Chicago's budget is in dire straits. The city will face a massive budget deficit -- at least $655 million, and likely more -- in the coming year, and it ended last year with only $2.7 million in the bank.
Many city services are already cut to the bone, and there probably won't be much appetite for new revenues, either: according to a report released Tuesday, Chicago is tied with Los Angeles for the highest sales tax rate of any major city in the nation.
When the 6.25 percent Illinois sales tax, plus county taxes, city taxes and mass transit levies are taken together, Chicagoans pay 9.75 percent of every purchase in tax. This is equaled only by Los Angeles, according to an annual survey by CCH. Only in some parts of Kansas City is there a higher rate; that city has certain special tax districts in which customers pay 9.925 percent, though the city's base rate is one percent lower.
The study, described in a CCH press release, also looked at gasoline and cigarette taxes at the state level. In those departments, Illinois fares relatively well: for instance, the state's 98 cent-per-pack cigarette tax is lower than Iowa, Indiana or Michigan, and pales in comparison to Wisconsin's $2.52-per-pack tax.
But there again, Chicago is already levying significantly more taxes than the state at large. With city and county taxes combined, Chicagoans pay a whopping $4.05 per pack on top of sticker price, while the collar counties pay an average of $1.37. A recent study showed that around 75 percent of smokers leave the city to buy cigarettes, costing Chicago $120 million in revenues.
Lawmakers are considering raising the statewide cigarette tax by $1 to help address the state's even-more-dire fiscal situation. Were that to pass, Chicago would be charging more than $5 a pack in taxes.
That fact serves as a reminder that while we might have it bad, things could always be worse: Illinois didn't have any statewide hikes on the gas, sales or cigarette taxes last year.
By contrast, North Carolina -- another state struggling with its budget -- raised taxes in all three areas last year, the only state to do so.
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