Lightfoot will forgo election-year property tax increase that’s tied to inflation

Chicago Mayor Lori Lightfoot won’t try to raise property taxes next year, after all.

As she prepares to kick off her 2023 budget push Monday, Lightfoot announced Thursday she would do so without trying to pass the unpopular $42.7 million hike.

Dumping the tax increase will make it much easier for her to pass the overall budget, and spare her from defending it on the campaign trail ahead of the February local election.

“Because our economy continues to show better than projected recovery, our city revenues continue to exceed our estimates,” Lightfoot said. “As a consequence, I am happy to announce that we are able to forgo, for one year, the (consumer price index) increase on the property tax levy.”

With more than $130 million in unexpected tax revenue likely to come in this year, it was relatively easy for the mayor to drop the election year property tax proposal as she tries to convince reluctant aldermen to support her spending plan.

Lightfoot’s budget team will make their case for the overall budget Monday to the City Council Budget Committee. She could backfill the property tax gap with some cash the city has collected from higher-than-anticipated amusement taxes and other sources.

Taking out the tax increase should blunt much of the budget pushback she’s getting from aldermen seeking reelection themselves and those many members of the City Council who are retiring and therefore aren’t worried about standing up to the mayor on their way out the door.

Ultimately, Lightfoot has to convince 26 aldermen to support her 2023 budget before the end of this year. And it’s a tried-and-true mayoral tactic to dangle some unpopular budget idea, then make changes to the plan to garner more council backing before the vote.

Cutting bait on the 2023 edition of her signature measure of tying property tax to inflation would also spare her the political headache of making the case for it against mayoral opponents as she runs for re-election herself.

But it would open Lightfoot up to criticism that she abandoned her pledge to bring some regularity and certainty for property owners to Chicago’s property tax system.

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When Lightfoot got the City Council in 2021 to agree to link annual property tax increases to the consumer price index, she argued doing so would spare residents the Chicago political yo-yo of mayors jacking up taxes right after getting elected and then refusing to raise them at all when the next election looms and they don’t want to anger voters.

But for Lightfoot, getting called a property tax hypocrite is likely preferable to sticking to her plan during an inflation crisis and trying to wrangle council members to stand with her while facing her own tough campaign.

The inflation-linked 2023 property tax was set to be about $85.5 million, as inflation jumped well above the 5% ceiling on Lightfoot’s plan tying taxes to the annual increase in the Consumer Price Index. But Lightfoot in August announced she would lower that to 2.5% with Chicagoans struggling to make ends meet.

The city’s relatively robust financial recovery from the pandemic in certain key areas makes it even easier for the mayor to drop the tax hike altogether.

According to the city’s budget forecast, revenue for 2022 will come in $134 million above what was projected, “due to improving revenue projections and expected cost savings.”

Amusement taxes are coming in stronger than expected as concerts and other live events move toward pre-pandemic levels. Transaction taxes for property sales are also higher than anticipated, according to the city. So is the amount of money coming in from the state for personal income taxes and corporate income taxes in lieu of property tax.