Rahm Emanuel Requests Significant Raise to Illinois’ Commercial Property Taxes

Rahm Emanuel Requests Significant Raise to Illinois’ Commercial Property Taxes

Commercial-Property-TaxesMayor Rahm Emanuel is seeking to raise taxes on commercial property holders in the hopes that these tax increases will stave off the state’s ever burgeoning budget shortfalls. This past week, he pitched his proposals to Chicago’s 50 Alderman seeking their support of the largest property tax increases in the history of Illinois.

At issue is the philosophy of how to deal with the city’s budget shortfalls which exceed $9 billion dollars a year. Coupled with over $159 billion in IOU’s owed to future expenses including pensions and Medicaid, Mayor Emanuel is proposing these tax increases in the hopes that they will alleviate the city’s budget woes.

Commercial real estate lawyers throughout Illinois are currently assessing the impact Mayor Emanuel’s proposals will have on their clients. There is no doubt that Chicago and Illinois are in deep financial straits. However, there is concern that these proposals will simply make it too costly for businesses to operate in Illinois. There exists the possibility that should these increases be approved, that it will make it less appealing for businesses to initiate new operations within the state.

Facing considerable budget shortfalls, Mayor Emanuel is requesting the Alderman agree to raise property taxes by $588 million over the next four years. These funds would be used to bolster police and fire pensions. The largest of these increases totaling nearly $300 million would be levied in 2016. The remaining increases would be implemented through 2020. These increases would be in addition to other fees and taxes the mayor is seeking to raise that include additional fees on building permits, cigarettes, and taxi’s.

Mayor Emanuel is in a difficult position as he seeks ways to meet the obligations the state has to its pensioners. These increases will no doubt place an additional financial burden on businesses still recovering from the recession. By placing these expenses on commercial property holders and investors, city business leaders argue that it could stagnate the economy even as it is showing signs of recovering.

While it is as yet undetermined whether the Alderman will grant Mayor Emanuel’s requests, it is unlikely that Governor Rauner would support such increases. He is proposing freezing the statewide tax rates on property arguing that they are already the highest in the nation and that further increases could cause considerable damage to the state’s long-term economic recovery.

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