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* Sun-Times…
Mayor Brandon Johnson’s administration is working toward the framework of an agreement to end the budget stalemate that could shrink a property tax increase to $68.1 million while eliminating guaranteed basic income and small business programs bankrolled by federal pandemic relief funds. […]
There’s also talk of raising $14.4 million through congestion pricing” and generating tens of millions of dolllars by depriving hospital and other nonprofits of their property-tax exemption. Also, there’s a proposal for a so-called “payment in lieu of taxes” that would deprive hospitals and non-profits of their longstanding property tax exemption.
* From a Payment in Lieu of Taxes (PILOT) fact sheet on the 43rd Ward website…
Any change in the terms or criteria for property tax exemptions would require action by the State legislature to change the Illinois Property Tax Code.
The Chicago Bears floated the idea of a PILOT for an Arlington Heights stadium. The idea has gone nowhere.
Also, just about every legislative district outside Chicago has a hospital in it and their association is quite powerful. Hospital boards are typically filled with influential local people.
* Meanwhile, over at CPS…
Service Employees International Union 73, the union that represents special education classroom assistants in Chicago Public Schools, is threatening to sue the district over a Chicago Teachers Union proposal that it says would effectively take jobs from SEIU and give them to CTU.
SEIU 73 Vice President Stacia Scott emailed CPS CEO Pedro Martinez on Nov. 14 to object to negotiations between the school district and the teachers union that would “(reassign) to CTU work and positions that are, and have been, exclusively represented by (SEIU).” The Chicago Teachers Union and CPS are negotiating a 4-year contract. Their most recent contract expired in June.
The teachers union has proposed contract language to CPS that SEIU fears would allow classroom assistants, who are represented by CTU, to take over some of the special education classroom aides’ jobs.
posted by Rich Miller
Tuesday, Dec 3, 24 @ 11:24 am
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The ratings agencies are going to downgrade Chicago’s credit if the budget is filled with magic beans proposals like this. It is basically negating the purpose of making the advance pension payments.
Comment by Three Dimensional Checkers Tuesday, Dec 3, 24 @ 11:35 am
It only took what, two or three years to pass the legislation for those new Business Improvement Districts that at least in Chicago had some pretty major business and chamber support?
I’m sure City Hall can get PILOTs approved in veto…totally.
Comment by ChicagoBars Tuesday, Dec 3, 24 @ 11:55 am
Here is a non- controversial solution to all of the municipalities and state pension problems- the returns though perhaps often meeting the ridiculously low targets the Boards set for themselves- have the State impose true professional management( Blackrock or Goldman for example) to manage the investments- let the Trustees deal with benefit payments and the other admin issues- if the pensions could achieve better returns- we could stop shoveling billions into the Plans yet watch the unfunded liabilities continue to grow- these Boards have no business overseeing Hundred’s- of billions of our money - at least history so proves
Comment by Sue Tuesday, Dec 3, 24 @ 12:04 pm
Hi Rich. I don’t think it is accurate to say that the City entering into PILOT agreements with major nonprofit institutions requires a change in state law, and Alderman Knudsen’s fact sheet notes this.
State law exempts nonprofits from paying property taxes. So yes, lifting that exemption would require a change in state law. But as the Alderman’s fact sheet also notes, having the City voluntarily enter into PILOT’s of up to 5 years (that could be renewable) is permissible under state law. Those PILOTs would recognize the property tax exemption, but see nonprofits voluntarily agreeing to pay a portion of the property tax that would be owed if they were not exempt, in recognition of the fact that they consume city services. You could argue that our nonprofits wouldn’t agree, but they do in Boston, where in FY 2023 they raised $35 million this way (the Alderman’s fact sheet has older data on the amount that could be raised).
https://www.boston.gov/departments/assessing/payment-lieu-tax-pilot-program
I think public pressure would go a long way to securing agreement - do you think most people know that the Fire Department would certainly respond if the Art Institute was burning down, but the Art Institute doesn’t pay any of the property taxes used to fund the Fire Department?
Comment by Jeremy Rosen Tuesday, Dec 3, 24 @ 12:48 pm
===having the City voluntarily enter into PILOT’s of up to 5 years===
The key word here is “voluntarily.”
You gonna budget for that? Good luck.
Comment by Rich Miller Tuesday, Dec 3, 24 @ 12:50 pm
The Bears PILOT proposal did require state approval, because it was for longer than 5 years and because it was going to freeze their tax assessment - again totally different from a permissible voluntary PILOT.
Comment by Jeremy Rosen Tuesday, Dec 3, 24 @ 12:54 pm
I’m shocked the leadership of the CTU wants to require more people to join their union (and pay their required union dues that is spent in secret).
Comment by Just Me 2 Tuesday, Dec 3, 24 @ 12:56 pm
How to properly budget for this is a different question - it still doesn’t mean that state law must be changed as the headline says.
Comment by Jeremy Rosen Tuesday, Dec 3, 24 @ 12:56 pm
Before people start freaking out of “congestion pricing” remember Singapore used it first (1975), which the Heritage Foundation has ranked the economic “freest” nation in the world.
Comment by Anyone Remember Tuesday, Dec 3, 24 @ 12:59 pm
===, but the Art Institute doesn’t pay any of the property taxes used to fund the Fire Department?===
Bad example. The Art Institute in on public land. It is also subsidized by the Park District. So is the Field, Shedd, Science & Industry, etc. so these cultural institutions would be exempt. And even though they don’t pay property taxes, they pay a lot of other taxes to the city including amusement, sales, utility taxes and more.
Comment by 47th Ward Tuesday, Dec 3, 24 @ 1:04 pm
===it still doesn’t mean that state law must be changed as the headline says. ===
The headline is accurate. A PILOT program, as discussed in the article, must be approved by the state.
===How to properly budget for this is a different question===
Um, this is ALL ABOUT THE BUDGET. How can you even claim this?
Comment by Rich Miller Tuesday, Dec 3, 24 @ 1:04 pm
-Anyone remembers-
The City of Chicago has talked for over a decade about copying New York City “Block the Box” tickets for drivers who ignore congestion and get stuck in an intersection after the light changes messing up traffic for all.
I do not know if congestion pricing would be good or bad for keeping the Loop and downtown Chicago vibrant and property values up but I sure wish City could figure out copying NYC on that old idea before I pin my hopes on them copying NYC on a new one about congestion pricing.
Comment by ChicagoBars Tuesday, Dec 3, 24 @ 1:11 pm
===again totally different from a permissible voluntary PILOT===
Again, what part of “that would deprive hospitals and non-profits of their longstanding property tax exemption” do you not comprehend?
Comment by Rich Miller Tuesday, Dec 3, 24 @ 1:17 pm
The tax exemption for hospitals has always been, as the kids say, sus (full disclosure: I’ve never actually heard a kid say that). The Illinois constitution allows the General Assembly to create property-tax exemptions for property that is used exclusively for charitable purposes. After an intense lobbying effort by the Hospital Association a decade or so ago, the General Assembly and courts settled on an interpretation of this requirement that allowed for hospital property to be exempt if it was occasionally used for charitable purposes. Exclusivity is a rather elastic concept in Illinois.
Comment by Duck Duck Goose Tuesday, Dec 3, 24 @ 1:32 pm
A congestion tax? If only we had more congestion! Our problem is that people are not coming back to the Loop in numbers remotely close to pre-pandemic numbers. And now we should tax the few who do come into the Loop for that privilege? Watch our “congestion” go down more, with the loss of jobs and sales tax revenue here.
If the tax is designed to keep cars out, I say we already have a congestion tax. It’s called the parking lot tax.
We should be doing things to generate more “congestion” in the Loop, not less.
Comment by Concerned Tuesday, Dec 3, 24 @ 1:33 pm
Nonprofits would include every community group, neighborhood organization, ect that owns a building. Why do the geniuses even float this hairbrained idea? It would ding some of the Mayor’s only remaining allies.
Comment by Three Dimensional Checkers Tuesday, Dec 3, 24 @ 1:41 pm
The Fifth Floor Fiasco continues…
Comment by low level Tuesday, Dec 3, 24 @ 1:57 pm
SEIU vs CTU in Chicago.
Wonder who will win that one?
I’m sure that Brandon will call Pedro and let him know to objectively look at both sides of the argument and make the best decision for the kids, on a union contract.
Comment by Frida's Boss Tuesday, Dec 3, 24 @ 2:03 pm
The concept of a voluntary payment in this situation is borderline absurd. “Well, we haven’t talked to anyone about it, but we think we can get these exempt institutions to pony up this much money to plug this hole.” The Boston numbers say they only received 76% of the requested amount, and that’s after decades of the program. Cultural institutions only gave 31%. But I’m sure the AIC or NMH will be all to eager to fork over 100% of the requested amount. And if the city can’t meaningfully estimate the revenue, it’s just more magic beans to avoid making the types of hard decisions responsible public officials should understand they have to make. Proposing a voluntary scheme like this at this point isn’t a legitimate proposal, it’s throwing every possible source of additional revenue, no matter how harebrained, against the wall and hoping something sticks.
Comment by Anon324 Tuesday, Dec 3, 24 @ 2:09 pm
===concept of a voluntary payment in this situation is borderline absurd===
True, but from my read of the CS-T story, that’s not even on the table. It was brought up as a distraction in comments here.
Comment by Rich Miller Tuesday, Dec 3, 24 @ 2:16 pm
Municipalities have entered into PILOT-like agreements with nonprofit property owners, but those things tend to happen only when the property owner needs something out of the local government and are forced into a negotiation. For instance, a university wants to put a new building up on their campus and they need a zoning change or building permit. The municipality can require the university to agree to a PILOT or they don’t get their permit.
It’s not a horrible idea for the city to pursue this as a long term revenue strategy, but as Rich alludes to, there’s no way to put this together and bake into a budget for next year — unless a state law is adopted to force nonprofits to enter into PILOTs immediately.
Comment by Frank Tuesday, Dec 3, 24 @ 2:38 pm
===For instance, a university wants to put a new building up on their campus and they need a zoning change or building permit. The municipality can require the university to agree to a PILOT or they don’t get their permit.===
Sounds like extortion to me. And the building trades may not like it when universities stop all new construction. But yeah, if Chicago does as well as Boston, the city will see enough new revenue to only have a slightly smaller, but still enormous, budget gap.
Comment by 47th Ward Tuesday, Dec 3, 24 @ 2:55 pm
== Sounds like extortion to me. ==
Yes, kinda. Let’s just say it ain’t exactly voluntary.
The municipalities would argue that the new construction creates a financial burden for them — a place they have to police and provide fire protection for, or maybe it will increase traffic on their streets — and because the university isn’t paying property taxes, they’re really not paying for those services like residents and businesses do. So, the logic goes, require the university to pay a fee in lieu of taxes.
Again, it’s not a horrible idea for big new projects. And if it’s done right, it requires a lot of negotiation between the town and nonprofit. Most towns welcome that kind of development even without the property tax payments. But it’s not something to look at as a sudden budget-saving revenue plan.
Comment by Frank Tuesday, Dec 3, 24 @ 3:19 pm
= If only we had more congestion! =
You have obviously not tried to get through the intersection of State and Congress at rush hour.
Comment by JoanP Tuesday, Dec 3, 24 @ 4:39 pm
==(reassign) to CTU work and positions that are, and have been, exclusively represented by (SEIU)==
No such thing as exclusive representation anymore. WRA is pretty clear on the matter.
Comment by City Zen Tuesday, Dec 3, 24 @ 4:41 pm