Mayor Lori Lightfoot points to real estate tax hike as possible budget fix as some aldermen again call to raise it and use money for homeless services


Mayor Lori Lightfoot on Tuesday said she might raise the real estate transfer tax on expensive property sales to help close an enormous 2020 budget hole.

Lightfoot’s comment came hours after some aldermen said they would introduce a plan this week to again try to hike the real estate transfer tax on home sales above $1 million to help combat homelessness.

An ordinance several council members are set to introduce Wednesday would raise the tax rate for those high-end purchases from 0.75% of the purchase price to 1.95%. The proceeds, which supporters said could be as much as $150 million annually, would be earmarked specifically for homeless services and affordable housing programs.

Asked about that proposal, Lightfoot revealed that she might have other uses for that new revenue.

“We want to look at that issue as a revenue source for us for the 2020 budget, and the way that their ordinance is structured those resources won’t be available to us till much later,” she said. “So we’re on different time frames. I think we also have a slightly different trajectory in the various cut points for the tax. But we’ll work through those.”

Lightfoot said during the mayoral campaign that she supported an additional tax on high-cost property sales to funnel more money toward homelessness. But she’s now also facing a 2020 budget deficit that could be around $1 billion, so priorities might be changing on City Hall’s fifth floor.

Supporters Tuesday said the tax hike could raise $100 million to $150 million a year to go toward homeless services, though real estate groups have warned that hitting high-end buyers in the pocketbook with such a big increase would hurt the city’s market.

While former Mayor Rahm Emanuel opposed an earlier bid to increase the tax that fizzled, Lightfoot campaigned in favor of the idea. Supporters hope she gets behind their plan.

“The mayor campaigned on the issue,” said Ald. Michael Rodriguez, 22nd, a co-sponsor of the proposal. “She campaigned hard on being for raising the real estate transfer tax to improve homeless services. I expect she’ll continue to support that campaign.”

But Lightfoot on Tuesday said that while she agrees with the idea, this particular effort isn’t exactly what she has in mind.

“I know that there’s an effort that’s being made on the part of the Chicago Coalition for the Homeless. I believe that the intent is to introduce an ordinance tomorrow,” the mayor said. “We have sat down and talked with them about what our plans are. I think we have a different timeline in which we’re going to address it, we’re going to do this also in a slightly different way, but I think we can work collaboratively to get to the same place.”

Ald. Roberto Maldonado, 26th, said the mayor was “noncommittal about our version in particular, but she urged us to introduce it.”

The homelessness problem is worsening, Maldonado said, and Chicago doesn’t invest enough in fighting it.

“This is a crime, and this is a chance to raise $100 million from rich people to help the less fortunate,” the alderman said.

Housing Committee Chairman Ald. Harry Osterman, 48th, said he’s supportive of the idea of finding a way to funnel more money both to homelessness services and affordable housing, but he wants to take a “deeper dive” on the proposal. “I want to look specifically at how much goes where, and how it’s used,” Osterman said.

There are several legislative hoops to jump through before the new tax rate could take effect. First, backers need to get a referendum question on the 2020 presidential primary election ballot asking Chicago voters if they support the idea. If that referendum question passes, the City Council could then adopt the rate, which would become law that September.

“When you look at cities throughout the country, what they spend on their homelessness services, the city of Chicago lags way behind,” Rodriguez said. “We need to join the 21st century in investing in our most vulnerable populations.”