Accounting
Chicago nixes property-tax hike as Olympic loan payment extended
Chicago Mayor Brandon Johnson is reversing his plan to raise property taxes by offering to use some bond refinancing savings and defer a loan repayment to close the budget deficit.
After
“Based on conversations with aldermen the decision was made to remove the property-tax” increase, Chief Financial Officer Jill Jaworski said in a telephone interview on Monday.
Earlier this month, the city
The mayor’s proposal in October didn’t include repayment of the final loan portion of the more than $90 million the city had paid for the Michael Reese site, Jaworski said. The loan, a general obligation of the city not supported by the property-tax levy, had a fixed interest rate of 3.55% following a 2017 refinancing and an outstanding balance of about $40 million that was set to mature June 30, 2024, according to a bond filing in 2022. The loan has lingered for years on the city’s balance sheet even after Chicago agreed in 2021 to sell the site to a developer in phases through
The city paid that $40 million from a separate line of credit this year and is proposing to amortize the debt in 2026, Jaworski said. She added that at the high-end, deferring paying off the debt entirely may cost the city $2 million a year.
Alderman Daniel La Spata said the proposal appears to be “kicking the can down the road.”
Jaworski disagreed, adding that the city is looking at different ways to repay the loan over time given the site has not been developed yet.
The city council is expected to approve the latest version of Johnson’s spending plan Monday now that the property-tax hike has been removed. He had originally pitched a $300 million property-tax hike that aldermen unanimously
Johnson and his team have negotiated items piecemeal and proposed raising other taxes, fines and fees to fill the nearly $1 billion deficit in the city’s $5.6 billion operating fund, known as the corporate fund. That fund pays for public safety, streets and sanitation among other services.
Rating firms are watching how the budget process unfolds. Last month, S&P Global Ratings put the city on a negative credit watch with at least a one-in-two chance of a downgrade in the next 90 days amid the struggle to pass a budget.
The rating firms have expressed concerns that include the city making its statutorily mandated pension payments as well as the supplemental amounts that have been added in recent years, Jaworski said. They have also stressed that the city focus on budgets that are primarily structurally balanced.
“We are hopeful that the rating agencies will be comfortable with this budget and with all the revenues and cuts,” she said. “But we recognize they are looking at it carefully and there always is some risk that we could get downgraded.”
Easing restrictions, sharpening personal attention and clarifying denials are among the aims of
The programs focus on “fast track settlement,” which allows IRS Appeals to mediate disputes between a taxpayer and the IRS while the case is still within the jurisdiction of the examination function, and post-appeals mediation, in which a mediator is introduced to help foster a settlement between Appeals and the taxpayer.
The IRS has been revitalizing existing ADR programs as part of transformation efforts of the agency’s new strategic plan, said Elizabeth Askey, chief of the IRS Independent Office of Appeals.
“By increasing awareness, changing and revitalizing existing programs and piloting new approaches, we hope to make our ADR programs, such as fast-track settlement and post-appeals mediation, more attractive and accessible for all eligible parties,” said Michael Baillif, director of Appeals’ ADR Program Management Office.
Among other improvements, the pilots:
- Align the Large Business and International, Small Business and Self-Employed and Tax Exempt and Government Entities divisions in offering FTS issue by issue. Previously, if a taxpayer had one issue ineligible for FTS, the entire case was ineligible.
- Provide that requests to participate in FTS and PAM will not be denied without the approval of a first-line executive.
- Clarify that taxpayers receive an explanation when requests for FTS or PAM are denied.
Another pilot, Last Chance FTS, is a limited scope SB/SE pilot in which Appeals will call taxpayers or their representatives after a protest is filed in response to a 30-day or equivalent letter to inform taxpayers about the potential application of FTS. This pilot will not impact eligibility for FTS but will simply test the awareness of taxpayers regarding the availability of FTS.
A final pilot removes the limitation that participation in FTS would preclude eligibility for PAM.
The traditional appeals process remains available for all taxpayers.
Inquiries can be addressed to the ADR Program Management Office at
The Internal Revenue Service has updated and added new guidance for taxpayers claiming the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit.
The updated
New sections have been added on how long a taxpayer has to claim the tax credits, guidance for condominium and co-op owners, whether taxpayers who did not previously claim the credit can file an amended return to claim it, and a series of questions on qualified manufacturers and product identification numbers. Other material has been added on how to claim the credits, what kind of records a taxpayer has to keep for claiming the credit, and for how long, and whether taxpayers can include financing costs such as interest payments in determining the amount of the credit.
The IRS states that “financing costs such as interest, as well as other miscellaneous costs such as origination fees and the cost of an extended warranty, are not eligible expenditures for purposes of the credit.”
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