BOMA/Chicago Raises Voice on Mayor’s Property Tax Increase Proposal

Background

Mayor Emanuel recently unveiled his proposed 2016 budget at a special meeting of the City Council. The $7.84 billion budget proposes spending $500 million more than was appropriated in 2015, representing an increase of nearly 7% over the 2015 appropriation.

The 2016 budget proposal includes an unprecedented property tax increase to fund the City's police and fire pension obligations. The proposed 2016 property tax levy is $1.26 billion, which is $436 million (over a 50% increase) more than was levied in 2015.

To address the pension crisis, the Mayor needs the assistance of the legislature and the Governor on legislation that provides more time for the City to address the current situation with the police and fire pension. If signed into law the City would address the pensions through additional property tax increases as follows:

2015: $318 million
2016: $109 million
2017: $ 53 million
2018 $ 63 million

The mayor has also pledged to seek legislation to double the homeowner exemption which would protect homeowners from any increase. BOMA/Chicago and business organizations including the Chicagoland Chamber of Commerce, Illinois Chamber of Commerce, Illinois Retail Merchants Association, Illinois Manufacturers Association and National Federation of Independent Businesses are opposed to increasing the exemption which would shift much of the property tax increase to commercial properties and residential renters.

To close the estimated $232.6 million shortfall in the 2016 operating budget, both expense reductions and revenue increases are being proposed. The proposed revenue increases include $35 million in building permit reform and increases in certain building permit fees, in addition to nearly $126 million in combined fees for residential garbage pickup, rideshare and tax fees and e-cigarette tax.

BOMA/Chicago is employing every resource available to evaluate the Mayor’s proposals, to ensure that they are as fair to our industry as they can be, and will fight against further overburdening commercial taxpayers and tenants in whatever form the painful steps toward fiscal responsibility might take. Resources include BOMA/Chicago's staff, lobbyists both here and in Springfield, tax counsel and researchers, and public relations firm. Here is a summary of some of the steps taken so far:

Participating in Discussions with Key Policymakers

BOMA/Chicago Executive Vice President Michael Cornicelli and Director of Government Affairs Ron Tabaczynski attended a private briefing by Vice Mayor Steven Koch and the city’s CFO Carol Brown on the Mayor’s budget and tax proposals, along with representatives from the Civic Committee and the Chicagoland Chamber of Commerce.

Cornicelli and Tabaczynski also met with the Governor’s senior staff to further educate them about the impact of the proposed property tax increase and the dramatic and adverse effects of shifting that burden to commercial buildings and tenants by increasing the homeowner exemption.

BOMA/Chicago Fighting Homestead Exemption Credit Expansion in Springfield

BOMA/Chicago's Government Affairs team, including Ron Tabaczynski, recently testified in front of the Illinois House Revenue Committee in opposition of the homestead exemption credit expansion. Though no specific legislation has yet been drafted, Ron and the rest of the team will be tracking this issue closely to commercial properties and the the small and large businesses they house are treated fairly.

Taking our Message to the Media

BOMA/Chicago has led the charge to educate the media and public about the unfair property tax burden commercial properties already bear by paying 2.5 times more than residential properties and the additional burden that would be paid once nearly 70% of the Mayor's property tax increase is shifted to commercial commercial tenants. Michael Cornicelli and Ron Tabaczynski have done over 24 interviews with the press, including television interviews with Chicago Tonight and ABC Channel 7 News, and have been quoted extensively, and in a favorable business light. Head over to our BOMA/Chicago In the News page to read more.

BOMA/Chicago representatives also met with the editorial board of the Chicago Tribune, which published an editorial supporting our position on these issues and recently met with the Sun-Times editorial board. Michael Cornicelli also had an op-ed published in Crain’s Chicago Business.

We created an Infographic to easily explain the impact of the Mayor’s proposed property tax increase on commercial tenants – small and large businesses – throughout the city.

Forming a Coalition with Like-Minded Business Groups

BOMA/Chicago has also taken the lead in forming a coalition of like-minded business groups working together on these issues. The group includes: Chicagoland Chamber of Commerce, Illinois Chamber of Commerce, Illinois Retail Merchants Association, Illinois Manufacturers Association, Civic Committee of the Commercial Club, Chicagoland Apartment Association, Illinois Restaurant Association, and others. The list is growing.

BOMA/Chicago will continue to research the economic impact of the proposed tax hikes and the proposed expansion of the homeowner exemption, including the effect of the shift in burden from residential to commercial taxpayers.

Stay tuned for additional information on this very important issue. Please direct any questions or comments to Ron Tabaczynski, Director of Government Affairs, at rtabaczynski@bomachicago or (312) 870-9611.