Chicago Suburb Rejects Tax Hike to Support Government Workers' Pensions

The Chicago Tribune reports:

Evanston voters were rejecting a property transfer tax increase to help pay down a $140 million deficit in the city's police and fire pensions, early vote totals showed Tuesday.

Defeat of the measure would require the city to find the necessary revenue to keep the pensions afloat.

The unofficial vote was roughly 58 percent 'no' and 42 percent 'yes' with 64 of 70 precincts counted.

The voters were asked to increase the transfer tax from $5 to $6 per $1,000 of the sale price. The increase would mean the seller would owe an extra $500 on a $500,000 house.

"We're pleased," said Howard Handler, government affairs director for the North Shore-Barrington Association of Realtors. "Hopefully this trend will continue through the rest of the night. I'm optimistic."

The tax was the hottest issue on the Evanston ballot, pitting firefighters and police who were worried about their pensions against homeowners and real estate agents fearful that a tax increase would further depress falling property values. Evanston's police and fire pension funds need millions to be fully funded through 2033, and the city hoped the transfer tax could help whittle down the deficit. If the tax increase is rejected, city officials probably would turn their attention to other options to fill the pension gap, such as a proposed 15.15 percent increase on property taxes earmarked for city expenses, said City Manager Julia Carroll.

"It's going to be a huge burden [on the city]," said Evanston firefighter Dave Ellis.

Ellis is also president of the Evanston Firefighters Foreign Fire Tax Board, which receives money from a tax the state collects on out-of-state insurance companies and distributes throughout Illinois. His organization gave $50,000 to the Evanston firefighter pension fund last month.

A 15.15 percent property tax increase would add about $300 annually to a $10,000 property tax bill and roughly $5.4 million to the city's yearly budget, Carroll said.

The growing pension deficit and the threat of a downgraded bond rating compelled City Council members to add the measure to the ballot.

No word yet from Northwestern University who doesn't pay any real estate taxes.