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Illinois Legislators Adjourn, Rebuffing Chicago’s Casino Request

Shruti Date Singh
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Illinois Legislators Adjourn, Rebuffing Chicago’s Casino Request

(Bloomberg) -- Chicago Mayor Lori Lightfoot wasn’t able secure state legislation that would bring in new cash from property sales in 2020 or improve the chances of a casino coming to the city in future years.

The Illinois General Assembly adjourned on Thursday without voting to change the tax structure of a proposed casino in the city, which is expected to make the project more appealing for potential operators. Her proposal for a progressive real estate transfer tax also faltered during the six-day veto session held during October and November.

Lightfoot’s 2020 budget proposal, released in October, projected $50 million in revenue from a graduated real estate transfer tax, which needs state approval. She also had been pushing lawmakers to lower the tax structure on a proposed Chicago casino, which could generate as much as $215 million annually for later years.

“While we are disappointed that a much-needed fix to the gaming bill won’t be made during this compressed veto session, the Chicago casino is still very much in the sight-line thanks to the progress we’ve made with our state partners,” Lightfoot said in statement on Thursday.

Even though lack of progress on the casino law won’t impact the city’s fiscal 2020 budget “this fiscal challenge looms large” for future years, she said. The city expects to draw money from a casino when its built to pay down some of the city’s rising pension costs and the state expects to use proceeds for infrastructure.

“Thus, the heightened sense of urgency remains,” Lightfoot said.

Budget Struggles

Earlier on Thursday, Lightfoot told reporters that if the graduated real estate transfer tax doesn’t move during veto session, she may try again next year.

Lightfoot is working to fill an $838 million budget shortfall, the biggest in recent history, as the city’s payments to its four massively underfunded pension plans ramp up in the coming year. Chicago is struggling with a $30-billion shortfall across its retirement system after years of not paying enough to the funds. The city’s mandated contributions to the funds climb to $1.68 billion in 2020, budget documents show. Revenue from a Chicago casino would help shore up the police and fire funds, according to Lightfoot.

Without a change in the tax structure, the Chicago casino would face an effective tax rate of approximately 72%, according to an Illinois Gaming Board report.

While the Illinois General Assembly made some technical changes for gaming operations during the veto session, “work remains to make sure the Chicago casino opens,” Jordan Abudayyeh, Illinois Governor J.B. Pritzker’s spokeswoman, said in an emailed statement.

“The governor is committed to continuing to work with the city and other stakeholders to finalize this important element,” she said.

Other Options

After weeks of negotiations between state and city officials, Illinois Representative Bob Rita had introduced a House amendment to a Senate bill to shift the tax structure for a proposed Chicago casino to a progressive rate. The legislation has been referred to the House Executive Committee but the chamber didn’t hold a vote.

Lightfoot has said she would consider spending cuts and hasn’t ruled out raising property taxes more to close the budget gap if the real estate tax measure wasn’t approved by state lawmakers. The city is planning to refinance $1.3 billion in debt and is projecting $215 million in savings from such a deal, Chief Financial Officer Jennie Huang Bennett said Tuesday. That’s $15 million higher from the previous savings estimate.

“Investors would like to see the city deliver a balanced budget, and believe that the administration has a number of options to reach this goal, given the home rule status of the city,” Dennis Derby, a senior credit analyst and portfolio manager at Wells Fargo Asset Management, which holds $41 billion in municipal assets under management, including Chicago debt. “We believe that if the real estate transfer tax is not enacted, the administration would explore other revenue and cost saving options to balance the budget.”

Uber Fight

With almost two weeks left until council members are expected to vote on the mayor’s first budget, Lightfoot’s spat with ride sharing companies escalated over the spending plan’s proposed fees to ease congestion. The plan would increase costs for single-passenger rides downtown and lower the cost for shared rides in neighborhoods, generating an estimated $40 million, according to city estimates.

“This means that people opting for the luxury of riding alone downtown will pay a little more,” Lightfoot said Wednesday.

Uber Technologies Inc. emailed Chicago users this week to blast the mayor’s proposal, calling it the “highest ride sharing tax in the country.” Uber has proposed an alternative plan that would raise $54 million for the city, according to Harry Hartfield, a company spokesman. Uber’s plan would expand the kinds of trips that would be subject to fees beyond downtown, according to a copy of Uber’s proposal. Lightfoot dismissed Uber’s plan on Wednesday and said the company will throw “hail Marys” to avoid more regulation.

The Civic Federation, which tracks the city finances, said it supports Lightfoot’s proposed fiscal 2020 budget but has “several significant concerns,” according to a report released Wednesday.

“The Mayor and her team have identified a number of creative avenues to fill an enormous budget gap,” Laurence Msall, president of the Civic Federation, which tracks the city’s finances, said in a release on Wednesday. “However, this plan leaves very little room for error.”

To contact the reporter on this story: Shruti Date Singh in Chicago at

To contact the editors responsible for this story: Elizabeth Campbell at, Michael B. Marois

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