Modest Hotel/Motel Tax Would Support Critical Public Safety Functions While Helping to Close FY 16 County Budget Gap: President Preckwinkle

Cook County Board President Toni Preckwinkle said today she will propose a 1% tax on hotels and motels in the County to provide revenue critically needed to close a gap in the County’s FY 2016 budget and fund critical public safety services in the coming year.

The tax proposal is expected to be introduced at a special Board of Commissioners meeting Monday and will replace a previously proposed expansion of the County’s existing amusement tax. Not pursuing a tax on in-home cable and participatory events like golf and bowling leaves a $20.25 million dollar gap in the County’s budget.

The proposed hotel/motel tax is expected to provide $15.4 million in revenue in FY 16 and be coupled with a $750,000 tax on ticket resellers and additional $4.1 million in expenditure reductions to balance the budget, on top of the $107.7 million in cuts already proposed for total reductions of $111.8 million.

“Chicago is a world-class city and a major convention center and this should not discourage people from enjoying all our city has to offer,” Preckwinkle said of the hotel/motel tax, which would add $1 to a hotel room bill of $100. Even with the addition of the 1 percent tax, Chicago’s hotel/motel tax rate would be below or comparable to other destination cities such as Indianapolis, Houston and Atlanta. The cost of an average Chicago hotel room, including taxes, would stay well below those in New York, San Francisco and Miami.

In an effort to reduce gun violence and improve public safety by creating new revenue for preventative actions, President Preckwinkle is also proposing a tax on rounds of ammunition sold in Cook County. The ammunition tax, either a penny or nickel per round depending on the category of ammunition, is aimed at addressing the costs of future gun crimes and the revenue generated will be dedicated to public safety initiatives.

President Preckwinkle, long an advocate of common sense gun laws, previously supported and passed a $25 tax on gun sales in Cook County. She has advocated for legislation that would ban assault weapons and high-capacity magazines, require registration of existing firearms and require background checks on all firearms sales at gun shows — commonly referred to as the “gun show loophole.”

The President’s proposed $4 billion FY 16 budget recommendation was introduced October 14. The budget required a number of difficult choices in the way of expense reductions and was the result of collaboration and discussion with commissioners, separately elected officials, County department heads, union officials and the public.

“We spent months developing a sound and balanced budget, which included more than $100 million in targeted spending cuts but also required some new revenue, so as not to impact services,” Preckwinkle said. “As we have proceeded through the budget hearing process we remain convinced this is the only responsible action to avoid severely impacting operations and services, particularly in the public safety arena.”

Preckwinkle’s initial proposed budget closed a $198.9 million budget gap through steps including:

  •  $107.7 million in spending reductions;

  •  Revenue exceeding preliminary budget expectations, increased enforcement on existing taxes and the County’s share of TIF surplus funds contributed a total of $44.4 million;

  •  Closing amusement tax loopholes and implementing a tax on e-cigarettes to generate $21.8 million;

  •  In addition to addressing the Pension Fund’s shortfall and transportation infrastructure needs, revenue from a previously approved sales tax increase contributes $25 million to legacy debt service and $2.5 million to technology project costs.


Preckwinkle said public hearings and discussions with commissioners have revealed significant opposition to the amusement tax.

“We listened to the commissioners and the public,” Preckwinkle said. “While balancing our budget depends on cuts in spending and new revenue sources, we recognize that there is not enough support for the amusement tax and we are withdrawing that proposal.

“Government must be both responsive and responsible,” she continued. “Removing the amusement tax from consideration responds to the concerns we have heard. Nonetheless, balancing the budget is a critical responsibility and enacting a small tax on hotels and motels will provide needed revenue for crucial public safety efforts and critical services.”

The hotel/motel tax will apply to hotels, motels and bed and breakfasts, as well as condominiums, apartments and houses rented for less than 30 consecutive days. To completely close the budget gap, President Preckwinkle plans to support smaller revenue infusions including the previous proposal on ticket resellers, expected to yield $750,000.

She pointed out that 87 percent of the County’s General Fund budget, the core operating account of the County, is personnel-driven.

“Our budget already proposes a number of consolidations and program eliminations, as well as a 1.2 percent reduction in the number of full-time equivalent positions through layoffs and closing vacant positions. Overall, the County workforce is 9.4 percent lower today than when I took office in 2010,” Preckwinkle said. “Without additional revenue, we will need to revisit staffing levels throughout the County, including functions and services our residents rely on most.”

A final vote on the FY 16 budget is expected later this month.

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