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* At one point in her Sun-Times editorial board interview yesterday, Mayor Lori Lightfoot had this to say about her idea to create a progressive rate on the real estate transfer tax, for which she’ll need Statehouse approval…
Everybody pays the same amount regardless of the value of their home. We think that’s regressive and unfair. What we’d like to see is a progressive ramp that gives relief to homeowners at the lower end of the housing market value and make people upstream pay more of their fair share.
* But Lightfoot was also asked if she thought it was politically tough to get Downstaters on board for pension help for the city at the same time that the Democrats are trying to pass a progressive income tax…
We have to look at the entire eco-system of what’s happening. If we don’t get help from Springfield, we have limited options. And you know that one of those options is property taxes - a huge property tax given the size of the deficit for next year.
So we have to think about the timing of that. Right? We go first. Twice. This year, next year before the voters go to the polls to approve the Fair Tax. So we have to take the long view of what that’s going to mean. And I’m also mindful of the fact that in this state the vast majority of high net worth earners live in the city of Chicago.
We can’t keep taxing the hell out of all of our people who make substantial income. That’s not right. That’s not fair. It’s not gonna work.
What I think she’s trying to say here is that if upper-income folks get hit with two big property tax hikes between now and next November, they’re gonna rebel at the polls against the progressive income tax. OK, but they’re still a minority, including in the city, and Lightfoot herself is trying to impose her own progressive tax.
And that last little bit about the poor put-upon rich people was a big political mistake. You can probably bet a lot of money that this quote is gonna wind up in a TV ad against the Pritzker graduated income tax. And you can also bet that the legislators who voted to put that tax proposal on the ballot are not going to be pleased with the mayor.
[Hat tip: Rachel Hinton
*** UPDATE 1 *** Good questions by Tina…
A source close to the mayor worked quickly to walk back that statement, reasserting that Lightfoot supports a graduated income tax structure for the state. But is this Lightfoot’s power play? Get in the way of a plan the governor is spending millions on, so the city can get its needed casino and pension help?
The state-city power struggle came into full view during Lightfoot’s address, in which she tied the city’s woes to getting help from Springfield.
* Meanwhile, over at Crain’s Chicago Business…
Mayor Lori Lightfoot today declared “unsustainable” the 3 percent annual compound pension COLA many city workers and retirees have been promised—and hinted she would not object if further conversations occurred about amending the pension clause in the Illinois Constitution to allow change. […]
Not only labor unions but Gov. J.B. Pritzker oppose doing that, and Lightfoot—who in other settings has said workers should not have their benefits reduced—said today that “I’m not advocating for a constitutional amendment.” […]
But a few minutes later, Lightfoot said that even if such efforts succeed, the current COLA is “unsustainable.” Asked if she’d like the constitution to be amended, Lightfoot replied that, “I’d like to put as many options as possible on the table.”
In response to another question, Lightfoot said she did not mean to imply that other pension efforts short of amending the constitution were useless, but that in today’s economy, “3 percent compounded is a tough climb.”
Pick a lane, please.
*** UPDATE 2 *** Michael Crowley at the mayor’s office…
As the Mayor has repeatedly made clear, she believes that our pension obligations are not optional. This administration is committed to finding ways to shore up the sustainability of our pension funds – including the COLA. We must secure the retirement of our working people by partnering with our allies from the State to identify progressive revenue streams. Mayor Lightfoot remains opposed to a constitutional amendment on pensions.
posted by Rich Miller
Friday, Aug 30, 19 @ 1:07 pm
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Chicago residents have a rookie Mayor, rookie Governor, and Rookie President. What could go wrong? She is a neoliberal I think that is plain to see
Comment by P Friday, Aug 30, 19 @ 1:13 pm
Wow - I’m disappointed because Mayor Lightfoot has said over and over that the pensions are a “promise.” Yet now she thinks the compound pension COLA which was a part of that promise is “unsustainable”?
Comment by Christopher Friday, Aug 30, 19 @ 1:15 pm
I read it as a not-too-subtle threat to sabotage the fair tax if Democrats will not bail out Chicago.
How about you, Anne?
She is not only playing into GOP hands, she is encouraging them to oppose any bailout for Chicago by suggesting if it doesn’t happen, she will help them kill the progressive income tax.
Lightfoot is playing tic-tac-toe against herself and losing on both sides.
Comment by Charlie Brown Friday, Aug 30, 19 @ 1:16 pm
===I read it as a not-too-subtle threat to sabotage the fair tax===
She’s done that before on this very topic. She moved from threat to overt act today. Oops.
Comment by Rich Miller Friday, Aug 30, 19 @ 1:18 pm
At this point, taking Mayor Lightfoot seriously is something you do at your own peril.
She talks, then she talks again, talking a third time, all three are confusing gibberish to the honesty of a plan or someone willing to work with others to get a plan.
For the love of Pete…
1) Decide on options you want to discuss with the GA Leaders and this governor.
2) Actually talk with… the GA Leaders and the Governor… first… like not say silly things publicly then hope they get “hints” or “drifts”
3) Get strong old hands that understand process and the politics to them both to meet with GA Leaders’ Crews abc the Governor’s too.
4) Whittle down to actual options all can agree to, and then discuss how to plan… to move the whole plan… with the small steps to achieve success.
5) Now… talk to the press.
It’s only hard if you refuse to see this or another similar strategy that revolves around finding a solution, with partners, privately then publicly, then proceed to execute that or any plan.
Be better.
Comment by Oswego Willy Friday, Aug 30, 19 @ 1:20 pm
Cue an email blast from Baise in 3…2…1…
Comment by Bertrum Cates Friday, Aug 30, 19 @ 1:21 pm
In her speech yesterday she kept going back and forth about pension being a promise and then would refer to fundamental changes. What is more fundamental than a constitution? She is inferring or threatening to try and change the pension clause if she doesn’t get what she wants.
Comment by DuPage Saint Friday, Aug 30, 19 @ 1:24 pm
What OW said times 100. The Sun Times kept asking if she picked up the phone and called J.B. before the speech. She said a whole lot of words except “Yes.” For someone that is really proud of all the conversations she is having, it doesn’t seem like she knows how to have productive, strategic conversation.
Comment by Montrose Friday, Aug 30, 19 @ 1:26 pm
Lightfoot keeps this up and she could be a one-termer. But no worries, she could find decent pay working for a right wing outlet, maybe teaming up with Janus at the IPI.
Comment by Grandson of Man Friday, Aug 30, 19 @ 1:30 pm
A 3% compounded COLA is unsustainable in a low inflation environment
The inflation rate has only been 3% or higher only 8 years since 1990
https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093
Comment by Lucky Pierre Friday, Aug 30, 19 @ 1:31 pm
First reaction: It’s word salad.
Solution: What OW said and then some.
Develop a position/policy, hopefully in consultation with political allies, then memorize it, then talk to the press (and stay on message). Please.
Comment by Pot calling kettle Friday, Aug 30, 19 @ 1:32 pm
Great another pension basher….
I’m so tired of this crap.
Each pension is a person
Each pension is a earned by service
When you attack pensions
you’re attacking a person who served faithfully
for many years.
If you don’t like pension promises
Don’t make them.
Comment by Honeybear Friday, Aug 30, 19 @ 1:35 pm
It is going to be a long four years.
Comment by Bertrum Cates Friday, Aug 30, 19 @ 1:35 pm
And with this one interview , Mayor Lightfoot may have hurt the chances of the progressive income tax to become part of the Illinois state constitution. When you’ve won 50 wards in Chicago, you just might think you have more popular support than some legacy politicians.
Comment by Steve Friday, Aug 30, 19 @ 1:37 pm
===She is a neoliberal I think that is plain to see===
What does that even mean in this context?
Comment by Oswego Willy Friday, Aug 30, 19 @ 1:38 pm
===And with this one interview , Mayor Lightfoot may have hurt the chances of the progressive income tax to become part of the Illinois state constitution.===
Take a breath.
The election is 14 months away, not 14 minutes away.
Try not to have your politics forget what timing is and what’s it’s meaning
===When you’ve won 50 wards in Chicago, you just might think you have more popular support than some legacy politicians.===
Governors > Mayors
Keep up.
Comment by Oswego Willy Friday, Aug 30, 19 @ 1:41 pm
She is on her way to becoming a total failure I rather doubt she is a factor by next November. Or what OW said.
Comment by Not a Billionaire Friday, Aug 30, 19 @ 1:41 pm
“Yes, I support that. And by support I mean strongly oppose. We should definitely look at that, but first my spokesperson would like to clarify my statements to the consistency of mud.”
Comment by Harvest76 Friday, Aug 30, 19 @ 1:46 pm
The pension bump of 3% is not repeat not a COLA.
The Illinois Supreme Court specifically said it was a bargained for provision and not tied to a cost of living. And in a foot note said that if in fact it was a cost of living increase the payout since the 1970 Constitution would have been greater than the 3% bump. It is in the footnotes
Comment by DuPage Saint Friday, Aug 30, 19 @ 1:47 pm
=the vast majority of high net worth earners live in the city of Chicago.=
Ms. Mayor, you may want to check your statistics on that one.
=A 3% compounded COLA is unsustainable in a low inflation environment=
Jibberish. The inflation rate has nothing to do with sustainability. Investment returns.
Of course the fact that the pensions have hovered at roughly 40% of obligations for going on 50 years would also be a strong indication that they are sustainable.
The pensions have been around for a century so going back to 1990 is cherry picking and, using your numbers, inflation was above 3% for nearly 1/3 or the time.
Comment by JS Mill Friday, Aug 30, 19 @ 1:48 pm
=the vast majority of high net worth earners live in the city of Chicago.=
Ms. Mayor, you may want to check your statistics on that one.
=A 3% compounded COLA is unsustainable in a low inflation environment=
Jibberish. The inflation rate has nothing to do with sustainability. Investment returns.
Of course the fact that the pensions have hovered at roughly 40% of obligations for going on 50 years would also be a strong indication that they are sustainable.
The pensions have been around for a century so going back to 1990 is cherry picking and, using your numbers, inflation was above 3% for nearly 1/3 or the time.
Comment by JS Mill Friday, Aug 30, 19 @ 1:48 pm
OW
I do realize a lot can change in 14 months from now, like revenue projections based on what’s going on in the economy. But, Mayor Lightfoot didn’t make it any easier today to pass a progressive income tax.
Comment by Steve Friday, Aug 30, 19 @ 1:48 pm
She’s either a machiavellian genius pursuing a political strategy few can see or understand at this juncture, or she is incompetent, and Chicago is screwed for the next four years.
Comment by Awnoun Friday, Aug 30, 19 @ 1:49 pm
She’s not the first Chicago mayor who thinks the state exists to serve Chicago.
She said in her remarks yesterday that “she walked into” this financial mess. That’s not correct. She ran into it, as soon as she decided to run for mayor.
No, the financial mess was not a central issue in the campaign, but it’s impossible to believe she didn’t have a pretty good idea of how bad it was long before she won. She should have been preparing for this day much sooner. Her feeble attempts to get help from Springfield are like the kid who did his homework on the bus on the ride to school.
My best advice for her is to do whatever she can to keep the city afloat while building a coalition in Springfield around a comprehensive approach to problems affecting Chicago and all Illinois cities. Unless and until the graduated income tax is approved by voters, the state is simply not in a position to bail out Chicago. And shame on whoever told Lightfoot otherwise.
“But, but, but Chicago is so important to Illinois…” doesn’t get you to 60/30. It never has and it never will.
Comment by 47th Ward Friday, Aug 30, 19 @ 1:51 pm
===But, Mayor Lightfoot didn’t make it any easier today to pass a progressive income tax.===
… and in 10 minutes, she’ll favor it.
Or better… to get anything from this governor, she’ll be on board.
Seriously, it’s tiresome.
When Pritzker goes $7-10 million deep on advertising on a tax 97% won’t see a raise in… Lightfoot is gonna take on that Governor, when she needs… that Governor?
Ugh.
Comment by Oswego Willy Friday, Aug 30, 19 @ 1:51 pm
Lightfoot May said something like this once before, in regards to a financial transaction tax proposal. She could dispel some future flak by doing a video ad supporting the graduated income tax.
Several things about taxing the rich more.
1) They out-migrate less than others from higher tax states.
2) Chicago metro is almost always tops in the country in corporate real estate deals.
3) After the 2011 tax hike in Illinois, flat as it was, the richest made the biggest income gains, and their population grew.
Comment by Grandson of Man Friday, Aug 30, 19 @ 1:54 pm
$800M is a big number, but on the other hand isn’t it about 8% of the city budget? It’s important to put the numbers in context.
Comment by NoGifts Friday, Aug 30, 19 @ 2:01 pm
The Mayor may want to actually talk to some people first who know how to do this? And by this, I mean, the actual job of putting together coalitions and teams that can achieve results.
Yesterday the Progressive Caucus held a press conference about how they’re going to be involved, they’ll have a voice on the solution. Today the mayor just shot down the Progressive Caucus goal of taxing the rich.
So who does the mayor believe should be taxed? She’s going to hit the working class folks who have pensions at the expense of not taxing the high income earners? Is this what the new progressive caucus wants?
Plus she wants a rewrite of the City casino?
And the “out of town” tax, is she going to put up toll booths at Union Station and Ogilive? Maybe put a toll on the Eisenhower, Edens and Kennedy that go directly to city coffers?
There’s more items on her wishlist than a menu at a greek diner.
Comment by Dupage Bard Friday, Aug 30, 19 @ 2:02 pm
Mayor LIghtfoot has rightfully acknowledged a known challenge to tax increases.
You can’t tax the financial transactions in the city, because that business can easily move elsewhere.
And if you agree with the easy mobility of that activity, then you understand that increasing taxes is a matter of driving out business activities by degrees. Less mobile businesses will move, as taxes get higher.
But even that misses the bigger point. Because, if you acknowledge that transactional business would easily leave Chicago if we start to tax it, then it follows that businesses, for the same reasons, would not look to expand in or move to a state that is increasing taxes on income, property, property transfers, etc.
That is what we are seeing play out in slow motion, here in Central Illinois.
Comment by Downstate Friday, Aug 30, 19 @ 2:02 pm
==We can’t keep taxing the hell out of all of our people who make substantial income.==
Under the proposed graduated tax plan, you’re going to keep taxing the hell out of all of our people who make any income. No inflation indexing, remember?
Comment by City Zen Friday, Aug 30, 19 @ 2:04 pm
Piggybacking on what 47th Ward said, it seems to me the big problem is that Mayor Lightfoot campaigned as a progressive, but her personal beliefs seem closer to Richard M. Daley. Pensions are too generous, and we cannot raise property or any taxes on the wealthy or there will be a taxpayer revolt. If Lightfoot could quell her Daley II side, she could pick a revenue source, income tax, service tax, or otherwise, and work in Springfield to pass it. Instead, she gives a speech where she tries to flaunt her progressive bona fides while avoiding a progressive solution to the budget deficit.
Comment by Three Dimensional Checkers Friday, Aug 30, 19 @ 2:05 pm
“Everybody pays the same amount regardless of the value of their home. We think that’s regressive and unfair”
The sale of a property will impact the city of Chicago the same regardless of its value. A progressive real estate transfer tax is a pure revenue grab - rather than an equity play. They can use the revenue to address inequities like affordable housing or fix lead pipes or pay for pensions - but it is a pure revenue play.
Comment by Donnie Elgin Friday, Aug 30, 19 @ 2:08 pm
===$800M is a big number, but on the other hand isn’t it about 8% of the city budget?===
No, it’s closer to 25%. The corporate budget is about $3.7 billion, give or take.
The budgets for the schools, the park district, the CTA and other entities are separate budgets with separate revenue streams.
Comment by 47th Ward Friday, Aug 30, 19 @ 2:08 pm
Rookie mayor…
Comment by El Conquistador Friday, Aug 30, 19 @ 2:10 pm
I wonder how the Mayor feels about Elizabeth Warren’s proposed wealth tax? That seems like the best way to generate the revenue necessary to simultaneously pay down pensions and not cut programs.
Comment by Warrenville Not to be confunsed withMargaritaville Friday, Aug 30, 19 @ 2:11 pm
5 pm Friday cannot come soon enough for this administration.
What we are resisting is a mayor whose brain is constantly resisting her talking points.
Her staff might have convinced her to go with the script, but they have not actually changed her mind on the issue.
Comment by Charlie Brown Friday, Aug 30, 19 @ 2:13 pm
The rookie has a good fastball, but can’t command it in the strike zone. A lot like Dylan Cease against the Twins.
Comment by Rich Hill Friday, Aug 30, 19 @ 2:13 pm
It feels like they are very much making it up as they go along, with a lot of on the job learning (one hopes) taking place. That’s painful to watch.
Last night’s speech was originally billed as a budget speech, then it became a “State of the City” speech. But, it was mostly focused on budget topics and didn’t at all speak directly to the problem of violence, which seems like a major omission if one is supposed to be accounting for the state of the city.
Also, while Lightfoot is without question the most important mayor in the state, she acts as if she is on the same level as the governor. The persistent lack of communications from the mayor’s office to the governor’s office is baffling, but less so if she thinks she is co-equal and he owes her as much deference as she owes him.
The wild card is the city council. Some early success, but they haven’t done anything hard, yet. Despite the formation of a PAC, I wouldn’t expect she has them on lockdown yet.
Comment by Moe Berg Friday, Aug 30, 19 @ 2:14 pm
Regarding Mayor Lightfoot’s statement that “we don’t have a moment to lose”:
Sometimes your options are limited by outside conditions–like playing baseball in a thunderstorm. The earliest I can see the GA helping Chicago by enabling a local service or income tax would be the 2021 session–after the graduated income tax is voted on. The Governor will not want too many new taxes being considered before the referendum.
So the Mayor may want to hold property taxes where they are and live with the deficit for a couple years, progressive-ise the RE transfer tax, get the casino and pot shops up, support the graduated income tax, plan to run for re-election, and then quietly (not tweeting or leaking details prematurely) start working with the GA and Governor to devise a longer-term tax plan for the City that might not be soup until both she and the Governor win their second term.
Comment by James Friday, Aug 30, 19 @ 2:16 pm
Memo to Mayor Lightfoot: it’s time to stop campaigning and time to start governing. That means you pick up the phone or meet in person with the folks you need to get your agenda done. You don’t do so through the media. In fact, that will help ensure that you won’t get anything done. Also, message discipline. Everyone remembers what you said last week or a couple of days ago, so your message needs to stay consistent. And, if your comms director and advisors have to keep clarifying your statements, that means you need more practice at staying on script.
Comment by Shytown Friday, Aug 30, 19 @ 2:21 pm
==live with the deficit for a couple years==
Given the City’s financial situation, the credit rating agencies are unlikely to tolerate this strategy.
Comment by Warrenville Friday, Aug 30, 19 @ 2:22 pm
Uh oh now the super secret second spokesperson is saying she’s against a Constitutional amendment?
Pick a message and stick with it. Teach your candidate what the policies actually are that you stand for and have them stay on message.
Comment by Dupage Bard Friday, Aug 30, 19 @ 2:33 pm
As a point of reference the 3 percent COLA wasn’t even part of the pension program at the time of the constitutional convention adopting the impairment clause. My recollection is Thompson dumped this stick bomb onto us taxpayers in 1990 as he was walking out the door. At the same time I believe he legislated quite the pension jump for himself
Comment by Sue Friday, Aug 30, 19 @ 2:49 pm
If you want to stab the Governor in the back, you need to wait until he turns around.
That’s Lightfoot’s “rookie mistake.”
You are supposed to whisper these threats off the record, or via messengers, not on the record in an editorial meeting.
I can only imagine how Anne took it. How about Scott?
Comment by Charlie Brown Friday, Aug 30, 19 @ 2:54 pm
“My recollection is Thompson dumped this stick bomb” Those darned tax-and-spend liberal Democrats.
Comment by Skeptic Friday, Aug 30, 19 @ 2:58 pm
I agree wholeheartedly with Honerbear. I also think it’s past time governments moved from pensions to 403b accounts. I’ve worked for various private universities for most of my adult like. I enrolled in TIAA Cref as soon as I could. Between my contribution and each schools contribution s, I’ve been socking away roughly 10% of my salary for roughly 35 years. I retired at the end of last week.
This is doable. I would not ever want the state to end pensions for people who have skin in the game already, but they should start something like this for new hires.
Comment by Cheryl44 Friday, Aug 30, 19 @ 3:01 pm
== it seems to me the big problem is that Mayor Lightfoot campaigned as a progressive, but her personal beliefs seem closer to Richard M. Daley. ==
Yes. And mix the muddled messaging that creates with her and her staff’s political inexperience and you end up with a mess.
Comment by Roman Friday, Aug 30, 19 @ 3:05 pm
Can’t wait till Chicago becomes its own state. (Snark)
Comment by Bruce (no, not him) Friday, Aug 30, 19 @ 3:19 pm
Even if a constitutional change regarding the pension protection clause ultimately passed all the numerous obstacles, it is not at all clear the 3% AAI could be reduced, especially for those already retired. Like the US constitution, the state constitution also has a clause barring ex-post facto legislation and the abrogation of contracts, and in its 2015 ruling the ISC hinted that it would likely have overturned the 2013 legislation - which tried to dramatically cut the AAI - based on this clause alone. The way the AAI is structured, whereby a specific, dedicated portion of employee contributions goes towards providing this benefit in retirement, it is difficult to see how it can be changed, just based on general contract principles, for someone who is already retired or close to retirement. It would be like a long term care insurance company refusing to honor an inflation rider on a policy after a policyholder specifically paid higher premiums for decades in order to receive this benefit.
Comment by Andy S. Friday, Aug 30, 19 @ 3:20 pm
==Andy S == Adding to what you said, if you can change the 3% AAI, then you can change the rate you pay on bonds. Could also keep 25% of Sue’s income tax refund while you are selecting who to default on.
PS John Shimkus retiring …
Comment by Anotheretiree Friday, Aug 30, 19 @ 3:36 pm
Focus, Lori, focus.
Comment by Grandson of Man Friday, Aug 30, 19 @ 3:40 pm
Tier 2 to the rescue - just have to wait out all those pesky Tier 1 folks.
“3% or 1/2 of any increase in the CPI for the preceding year, beginning 1 year after retirement or at age 67, whichever occurs later”
Comment by Donnie Elgin Friday, Aug 30, 19 @ 3:49 pm
Lightfoot has been sadly disappointing thus far as mayor.
Comment by Nick Friday, Aug 30, 19 @ 3:58 pm