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.
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."