121 Report – CRMA – November 2015

 In This Issue

CHICAGO BUDGET TAKES EFFECT
COUNCIL INTRODUCTIONS

BUDGET BATTLE COMES TO A CLOSE AS TAXPAYERS OPEN THEIR WALLETS

 

Last week, Mayor Emanuel and the City Council passed a budget for 2016 that addresses, in part, the tough realities that the city is facing right now concerning its underfunded police and fire pensions. After years of coming up short on pension payments, engaging in long-term borrowing for short-term investments and preserving a payroll that was unsustainable, the City Council passed a revenue package that left no constituency unscathed.

While there were legitimate attempts to cut costs, trim department budgets and negotiate other savings, the outcome is that property owners will experience the highest property tax increase in Chicago’s history over a four-year period. And Chicago’s employer community will pick up more than its fair share of the tab.

Due to Cook County’s unfair property tax system, employers pay 25% of their property’s assessed value, while homeowners pay 10%. Wondering which taxpayers will be hardest hit by this scheme? Neighborhood businesses. Competing with their suburban counterparts, neighborhood businesses have a much tougher fight to maintain sales and a solid customer base. An increase in property taxes is a direct hit to their bottom line which is difficult enough to absorb. Add on top of this that Mayor Emanuel has gone to the General Assembly to ask for a doubling of the homestead exemption which will have the effect of exempting homes with a value of less than $250,000 from the increase. As property taxes go, that means that all of the rest of the taxpayers will have to swallow what those homeowners don’t have to pay. Yet, homeowners and businesses alike use the services of the police and firefighters whose pensions will be helped by the tax increase. Therefore, no one should be exempt from doing their part. While we are neutral on a tax increase, we oppose this attempt to force neighborhood businesses to pay more than their fair share.

In addition to the property tax, the Council passed a new tax on e-vape products. While some states and Washington, DC have already passed a tax on nicotine liquid, Chicago decided to go in a different direction. The city is taxing the product that is actually consumed which is consistent with how cigarettes are taxed. But in a baffling move, it will now also tax

any item that contains nicotine liquid. That would include everything from a plastic bottle, to a refill cartridge, to a disposable e-cigarette. The argument for taxing the packaging is that it will help deter the “youth” from purchasing the product. If the “youth” is anyone under the age of 18, then it is already illegal for them to purchase these products and for retailers to sell the products to them. If the “youth” is anyone 18 and over, then this inconsistent tax will absolutely deter them from purchasing the product…in Chicago. Retailers ought to get a fair shot at competing for sales of this popular product especially since so many have lost sales to Indiana, the suburbs and illegal sellers, not to mention those that have lost flavored cigarette sales because they had the unfortunate luck of being within 500 ft. of a school. Chicago’s tobacco tax policies are inconsistent with the rest of the country and now its policies are even inconsistent with itself. CRMA is working to get this law changed so that Chicago’s policy reflects its concern about the product without shifting sales outside of the city.

Tax policy should be effective, consistent and based on verifiable data. Chicago’s ordinances should reflect this principle.

CRMA will continue to work to make reasonable changes regarding the property tax exemption and the e-vape tax in the coming months.

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CITY COUNCIL ORDINANCES AND RESOLUTIONS

 

INTRODUCTIONS

Ban on the Sale of Nail Polish Containing Triphenyl-phosphate

Sponsors: Alderman Edward M. Burke (14th Ward), Alderman Margaret Laurino (39th Ward) and Alderman Pat O’Connor (40th Ward)

Committee on Finance

Citing concerns about the potential for triphenyl-phosphate to be a hormone-disrupting chemical, this proposal would ban the sale of nail polish containing the ingredient. It is unclear whether it would also be unlawful for salons and spas to use nail polish with the ingredient.

Amendment of E-Vape Tax

Sponsor: Alderman Joe Moreno (1st Ward)

Committee on Finance

The revenue ordinance includes a tax on containers of nicotine liquid of $1.25 and a tax on nicotine liquid of $0.25/milliliter. This proposal would decrease the tax on the container to $0.80 and increase the tax on the liquid to $0.55. This proposal purportedly addresses concerns expressed by the industry regarding distortion of the market pushing users of e-vape products to larger volume refill bottles. Another concern is that the city is adding a tobacco tax to products that are not consumable. This is inconsistent with how cigarettes are taxed.  This issue also doesn’t address the significant cost difference that this product will have between Chicago and surrounding areas. The proposal would reduce the overall tax on the product by $0.15.

 

PASSED INITIATIVES

Resolution Urging the General Assembly to Expand Chicago’s Authority to Tax

Sponsors: Alderman John Arena (45th Ward) and 29 additional co-sponsors

Home Rule jurisdictions are currently given broad authority to tax, but there are a number of taxes that are solely the purview of the General Assembly. The city would like to have the ability to implement taxes that target employers and residents that are wealthy…however that is defined. Included in this wish list of taxes is a graduated income tax, a financial transaction tax that targets Chicago’s mercantile and stock exchanges, a sales tax on services and a tax on luxury goods.

Resolution Urging the General Assembly to Either Pass an Increase in the Homestead Exemption or to Encourage the City Council to Develop a Property Tax Rebate Program for Certain Homeowners

Sponsors: Alderman Michele Smith (43rd Ward) and 32 additional co-sponsors

This resolution asks the General Assembly to pass SB 1488 which is Mayor Emanuel’s doubling of the homestead exemption which will shift more of the property tax increase to employers and renters. The bill recently passed the House Revenue and Finance Committee but has not been called for a full House vote. In anticipation of a tough House vote, the resolution looks ahead and calls for the City Council to adopt a rebate program in the event SB 1488 fails.

2016 Revenue Ordinance

Sponsor: Mayor Rahm Emanuel and 24 co-sponsors

The budget passed by a vote of 36-14.  The following are revenue items of interest to the retail community.

1. Personal Property Lease Transaction Tax and Amusement Tax

This item changes the lease tax to include nonpossessory computer leases where a customer accesses the provider’s computer from a mobile device. If customers are accessing the computer to input, modify or retrieve data, then the transaction will be taxed at 9% of the lease/rental price. If the access is to input, modify or retrieve data that is supplied by the customer, then the transaction is taxed at the lower rate of 5.25% of the lease/rental price.

Small, new businesses will be exempt from having to collect or pay this tax. Businesses eligible for the exemption are defined as licensed businesses (in any jurisdiction) during the most recent year prior to the taxing year which had under $25 million in sales and has been in operation for less than 60 months. Businesses will be combined into one unitary business group depending upon how they are formed and how revenue/management is shared.

EFFECTIVE DATE: January 1, 2016

A separate, but related item seeks to add amusements delivered electronically to mobile devices to the amusement tax. This will make video and audio streaming, and on-line games subject to the tax.

EFFECTIVE DATE: November 18, 2015

2. Liquid Nicotine Product Tax

This item will tax closed-unit e-cigarettes as well as all products intended for vaping that contain nicotine. The tax on closed-unit devices is $1.25/unit and the tax on the liquid is $0.25/milliliter. Chicago will be the only jurisdiction in the country to tax closed-unit devices. All other jurisdictions that are taxing or proposing to tax e-cigarettes are taxing the consumable product only. Chicago’s version will unnecessarily distort the market for e-cigarettes, creating winners and losers in an open, competitive market. Vape pens (largely sold by vape shops) would be the winners and e-cigarettes (largely sold by grocers and convenience stores) would be the losers.

 EFFECTIVE DATE: January 1, 2016

3. Increased Fees

Overweight Truck permit fees will increase annually according to CPI-U.

EFFECTIVE DATE: January 1, 2016

Building Permit fees needing plan review for the construction of new buildings, or renovations and/or repair of existing buildings will be increased. Related fees are increasing anywhere from 25% on the low end to 100%.

EFFECTIVE DATE: January 1, 2016

 

2016 Management Ordinance

Sponsor: Mayor Rahm Emanuel

The annual Budget Management Ordinance which generally focuses on matters not directly related to revenue, but can contain fee increases, has a number of items of interest to the retail community:

1. Driveway Permit Fees

Businesses seeking these permits will pay different amounts depending on their location. Businesses inside the Central Business District (CBD) will pay $500 for sign installations related to the permit along with any other fees directly related to the sign installation. Businesses outside of the CBD will pay $110. The annual maintenance fee will be equal to the amount of the sign installation fee.

2. Debt Relief Program

The city is establishing a debt relief program for taxpayers for debts incurred during the period ending December 31, 2011. Taxpayers must apply for the relief.

3. Sale of Tobacco

The prohibition on the sale of tobacco within 100 ft. of a school, child care facility or place of education/recreation of minors was changed to reflect how the property is measured for the prohibition on the sale of flavored tobacco. It will be measured from property line to property line.

4. Tobacco License Revocation and Fines

A license shall be revoked for 3 or more violations within a 24-month period of the following: failure to pay the cigarette tax, mutilated stamps, interference with inspections/recordkeeping, purchase of tobacco products from unlicensed wholesalers, violations of the 100 ft./500 ft. rules regarding the sale of tobacco/flavored cigarettes, sale to minors, sale outside of original packaging, failure to post warning to minors and interference with ID cards of inspection officials. Fines have also increased for these violations by 100% in most cases.

All relevant items in the Management Ordinance have an EFFECTIVE DATE of January 1, 2016.

 Links to the Property Tax Levy Increases:

2015

2016

2017

2018

 

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CONTACT INFORMATION:

TanyaTriche

 

Tanya Triche
Vice President
General Counsel
312-726-4600
ttriche@irma.org

121 Report – CRMA – October 2015 – Part 3

In This Issue

Council Introductions

CITY COUNCIL ORDINANCES AND RESOLUTIONS

This week, the Chicago City Council will vote to pass the budget which includes a number of revenue and management items detailed in previous issues of the 121 Report and possibly including these latest introductions. Matters previously discussed in committee can be amended as well before passage. The following are matters that are both new and revisions of current proposals.

 

INTRODUCTIONS

Sidewalk Cafe Permit Fee

Sponsors: Alderman John Arena (45th Ward), Alderman Toni Foulkes (16th Ward), Alderman Roderick Sawyer (6th Ward) and others

Committee on Finance

This proposal would establish a minimum annual fee of $1200 for a sidewalk café permit. Currently, the fees for such permits are determined on an individual basis according to land values.

Property Tax Residential Rebate Program

Sponsors: Alderman Michele Smith (43rd Ward), Alderman Joe Moreno (1st Ward), Alderman Brian Hopkins (2nd Ward) and others

Committee on Finance

This is an alternate proposal to Mayor Emanuel’s current plan to exempt homes with a value of $250,000 or less from the increased property tax. Mayor Emanuel’s proposal would require the General Assembly to approve his request to double the current levy. Business groups, including IRMA, and the apartment association have all advocated against the exemption as it will move the increased tax onto the employer and renter communities. Our position has been that if property taxes are going up, then all taxpayers should share in the pain. Neighborhood businesses should not have to pick up the tab.

While Alderman Smith’s proposal would not exempt any taxpayer from paying their share of the increase, it would only allow some homeowners (those with an AGI of under $100,000) to get relief based on their income. Our concern is that the money that is rebated will have to be recovered elsewhere in the budget. The business community is concerned that they will be required to pay in some other way to make up the difference. In either proposal, we will be asked to pay, whether directly, or indirectly down the line. Therefore, we are opposed to this introduction.

Stormwater Stress User Fee

Sponsors: Alderman Carlos Ramirez-Rosa (35th Ward), Alderman Scott Waguespack (32nd Ward), Alderman Nicholas Sposato (38th Ward) and others

Committee on Finance

This proposal would create a new user fee beginning in 2017 for properties with impervious surfaces. The fee would apply both to residential and commercial properties. The formula for determining the fee for commercial properties would take into account the storm water management costs attributed to residential properties. The city will determine the amount of impervious surface for each property using a GIS program. The funds from the fee will go to a separate fund to address storm water issues and the rest will be deposited into the sewer fund.


TanyaTriche

Contact Information:

Tanya Triche
Vice President & General Counsel
312/726-4600
ttriche@irma.org

121 Report – CRMA – October 2015 – Part 2

October 19, 2015          

IN THIS ISSUE:

CRMA Weights in on Property Tax Increase
Cook County Budget is Introduced
Cook County Wants Its Own Starting Wage
Council Introductions

CRMA Testifies Against Unfair Distribution of Proposed
Property Tax Increase

The Chicago City Council held its annual public hearing on the budget this week and CRMA was there to weigh in on Mayor Rahm Emanuel’s proposal to shift a portion of the proposed property tax increase to the employer community. The ordinance proposes to increase the property tax levy over a four year period with the largest part of the increase to coincide with the 2015 property tax bills. While it is clear that the city needs a significant amount of revenue to meet its pressing pension obligations, the employer community is concerned that all taxpayers will not be asked to pay their share of the increase. Instead, the Mayor is asking the General Assembly to increase the homestead exemption which would essentially exempt homeowners with properties valued at $250,000 or less from the increase leaving employers to pick up the tab. Chicago’s neighborhood employers are stretched thin and are disheartened to learn that they will be asked to pay their share and the share of others.

CRMA is asking the Mayor and the City Council to reconsider a policy that favors some homeowners over others as well as renters and local business owners.

You can read our testimony here.

You can also view the actual budget for the city here.

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 Cook County Kicks Off Budget Season With Modest Mix of Cuts
and New Revenue

With the sales tax increase set to go into effect on January 1, 2016, Cook County kicked off its budget season last week by issuing its preliminary budget for public review. IRMA took part in a meeting with the employer community prior to the release of the budget where the County’s Budget Officer detailed plans for cutting expenses and seeking new revenue.

Since the County took care of the most significant part of its new revenue outside of the budget process by passing the 1% sales tax increase in July, this budget seeks smaller revenue enhancers along with some structural cuts. The sales tax increase will mostly fund a significant pension payment, although there has been some question about whether the County has the authority to use sales tax revenues for this purpose. The County Board has signed an intergovernmental agreement with the pension board to allow for payment from this revenue source. The County believes that such an agreement is all that is necessary to not run afoul of Illinois law. I would note though, that the County’s pension bill, which is still languishing in the General Assembly, would allow the County to increase the amount for its maximum pension payment, and it would also allow for pension payments to be funded by other sources such as the sales tax. Unless there are structural changes to how the pensions are funded, the county expects that it will continue to have problems keeping up with the rate of growth of the debt obligation. For its part, the sales tax increase is expected to generate an additional $308 million in its first year.

The $4.5 billion budget will mostly be financed by revenues from the health and hospital system, the sales tax and property taxes. The majority of revenue will be spent on expenses related to the health and hospital system, public safety (which includes the county jail) and other fixed costs. As the hospital system works its way back to profitability, the county has used less of its tax resources over time to fund it, resulting in savings in the budget.  The county also plans to  eliminate vacancies in other areas and has negotiated some health benefits savings with its unions. It will also demolish three buildings at the county jail as it continues to permanently reduce population and it will consolidate or eliminate programs that have either been ineffective (the Sheriff’s Day Reporting Unit) or are no longer needed in large quantities (mortgage foreclosure program). Additional revenues will come from an expanded amusement tax which will add a tax to such things as in-home cable TV services and other recreational activities. The county also expects to discontinue the practice of diverting revenue from the motor fuel tax to the circuit court system. Instead, it will use the money to fund three infrastructure projects for new or improved roads and bridges which it hopes will increase economic development.

President Preckwinkle is also proposing an e-cigarette tax which would be applied similarly to the tax in effect in North Carolina. She also plans to increase cigarette and gas tax enforcement. Unlike Chicago, the county is not proposing an additional tax on closed-unit delivery systems for e-cigarettes. The county expects that this new tax will bring in $1.5 million.

After holding four public hearings on the budget over the next couple of weeks, some amendments will be made to the budget before its expected passage prior to the Thanksgiving holiday. IRMA will weigh in on this process along the way and encourages your feedback during these discussions.

 

Cook County 2016 Budget Overview Document

President Toni Preckwinkle’s Remarks on the 2016 Budget

Schedule of Cook County Public Hearings on the 2016 Budget
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Cook County Commissioner Steele Pushes for Hearing on
Starting Wage for Large Employers

 

After introducing an ordinance to create a Cook County-specific starting wage for businesses with at least 750 employees in the county, Commissioner Robert Steele is set to have a public hearing on the matter on Tuesday, October 20th. The Commissioner and co-sponsors Commissioner Luis Arroyo and Commissioner Joan Murphy are being encouraged to move forward with the quick hearing by IIRON.  IIRON is a local group that organizes people around various issues including the “living” wage, the right to unionize, environmental issues and economic concerns focused on large corporations. This group has not been a part of starting wage discussions in Springfield, nor were they involved in the Chicago negotiations. There has been no attempt by the sponsors of this ordinance to have a conversation with the employer community regarding its concerns which is a significant departure from how wage issues have been addressed in other jurisdictions. IRMA is of the firm belief that the authority to set wages is the sole purview of the General Assembly, and locally-set starting wages are in conflict with the provisions of the Illinois Constitution. Moreover, the early results of Chicago’s implementation of the higher starting wage has shown that employees have had their hours cut and others have lost their jobs.  The unintended consequences of this policy are being felt all over the city. Nevertheless, Commissioner Steele has called the issue for a vote, although he can re-call that request at any time.  If this issue were to pass, Cook County would be the first home rule county in the state to not only pass a starting wage ordinance, but one that would only apply to certain employers.

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CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

2016 Revenue Ordinance

Sponsor: Mayor Rahm Emanuel

Committee on Finance

The 2016 Budget Proposal includes a number of new taxes and fees. Of particular interest to the retail community are the following proposals:

 

Personal Property Lease Transaction Tax and Amusement Tax

This item changes the lease tax to include non-possessory computer leases where a customer accesses the provider’s computer from a mobile device. If customers are accessing the computer to input, modify or retrieve data, then the transaction will be taxed at 9% of the lease/rental price. If the access is to input, modify or retrieve data that is supplied by the customer, then the transaction is taxed at the lower rate of 5.25% of the lease/rental price.

Small, new businesses will be exempt from having to collect or pay this tax. Businesses qualified for the exemption are defined as licensed businesses (licensed in any jurisdiction) during the most recent year prior to the taxing year, which have under $25 million in sales and have been in operation for less than 60 months. Businesses will be combined into one unitary business group depending upon how they are formed and how revenue/management is shared.

A separate, but related item seeks to add amusements delivered electronically to mobile devices to the amusement tax. If passed, video and audio streaming, and on-line games would be subject to the tax.

 

Liquid Nicotine Product Tax

This item will tax closed-unit e-cigarettes as well as all product intended for vaping that contains nicotine. The tax on closed-unit devices is $1.25/unit and the tax on the liquid is $0.25/milliliter. This proposal is the only proposal in the country seeking to tax closed-unit devices. All other jurisdictions that are taxing or proposing to tax e-cigarettes are taxing the consumable product only. Chicago’s version would unnecessarily distort the market for e-cigarettes, creating winners and losers in an otherwise open, competitive market. Vape pens (largely sold by vape shops) would be the winners and e-cigarettes (largely sold by grocers and convenience stores) would be the losers. We have asked the city to reconsider its position and tax this product similarly to how it is being taxed elsewhere in the country which has already been approved by vape shops, grocers and convenience stores alike. Taxing the product similarly to North Carolina and Cook County’s recent proposal would give the city the revenue it seeks while discouraging use without diverting the sale of the product to other jurisdictions.

CRMA is opposed to this item as written.

Increased Fees

Overweight Truck permit fees will increase annually according to CPI-U.

Building Permit fees regarding plan review related to the construction of new buildings, renovations and/or repair of existing buildings are increasing anywhere from 25% on the low end to 100%.

 

2016 Management Ordinance

Sponsor: Mayor Rahm Emanuel

Committee on Budget and Government Operations

The 2016 Budget Management Ordinance which generally focuses on matters not directly related to revenue but can contain fee increases has a number of items of interest to the retail community:

 

Driveway Permit Fees

Businesses seeking these permits will pay different amounts for appropriate street signage depending on their location. Businesses inside the Central Business District (CBD) will pay $500 for sign installations related to the permit along with any other fees directly related to the sign installation. Businesses outside of the CBD will pay $110. The annual maintenance fee will be equal to the amount of the sign installation fee.

Debt Relief Program

The city is establishing a debt relief program for taxpayers for debts incurred during the period ending December 31, 2011. Taxpayers must apply for the relief.

Sale of Tobacco

The prohibition on the sale of tobacco within 100 ft. of a school, child care facility or place of education/recreation of minors was changed to reflect how the property is measured for the prohibition on the sale of flavored tobacco. It will be measure from property line to property line.

Tobacco License Revocation and Fines

A license shall be revoked for 3 or more violations within a 24-month period of the following: failure to pay the cigarette tax, mutilated stamps, interference with inspections/recordkeeping, purchase of tobacco products from unlicensed wholesalers, violations of the 100 ft./500 ft. rules regarding the sale of tobacco products/flavored cigarettes, sale to minors, sale outside of original packaging, failure to post warning to minors, interference with ID cards of inspection officials. Fines have also increased for these violations over 100% in most cases.

Resolution to Call for a Public/Private Partnership at the Airports to Combat Terrorism

Sponsors:  Alderman Matt O’Shea (19th Ward) and Alderman Brian Hopkins (2nd Ward)

Committee on Aviation

This resolution calls for the Department of Aviation, the airlines and airport concessionaires to form a public/private partnership to help combat terrorism and fund additional police presence at the airports.  All related parties are being asked to offer their input on the idea.

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TanyaTricheContact Information

Tanya Triche
Vice President & General Counsel
312/726-4600
ttriche@irma.org

121 REPORT – CRMA – October 2015

 

CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

Sponsor:  Alderman Joe Moreno (1st Ward)
Committee on Health and Environmental Protection
This proposal would amend the recently enacted plastic t-shirt bag ban by prohibiting retailers from offering reusable bags made of plastic if they are less than 10 mils thick.  In addition, the proposal would require retailers to report the number and type of bags distributed on a weekly basis to the city.  Lastly, the ordinance bans compostable bags until such time that residents have curbside composting.  This last point is a distinction without a difference as there is at least one company that offers residential composting for a fee in the city.    
 
CRMA will continue to push for the ordinance to be amended to replace this language with a fee on all single-use bags.  The latter option preserves customer choice while employing a proven method for actually changing consumer behavior.  If a customer doesn’t want to pay for bags, then the customer will start bringing their own bags.  The use of plastic bags has decreased dramatically with this model in other areas of the country with similar mandates and customers adopted the habit of bringing their own bags.
 
Sponsors:  Aldermen Edward M. Burke (14th Ward), Pat Dowell (3rd Ward), Leslie Hairston (5th Ward) and others
Committee on Finance
Chicago’s suburbs have been dealing with an outright heroin epidemic for years among teens and young adults.  While use hasn’t been as much of an issue in Chicago, the sale of the drug has increased exponentially as it has increasing become a drug of choice.  Sales have spiked on the west side of the city with suburban buyers traveling down Interstate 290 (dubiously dubbed the “Heroin Highway”) to the city in order to score the drug.  Legislators, local police departments, pharmacies, hospitals and treatment facilities have been inundated with those seeking treatment and others demanding ways to combat the problem.  To that end, HB 1 was signed into law recently by Gov. Rauner which will put forth a comprehensive plan to combat heroin and prescription drug abuse.  It would allow pharmacists to distribute opiod antagonists without a prescription, provides for training for law enforcement, grants for drug take-back programs and other efforts to combat this issue from all sides.
 
This resolution focuses on coordinating public health measures, law enforcement strategy and equipping first responders with training and kits to properly respond timely to overdoses.  Tragically, over the weekend, there were over 70 cases of heroin overdoses related to heroin purchases on the west side laced with a painkiller used to give people a faster high.  The task force will include various Aldermen, city agencies and departments that will consult with Cook County to develop a regional approach, medical professionals and other concerned advocates.
 
Proposals to Establish a Property Tax Rebate Program
Committee on Finance
We have previously reported on the Mayor’s efforts to increase property taxes over the next four years while increasing the homestead exemption for homes valued at $250,000 or less which would push the burden of that tax further onto the business community.  Aldermen Moreno and Ramirez-Rosa have both introduced their own proposals that would provide a rebate program instead of increasing the homestead exemption for homeowners.  They would allow homeowners with an AGI of less than $100,000 or whose AGI is less than or equal to 400% of FPL to apply for a grant/rebate that could cover the increase in their property taxes.
Cook County already has a property tax system that taxes residences and commercial properties differently with businesses taxed at 25% of assessed value and residences at 10%.  Of course, Cook County is the only county in the state with such a tax differential.  While the focus has been on the thriving Central Business District, the struggling neighborhood businesses will take the hit of this tax the hardest.  CRMA understands the need for a large tax increase considering the precarious financial position in which the city finds itself, but it opposes any proposal that might push the property tax burden to Chicago’s neighborhood businesses.  There are many neighborhood businesses that are struggling to keep their doors open, and like residents, they could use some tax relief as well.
 
Sponsor:  Mayor Rahm Emanuel
Committee on Health and Environmental Protection
This proposal would allow the Commissioner to immediately suspend a low-risk food establishment’s business license for failure to submit the self-inspection report within the designated times established by the department.
 

PASSED ORDINANCES

 
Sponsors:  Mayor Rahm Emanuel, Aldermen Daniel Solis (25th Ward), James Cappleman (46th Ward) and others
After spending millions of dollars in recent years modernizing many of the “el” stations with more projects to come, the city is focused on turning these areas into bustling retail and residential meccas.  To that end, Mayor Emanuel introduced this proposal to loosen some of the parking requirements and increase incentives for providing affordable units and mixed-use development near these transportation hubs.  Effective Date:  November 1, 2015.
TanyaTriche

 

Tanya Triche
Vice President/General Counsel
312-726-4600
ttriche@irna.org

121 Report – CRMA – August 2015

A BUDGET STALEMATE BRINGS TAXES
…AND MORE TAXES

As the state continues to operate without a budget, Illinois residents and business owners are starting to feel the very real effects of the stalemate.

 

Every week, it seems as if some important constituency will have their funding cut or that bills will not be paid.  Whether it’s federal pass-through funding to help the poor and elderly maintain access to groceries and prepared meals, employee salaries or child care subsidies for low-income families, everything has been in jeopardy at some point.  And while the General Assembly has been in session every week since May 31st (the date by which session was originally scheduled to end) very few bills have passed, including the City of Chicago’s and Cook County’s pension reform bills.

 The financial position of both local jurisdictions has had, and will continue to have, consequences for taxpayers.  While the pension reform bills will help ease some of their burden, both units of government have deficits that exceed the reach of their legislative initiatives.  Cook County Board President Toni Preckwinkle used the legislature’s inaction on her pension bill as an opportunity to pass a sales tax increase. This increase will give the city of Chicago the highest sales tax in the country starting January 1, 2016.  After the tax increase was pushed through within two weeks of the measure being introduced, It was later revealed that President Preckwinkle plans to use over $100 million of that cash infusion to raise the salaries of county employees by as much as 6% in some cases.  This bombshell has left the local and national businesses near the border of the county feeling increasingly unwelcome.  Further salting the wound, it is questionable that the additional revenue could be used for pensions at all.  There is a school of thought that the General Assembly would have to approve the additional revenue for the pension payment which President Preckwinkle’s office has not totally denied.  It is very possible that all of the revenue could be used for purposes other than making pension payments.  This is why the Cook County Board could have, and should have, waited before taking the vote.  There are more questions than answers right now and the uncertainty will have a negative impact business and sales tax revenue.

 

While the retail and restaurant community prepares for that tax to go into effect, we are not out of the weeds yet.  Mayor Rahm Emanuel’s budget address is set to be delivered in mid-September.  If you believe the media reports, that address is likely to include a property tax increase.  A recent lower court decision rejected the city’s attempt to decrease a current pension benefit in exchange for lower-cost, city-funded employee retirement plans.  The city will appeal this decision, but considering that the Illinois Supreme Court just overturned the state’s similar pension reform bill, there is not much hope that the city will prevail.  Add to that current proposed budget from the Chicago Public Schools that cuts spending by $200 million, relies on over $400 million in state aid (that may never come) and lays off over 400 teachers.  If the school system fails to receive the money it is budgeting for from the state, its new chief, Forrest Claypool,  has not yet said what he would do to balance the budget (cue the higher property taxes).

 

While so much discussion regarding the possibility of higher property taxes centers on Chicago’s homeowners, we should note that the business community pays a larger and disproportionate share of property taxes.  It’s probably no surprise to members that the Cook County property tax system is structured differently from every other county in the state.  Rates are assessed at 10% of market value for residential and 25% for commercial.  Therefore, commercial properties carry more of the property tax burden.   Instead of addressing this system that no doubt has a negative impact on commercial development in the county, the discussion always seems to turn to increasing taxes.

 

 There’s no time like the present budget disaster at the state, county and city levels to change the way we think about who we tax, how we tax and why. Cook County would do well to reevaluate its property tax system that keeps residential rates artificially low and commercial rates higher than surrounding counties.  If we want to help the local economy, increased development and job growth is the way to go.  We should change the conversation from increasing property taxes to building the tax base.  There are many ways to stimulate the economy, get people working and grow revenue to local units of government.  Our broken property tax system should be fixed before taxpayers are again asked for more money.

 

CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

Sponsor:  Alderman Proco Joe Moreno (1st Ward)
Committee on Health and Environmental Protection
This proposal would amend the recently enacted plastic t-shirt bag ban by prohibiting retailers from offering compostable bags to customers.  The city of Chicago does not have any commercial composing facilities, and since these bags cannot be recycled, they would all end up in the landfill.  It is not clear how many retailers are actually offering such bags since the cost of doing so is often prohibitive.
 

 

CRMA will continue to push for the ordinance to be amended to replace a ban with a fee on all single-use bags.  The latter option preserves customer choice while employing a proven method for actually changing consumer behavior.  If a customer doesn’t want to pay for bags, then the customer will start bringing their own bags.  The use of plastic bags has decreased dramatically with this model and customers in Washington DC and other cities along the west coast that have gone to a bag fee model have developed the habit of bringing their own bags.
 
Sponsor:  Alderman George Cardenas (12th Ward)
Committee on Health and Environmental Protection
For the past several years legislation has been proposed in the General Assembly to tax sugar-sweetened beverages.  The initiative, led by members of the medical and various health-related non-profit communities, was an attempt to address obesity in communities of color and the chronic illnesses that are tied to it.  The HEAL Act, as it’s known in Springfield, has received hearings in both the House and Senate but has failed to garner enough votes for passage.  We have seen this trend before.  When the advocates fail to get their bill passed in the state legislature, they bring their fight to the city.  But sometimes a bad bill is just a bad bill no matter where it travels.  This fight should stay in the state legislature where it belongs.

 
Interestingly enough, the city of Chicago is the only city in the state that has had an additional tax on soft drinks for over 20 years.  This 3% tax is paid by the consumer to the retailer who then remits the tax to the city.  Yet, the tax has not helped shrink waistlines nor has it reduced the incidence of chronic illness among children or adults in black and Latino communities.  Maintaining a healthy weight is much more complicated than taxing individual products.  It requires a commitment to changing a person’s lifestyle:  what a person eats, drinks, how often they eat, portion size and regular physical activity all play an active role in keeping a person’s weight under control.

 

There is no silver bullet to weight loss.  This tax would just shift sales of the product across the border.  Meanwhile, like the current soft drink tax, it won’t make a dent in tackling obesity and it will hurt grocers near the border of the city.  Members should note that Ald. Cardenas was also the author of Chicago’s current bottled water tax and co-sponsor of the plastic t-shirt bag ban.

 

Sponsors:  Aldermen Tom Tunney (44th Ward) and Michele Smith (43rd Ward)
Committee on License and Consumer Protection
This proposal would establish a pilot program to extend sidewalk cafes into a protected area of the street.  Sidewalk cafes are an important additional revenue source for Chicago restaurants. In some of the most congested areas of the city, it is difficult to establish a sufficient area for outside eating due to narrow sidewalks.  Therefore, Aldermen Tunney and Smith are seeking to have a pilot program for the 2016 sidewalk café season where restaurants could extend the outside seating without unduly interfering with pedestrian or vehicular traffic and parking.

 

The idea would be a great addition to neighborhood retail and hospitality centers by allowing restaurants to expand their square footage and giving residents an opportunity to spend more time outside in the short Chicago summers.  It also will give restaurant employees more opportunities to earn more money due to the additional patrons.  The pilot program is a win for employers, their employees and commercial corridors.  We support it.

 

Sponsors:  Mayor Rahm Emanuel, Aldermen Daniel Solis (25th Ward), James Cappleman (46th Ward) and others
Committee on Zoning, Landmarks and Building Standards
As the city’s transportation authority has spent millions of dollars in recent years modernizing many of the “el” stations, it has become important to turn these areas into bustling retail and residential meccas.  To that end, Mayor Emanuel introduced this proposal to loosen some of the parking requirements and increase incentives for providing affordable units and mixed-use development near these transportation hubs.

TanyaTricheContact Information

Tanya Triche
Vice President & General Counsel

312/726-4600