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Preckwinkle says she has votes she needs for hotel tax

Monday, November 09, 2015
Crain's Chicago Business
by Greg Hinz

With key support in hand, Cook County Board President Toni Preckwinkle today moved to fast-track her proposal to impose a 1 percent tax on hotel and motel room rentals.

Preckwinkle shrugged off intense opposition from business leaders, who griped that the levy, on top of huge property-tax hikes by the city and an increase in the county's sales tax, would put Chicago's convention and trade show business in a competitive hole compared to key competitors such as Las Vegas and Orlando. The county levy would be in addition to existing state and city taxes on hotel rooms.

"Chicago is a world class city," and its overall hotel costs are still lower than those in New York and San Francisco, Preckwinkle declared at a press conference. "The relatively modest tax we've proposed isn't going to impact that."

Preckwinkle unveiled her plan on Nov. 6, saying the 1 percent levy would substitute for a planned 3 percent amusement tax on golf, bowling and cable TV that ran into a political roadblock. She formally introduced it today, and in so doing announced that the board's Finance Committee, which includes all commissioners, will vote on it Friday.

Asked if she has the votes, Preckwinkle smiled and said, "I think so."

One reason why is because of the the backing of West Side Commissioner Richard Boykin.

Boykin had vigorously objected to the amusement tax, and has been a frequent Preckwinkle critic on other matters. But his key issue is fighting gang violence, and in introducing the hotel/motel tax Preckwinkle agreed to also support his plan to impose a 1-cent to 5-cent tax on each round of gun ammunition, the amount varying by the caliber of the ammo. Preckwinkle had proposed a 5-cent bullet tax in 2012, but dropped it when she couldn't get enough support on the board.

Preckwinkle would not admit that a political horse trade had occurred. But Boykin did.

"If this ammunition tax will save one Chicagoan (from being shot), I'll gladly support the hotel/motel tax," he told reporters at the same press conference with Preckwinkle. "We can't always say no" to fiscal ideas.

Business groups--including the Illinois Hotel & Lodging Association, Chicagoland Chamber of Commerce and Illinois Restaurant Association--say Preckwikle's tax would make the combined city/state/county levy 17.4 percent--"significantly more than Orlando's 12 percent and Las Vegas 12.5 percent."

Combined with the recent $588 million city property-tax hike and the county penny-on-the-dollar sales tax increase Preckwinkle included in her proposed 2016 budget to pay pension costs, the impact could be heavy, they said in a joint statement.

The tax "will hurt our competitiveness and not bring more people to our region, further hurting tax revenue and reducing the impact from tourists and convention business," which support more than 190,000 jobs, the group said.

Preckwinkle's office countered that the tax rate in Omaha still would be higher than Chicago's, at 17.5 percent, and that Houston and Indianapolis are just below us at 17 percent. But none of those three generally competes for the big shows that move among Chicago, Las Vegas and Orlando.

Preckwinkle also noted that total costs to stay overnight in New York and San Francisco still will be higher than here. But full rental rates generally are paid only by tourists, and Chicago is far from the tourism magnet that the coastal cities are.

In moving for a fast vote on her hotel/motel tax, Preckwinkle is following the same script she employed on the sales-tax hike, which was enacted to balance the 2016 budget but approved months before the budget even was introduced.

Preckwinkle said the only option is to cut jobs, mostly in sensitive public-safety positions.



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