Aldermen mull CTA tax package

Chicago real estate agents today railed against a proposed tax increase on home transfers to pay for a transit bailout.

The tax, approved by state lawmakers as part of a funding package that prevented massive service cuts at the Chicago Transit Authority, will be considered Monday by the City Council's finance committee.

"The real estate tax is a highly regressive tax that's aimed at those who can least afford it," said Brian Bernardoni, government affairs director for the Chicago Association of Realtors. "It's a 40 percent increase that's going to make Chicago less affordable; it's a 40 percent increase that's going to make it difficult to do business here."

The tax, which is paid by home buyers, will increase from $7.50 to $10.50 per $1,000 of sale price. Someone buying a Portage Park home for that neighborhood's average price of $262, 268 would pay $3,147. Under the current tax rate, they would pay $2,360.

The state legislature's CTA bailout calls for the tax to provide $100 million for the agency to fix its troubled pension system.

At a press conference today, David Hanna, president-elect of the Chicago Association of Realtors, criticized the route that the city and the CTA took to achieve the legislation.


The CTA, he said, could have proposed a tax increase months ago, which would have enabled officials to place it on Tuesday's ballot as a referendum.

"The CTA chose not to take that path," he said. "Rather, they chose to take a path of the tax grab."

Hanna also said that the tax would fund pensions rather than upgrades to CTA service.

"The average Chicagoan that reads this story or sees it on T.V.  today does not have a pension plan," said Hanna. "Raising taxes on their backs to fund pensions is simply unwarranted."

Several aldermen said the tax poses a tough decision for them.

"When the country is facing a recession, you don't raise taxes on real estate," said Ald. Bernie Stone [D-50th]. "I can't vote for it and I can't vote against it. I have only one choice, I have to walk out of the room when the vote comes."

Stone also said that his ward suffers from a lack of CTA service.

"In the 50th ward, I virtually have no CTA anyway--it's a mile between buses," said Stone. "But I don't want to hurt the other people of Chicago."

Ald. Brendan Reilly [D-42] said he wants to understand what all the options are before he makes a final decision. He cited several examples of how the legislation could be fine-tuned.

"I want to get some agreement from the administration on negotiating a sunset date," said Reilly. "The legislation provides for the tax to be lifted but doesn't have a definite sunset built in. I also want to make sure that the ordinance reflects that we dedicate these funds to the CTA specifically. That we don't start borrowing from Peter to pay for Paul."

Reilly added that a cap is needed to ensure that the city doesn't collect more taxes than they need to pay the bonds.

Ald. Tom Tunney [D-44] said he will be looking over recommendations from the real estate industry on the ordinance, but would definitely be voting in favor of the tax.

"The CTA is an absolutely crucial part of my community," said Tunney.

He also said the prospects for passage are good.

"There will be a lot of ranting. But I think when it comes to the end of the day, nobody wants to be on the wrong side of their constituents when it comes to the CTA," Tunney said.

The CTA defended the tax transfer component of the package.

"The tax is a critical component of the holistic funding package that the General Assembly approved," said Noelle Gaffney, spokesperson for the CTA. "Ultimately, it's a smart investment that will allow the CTA to implement pension and healthcare that will save $11 million per month. That money is coming from operations now. It will provide money that can be used for day-to-day operations going forward."

Discuss

PG, 02-01-2008

This tax hike is absurd!



The extra thousands of dollars I am going to be forced to spend is going to pay for the CTA pension fund - not for more buses and trains.



I don't have a fully funded pension fund - why am I being forced to pay for the CTA's?



I went to www.wrongtax.com to email my alderman that this tax is only going to further hurt the Chicago economy.

LEE, 01-31-2008

"The CTA, he said, could have proposed a tax increase months ago"??? David Hanna, where have you been for the past year as the funding package was being debated? Now you're suddenly trying to make out as if this came from nowhere? This isn't a surprise. A lot of thought and deliberation has already gone into it, and I have yet to hear the Realtors explain how real estate values would hold if transit crumbled, or where else they think the money should come from.

DAVE HANNA, 02-01-2008

We in the real estate community have been fighting this battle since last spring. This tax is unfair to all Chicago citizens. The legislature took an easy way out and avoided dealing with the issue of how to ensure we have a functional regional transit system.

This is not about the CTA crumbling. This provides no funding for infrastructure repair or new routes, trains or buses. The CTA will be back asking for hundreds of millions of dollars for those things next.

This is a regional transportation authority, and yet Chicagoans pay the lions share of the taxes to fund it.

The funding should at the very least come from all the communities in the 5 county area that benefit from Metra, Pace and the CTA.

But, for me personally, the rub is in the complete lack of accountability of the RTA to the public. The mismanagement is chronic, the service continues to be nominal at best, and the money does not fix problems, it perpetuates a bloated bureaucratic payroll. We cannot continue to pay for failure.

BRIAN, 02-01-2008

Next elections vote the Alderman out of office. Let mayor daley and his little minions, city council, know the lack of leadership is no longer acceptable. Lets not forget that this will be the second time in 2 months that our mayor and his alderman have raised our taxes and stolen our money!

I WAS THERE, 02-05-2008

Dave, too bad you weren't making those arguments to your suburban real estate peers who killed a region-wide real estate transfer tax. You're right, the city and cook county pay more than their share for a regional transit system that benefits the entire region. But Chicago realtors were AWOL on this particular issue