standard & Poor’s) May 14, 2015–Standard & Poor’s Ratings Services lowered its rating to ‘A-‘ from ‘A+’ on the city of Chicago’s outstanding general obligation (GO) bonds, and placed the ratings on CreditWatch with negative implications…

Stay tuned…

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Mehta, Tanvi and Pierog, Karen. “UPDATE 1-S&P downgrades Chicago’s GO bond rating to BBB-plus.” Reuters. 8 July 2015. (http://www.reuters.com/article/2015/07/08/usa-chicago-sp-idUSL3N0ZO60H20150708). 9 July 2015.

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64 Shot, 10 Killed In Chicago Over Fourth Of July Weekend

It was another violent Independence Day weekend in the city of Chicago. Peter Nickeas reported on the Chicago Tribune website this morning:

Shootings over the long Fourth of July weekend left 10 people dead and 54 others wounded.

Among those killed was a 7-year-old boy shot in the chest during an attack aimed at his father, according to police…

(Editor’s note: Bold added for emphasis)

The Chicago Sun-Times added this morning on their website:

Police said Sunday the bullet that fatally wounded 7-year-old Amari Brown on the Fourth of July was meant for his father…

The boy’s father, Antonio Brown, is a ranking gang member with 45 previous arrests and was not cooperating with police as of Sunday afternoon as they tried to find his son’s killer, Chicago Police Supt. Garry McCarthy said Sunday, the Chicago Sun-Times reported…

According to a Chicago Crime Commission publication from 2012, there are an estimated 70 to 100 gangs in the Chicago metropolitan area with a membership of between 68,000 to over 150,000.

Nickeas added later on his piece:

Shootings last year, over an 84-hour period, left 82 people shot, 16 fatally…

While some may try to tout this “improvement” from 2014, this year’s carnage is still staggering, particularly as Chicago has strict gun “control” laws on its books.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Nickeas, Peter. “10 killed, 54 wounded in gun violence over Fourth of July weekend in Chicago.” Chicago Tribune. 6 July 2015. (http://www.chicagotribune.com/news/local/breaking/ct-chicago-violence-20150706-story.html). 6 July 2015.

“Nine dead, 53 injured in Fourth of July weekend shootings.” Chicago Sun-Times. 6 July 2015. (http://chicago.suntimes.com/crime/7/71/742607/police-3-dead-3-wounded-holiday-weekend-shootings-since-thursday-evening). 6 July 2015.

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Chicago Tribune: ‘Chicagoans Should Consider A Modest Property Tax Increase Inevitable’

Coming on the heels of last Thursday’s post and an earlier one about Chicago-area property/other taxes was an article by Chicago Tribune business columnist Melissa Harris entitled “Chicago isn’t Detroit- and it’s not going bankrupt.”

In the June 20 piece, Harris attempted to argue exactly what the title says (critics are panning it as “Machine”/union propaganda). But what interested me were statements like this:

More revenue will be required soon, most likely in the form of a property tax increase.

Not only is Chicago’s property tax rate lower than those in many suburbs, Chicago’s effective property tax rate ranked 49th out of the 50 largest cities in each state, according to 2009 U.S. Census data…

(Editor’s note: Bold added for emphasis)

And this:

Chicagoans should consider a modest property tax increase inevitable, though how much of an increase it will be could be affected by Moody’s decision, which made it more expensive for Chicago to borrow money…

(Editor’s note: Bold added for emphasis)

If one believes claims the Chicago news media routinely carries Mayor Rahm Emanuel’s water, increased tax hike chatter and growing comparisons of the city to other municipalities by the local press could be sending a strong signal to Chicagoans that they’ll be required to bust out their wallets shortly.

You can read the rest of that column on the Chicago Tribune website here (registration required)

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Property Tax Blues For Chicago, North Suburban Homeowners

While Chicagoland was preoccupied with the Blackhawks’ Stanley Cup victory parade Thursday, the Cook County Clerk’s office released the following:

Cook County Clerk David Orr released the 2014 property tax rates for the county’s more than 1,400 taxing agencies on Thursday, the final step in the tax process before bills are mailed out. The average homeowner in the city of Chicago and the northern suburbs will see their tax bill increase slightly, while the average homeowner in the southern suburbs will see a slight reduction in their tax bill.

In the south suburbs residential tax bills will on average be 1.0 percent lower. In north suburbs there will be an average increase of 2.4 percent, and most Chicago homeowners can expect an increase in their bill of 2.8 percent.

For the average single family home, this will translate to a decrease of $51.33 for south suburban homeowners, an increase of $155.49 for north suburban homeowners, and a property tax bill that is $89.44 higher than last year’s for Chicago homeowners…

(Editor’s note: Bold added for emphasis)

By the way, that $89 plus change property tax increase is based on an “average home with market value of $199,000″ in Chicago. Good luck finding a decent-sized family home that cheap in my old neighborhood on the northwest side of the city.

That being said, even a low three figure dollar increase in property taxes would likely be welcomed around my old stomping grounds compared to what could be coming down the line. John Byrne reported on the Chicago Tribune website this afternoon:

The threat of much steeper property tax hikes looms in Chicago. Mayor Rahm Emanuel is trying to find enough money to make police and fire pension payments set to balloon next year, and CPS faces a $1 billion budget hole driven by pension shortfalls of its own…

(Editor’s note: Bold added for emphasis)

You can read the entire press release on the Cook County Clerk’s website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Byrne, John. “Chicago property taxes to rise $90 on average.” Chicago Tribune. 18 June 2015. (http://www.chicagotribune.com/news/local/politics/ct-cook-county-property-tax-rates-met-0619-20150618-story.html). 18 June 2015.

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Thursday, June 18th, 2015 Education, Entitlements, Government, Housing, Taxes No Comments

Moody’s Downgrades Cook County’s Credit Rating, Issues Negative Outlook

The following is kind of stale, but the local press didn’t really publicize it and Cook County residents are entitled to know the financial health of the local government unit in these uncertain times. The Global Credit Research division of Moody’s announced on their website back on June 5:

Rating Action: Moody’s downgrades Cook County, IL’s GO to A2 from A1; outlook negative

A2 rating applies to $3.6B of GO debt

New York, June 05, 2015 — Moody’s Investors Service has downgraded to A2 from A1 the rating on Cook County, IL’s general obligation (GO) debt. The county has $3.6 billion in GO debt outstanding. The outlook remains negative…

The Global Credit Research division explained:

The A2 rating incorporates credit pressures associated with Cook County’s unfunded pension liabilities. Based on the Illinois Supreme Court’s May 8 overruling of the State of Illinois’ (A3 negative) pension reforms, we perceive increased risk that the county’s options for reducing unfunded pension liabilities have narrowed considerably. As it currently stands, Cook County-despite its home rule status-has little direct control over its single largest liability. Whether or not the statute that governs Cook County’s pension plan stands, we expect pension-related costs will place increasing strain on the county’s financial operations. Furthermore, approximately half of Cook County’s tax base is highly leveraged by the debt and unfunded pension liabilities of the City of Chicago (Ba1 negative) and the Chicago Public Schools (CPS) (Ba3 negative). We believe that the revenue demands of these entities could place practical limitations on the county’s ability and willingness to increase revenue to fund its pension costs. Other credit challenges for the county include enterprise risks inherent in operating the Cook County Health and Hospitals System (CCHHS)…

As for that negative outlook:

The negative outlook reflects our view that Cook County’s credit quality could weaken given continued uncertainty in the county’s future pension funding framework. Our outlook on the county’s credit is also informed by our expectation of growth in the pension costs of the local governments that share half of the county’s tax base. Finally, the negative outlook incorporates continued pressures in the health care sector, improved financial results for CCHHS notwithstanding…

On June 8, the major U.S. credit rating agency also announced a downgrade of the Cook County Forest Preserve District’s general obligation debt to A2 from A1, with a negative outlook as well.

You can read that entire June 5 Moody’s rating action on their website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Wednesday, June 17th, 2015 Credit, Debt Crisis, Entitlements, Government No Comments

Chicago, The Taxman Cometh

“Amid comparisons to ‘shuffling the deck chairs’ on the Titanic, the City Council’s Finance Committee agreed Monday to add another $1.1 billion to the mountain of debt piled on Chicago taxpayers…”

Chicago Sun-Times website, June 15, 2015

While Chicagoans celebrate the Stanley Cup, City Hall is mulling over which taxes of theirs to hike. Derrick Blakley reported on the CBS 2 (Chicago) website before the weekend:

With a huge budget deficit ahead, Chicago city government is desperately searching for new income.

Now, Mayor Rahm Emanuel may be seriously considering an income tax

Emanuel isn’t specifically talking income tax yet. But one of his strongest city council allies, 49th Ward Ald. Joe Moore, is speaking up.

“In my ideal scenario, it would be a graduated income tax that would be pegged at peoples’ ability to pay,” he says.
Some of the biggest U.S. cities already tax wages, including New York, Philadelphia, Detroit, Cleveland, San Francisco and Denver.

The tax that would also strike suburbanites who work in the city, Moore says.

The concept drew support Thursday from other mayoral allies who want to avoid a property tax hike…

Last year, the mayor rejected a city income tax. Not Thursday…

(Editor’s note: Bold added for emphasis)

The Chicago Sun-Times Editorial Board also picked up on Mayor Emanuel’s silence on the city income tax issue, writing Friday on the paper’s web site:

In a major break from the past, Mayor Rahm Emanuel did not immediately shoot it down…

(Editor’s note: Bold added for emphasis)

The Board added:

Might a Chicago income tax have bad, unintended consequences? Of course. And we’re by no means endorsing the idea here. But so might all the other taxes Chicago needs to consider: a commuter tax, a modest financial transaction, the broadening of the sale tax to cover more services, closing some tax-increment financing districts, congestion pricing and a pay-as-you-go garbage fee, to name some of the biggies.

Each revenue-generator should be vetted and priced out publicly, and the results should be explained far and wide so that the City Council and every Chicagoan come to accept two realities. One is the sheer size of Chicago’s financial crisis. The second is that no single solution will cut it. The pain has to be spread as widely as possible. The question then becomes: Which ingredients, in what proportions, make for the best stew — or at least the one that goes down easiest?

We have long said that raising property taxes — the city’s most stable revenue source, and one of the few it controls directly — is inevitable. But if property taxes are raised too much, both for Chicago and the school system, the city we know and love will cease to exist. An already dwindling middle class will flee.

A property tax hike should only be part of that bigger stew…

(Editor’s note: Bold added for emphasis)

Testing the waters? Conditioning Chicagoans for inevitable tax hikes?

All I know is this. Higher fees/fines/taxes. Reduced government benefits/services. That’s what I see coming down the pipeline for not only Chicago but the rest of the nation in due time.

Prepare accordingly.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Blakley, Derrick. “Chicago Eyes A City Income Tax On Residents, Suburbanites Who Work Here” CBS 2. 11 June 2015. (http://chicago.cbslocal.com/2015/06/11/chicago-eyes-a-city-income-tax-on-residents-suburbanites-who-work-here/). 16 June 2015.

Editorial Board. “Editorial: Mixing up a stew of Chicago revenue solutions.” Chicago Sun-Times. 12 June 2015. (http://chicago.suntimes.com/opinion/7/71/685251/editorial-16). 16 June 2015.

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Tuesday, June 16th, 2015 Debt Crisis, Fiscal Policy, Government, Taxes No Comments


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