Glossary of Terms
Actuarially-Calculated: An amount determined sufficient to increase the funded ratio of the City of Chicago’s pension funds, including Municipal Employees’ Annuity and Benefit Fund, the Laborers’ Annuity and Benefit Fund, the Policemen’s Annuity and Benefit Fund and the Firemen’s Annuity and Benefit Fund, to a statutorily required amount over a number of years.
Amusement Tax: A tax imposed upon the patrons of amusement activities within the City of Chicago including sporting events, theater productions, and a variety of other entertainment activities. The tax does not apply to admission fees to witness in-person live theatrical, live musical, or other live cultural performances that take place in a venue whose maximum capacity is 1,500 persons or fewer. The tax rate is 9.0 percent of the fee paid to witness in-person live theatrical, live musical, or other live cultural performances that take place in a venue whose maximum capacity is more than 1,500 persons. Authorization: Municipal Code 4-156-020.
Annual Comprehensive Financial Report (ACFR): Provides complete and accurate financial information which complies with the reporting requirements of the Municipal Code of Chicago. Appropriation: An amount of money in the budget, authorized by the City Council, for expenditures for specific purposes. Appropriations are made by account group within each department and fund. Automatic Amusement Device Tax: A tax imposed on each automatic amusement device or machine used within the City of Chicago for gain or profit. The tax rate is $150 per amusement device annually. Authorization: Municipal Code 4-156-160.
Aviation Funds: A fund established to account for acquisition, operation, and maintenance of the City’s airports. Aviation funds are comprised of the O’Hare International Airport Fund and the Midway International Airport Fund. Basis of Accounting: The method used to recognize increases and decreases in financial resources. Basis of Budgeting: The method used to determine when revenues and expenditures are recognized for budgetary purposes. Benefits: Includes costs such as healthcare, workers’ compensation, life insurance, social security contributions and Medicare contributions. While the City’s pensions are a benefit of City employment, employer costs associated with pensions are counted separately from other benefits.
Boat Mooring Tax: A tax imposed on the mooring or docking of any watercraft for a fee in or on a harbor, river or other body of water within the corporate limits or jurisdiction of the City. The tax rate is 7.0 percent of the mooring or docking fee. Authorization: Municipal Code 3-16-030. Bonds: Long-term debt primarily used to finance infrastructure projects including street and alley construction and improvements, lighting, sidewalk replacement, curb and gutter repairs and replacement, and transportation improvements, as well as Enterprise Fund related projects. The City of Chicago has several different types of bonds including general obligation bonds, Motor Fuel Tax revenue bonds, tax increment allocation bonds, water and wastewater bonds, and O’Hare and Midway Bonds.
Business Taxes: Consists of revenue from the City’s tax on hotel accommodations and the Checkout Bag Tax. Capital Improvement Plan: A five-year plan that identifies capital projects, establishes a planning schedule and provides options for financing projects. Carryover Appropriations: The balance of appropriations available for expenditure in years subsequent to the year of enactment. Charges for Service: Charges levied for services provided by the City of Chicago that are not covered by general tax revenue. Such services include building inspections, information requests, emergency medical services, and safety services.
Checkout Bag Tax: A tax of $.07 per bag on the retail sale or use of paper and plastic checkout bags in Chicago, of which retail merchants retain $.02 and the remaining $.05 is remitted to the City. Authorization: Municipal Code 3-50- 030.
Cigarette Tax: A tax of $0.059 per cigarette ($1.18 per pack of twenty) is imposed upon all cigarettes possessed for sale within the City of Chicago. The tax is paid through the purchase of tax stamps from the City of Chicago’s Department of Finance. In the City of Chicago’s budget, this also includes the liquid nicotine product tax, which is imposed on the retail sale of liquid nicotine products in the City of Chicago at $1.50 per product unit and $1.20 per fluid 2022 BUDGET OVERVIEW APPENDICES 189 milliliter of consumable nicotine solution. Authorization: Municipal Code 3-42-020 (cigarette) and 3-47-030 (liquid nicotine).
Claims, Refunds, Judgments and Legal Fees: Includes expenses incurred with claims filed against the City of Chicago, legal settlements and judgments, and related legal fees including attorney costs. Collective Bargaining Agreements (CBAs): A written legal contract between an employer and a union representing employees. Commodities and Equipment: Consists of costs for gas, electricity, natural gas, and small equipment.
Consumer Price Index (CPI): Generally understood as a way to measure inflation, CPI measures the average change over time in the prices paid for a set of consumer goods and services. Contractual Services: Comprised of costs incurred related to services provided to the City that are dictated by a contractual agreement, such as information technology or auditing services. Corporate Fund: The City of Chicago’s general operating fund, used to account for basic City operations and services such as public safety, business and consumer services, and tree trimming.
Debt Service Funds: Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long-term debt service and related costs. Revenue bonds issued for the City of Chicago’s Enterprise Funds and debt issued for special taxing districts are not included in the City’s general Debt Service Funds. Delegate Agencies: Organizations that provide services on behalf of the City through a grant contract. Doubtful Account: An account balance that has been delinquent for a period of at least 90 days, and where collection is unlikely.
Emergency Communication Surcharge: A surcharge imposed on all billed subscribers of telecommunications services within the City of Chicago for the purpose of funding a portion of the maintenance and operation of the City’s emergency 911 system. The surcharge is $5.00 per month for each network connection and wireless number, and a 9.0 percent tax on pre-paid wireless service. Authorization: Municipal Code 3-64-030 and 7-50-020. Emergency Communications Fund: A Special Revenue Fund that is comprised of revenues from the collection of the emergency communication surcharge and used to fund 911 and emergency preparedness related activities. Enterprise Funds: Funds established to account for acquisition, operation, and maintenance of government services such as water, sewer, and the airports. These funds are self-supporting in that they derive revenue from user charges.
Equalized Assessed Value (EAV): The equalized assessed value of a property is the result of applying a State equalization factor to the assessed value of a parcel of property. The State equalization factor is used to bring all property in Illinois to a uniform level of assessment. As it relates to TIF districts, base EAV is the value at the time the TIF district was established, incremental EAV is difference between the base EAV and the current EAV. Fines, Forfeitures, and Penalties: Fines and any associated penalties levied for violations of the Municipal Code. The primary source of this type of revenue is from parking tickets. Also included in this category are red-light and automated speed enforcement fines, moving violations, booting-related fees, sanitation code violations, and housing court fines. Fiscal Year (FY): The City of Chicago’s fiscal year aligns with the calendar year: January 1 to December 31.
Foreign Fire Insurance Tax: A tax imposed on any business not incorporated in the State of Illinois that is engaged in selling fire insurance in the City of Chicago. The tax is paid for the maintenance, use, and benefit of the Chicago Fire Department. The tax rate is 2.0 percent of the gross receipts received for premiums. Authorization: Municipal Code 4-308-020.
Full Time Equivalent (FTE): The ratio of the total number of paid hours during a period by the number of working hours in that period. One FTE is equivalent to one employee working full-time. Generally Accepted Accounting Principles (GAAP): Refers to a common set of accounting principles, standards and procedures that companies and their accountants must follow when they compile their financial statements.
Garbage Fee: Chicago residences receiving City-provided garbage collection services are charged a $9.50 monthly fee per dwelling unit. City-provided garbage collection services are provided to single family homes and multi- 2022 BUDGET OVERVIEW APPENDICES 190 family buildings with four units or fewer. Authorization: Municipal Code 7-28-235.
General Obligation Debt: Comprised of three types of general obligation bonds including Tax Levy Bonds, Alternate Revenue Bonds and Pledge Bonds. General Financing Requirements: Comprised of the Finance General budgeting category that represents cross departmental expenses such as information technology systems, employee benefits, contributions to employee pension funds, and long-term debt service payments.
Gross Domestic Product: The total value of goods produced, and services provided in a defined area (country, state, municipality, etc.) during one year. Ground Transportation Tax: A tax imposed on the provision of hired ground transportation to passengers in the City of Chicago. The tax rate is $98 per month on medallion licensees. There is a $3.50 per day charge for each non-taxicab vehicle with a seating capacity of 10 or fewer passengers, $6 per day for each non-taxicab vehicle with a seating capacity of 11 to 24 passengers, $9 per day for each non-taxicab vehicle with a capacity of more than 24 passengers. Transportation network providers are charged $1.13 per trip for single ride trips that begin or end in Chicago, or $0.53 for shared rides that begin or end in Chicago, and $0.10 per trip Accessibly Fund payment for all trips that begin or end in Chicago. Additionally, a $5.00 per trip surcharge on all transportation network provider vehicles for airport, Navy Pier, and McCormick Place pickup and drop-off. As of 2020, the City also implemented a downtown surcharge on weekdays from 6 am to 10 pm of $1.75 per trip for single rides and $0.60 per trip for shared rides. Lastly, the City of Chicago charges $1.00 per day for pedicabs for each day in service. Authorization: Municipal Code 3-46-030.
Home Rule Municipal Retailers’ Occupation Tax: A tax imposed on the activity of selling tangible personal property other than property titled or registered with the State of Illinois that is sold at retail in the City of Chicago. The tax rate is 1.25 percent of the gross receipts from such sales. Grocery food and prescription and nonprescription medicines are generally exempt from the tax. The tax is administered and collected by the Illinois Department of Revenue and disbursed monthly to the City. Authorization: Municipal Code 3-40-10 and 3-40-20.
Hotel Accommodations Tax: A 4.5 percent tax imposed on the rental or lease of hotel accommodations in the City of Chicago. For vacation rentals and shared housing units, a 6.0 percent surcharge is added to the 4.5 percent base rate for a total City tax rate of 10.5 percent of the gross rental or leasing charge. Authorization: Municipal Code 3-24-030.
Illinois Municipal Retailers’ Occupation Tax: A tax imposed on the activity of selling tangible personal property at retail in Illinois. The tax rate is 6.25 percent of the selling price. The tax is administered and collected by the State. Authorization: 35 Illinois Compiled Statutes (ILCS) 120/2-10.
Illinois Use Tax: A tax imposed on the use of tangible personal property purchased outside Illinois but used in the State. The tax rate is 6.25 percent of the selling price. The tax is administered and collected by the Illinois Department of Revenue. 16.0 percent of collections (1.0 percent of the 6.25 percent) is distributed to municipalities. The City receives 20.0 percent of the 1.0 percent portion allocated to municipalities. Authorization: 35 ILCS 105/1.
Income Tax: A tax imposed by the State of Illinois on the privilege of earning or receiving income in Illinois. The tax rate is 7.0 percent of net income for corporations and 4.95 percent of net income for individuals, trusts, and estates. Of the net income tax receipts after refund, 6.06 percent of personal income tax receipts and 6.85 percent of corporate income tax receipts are placed in the Local Government Distributive Fund, which is then distributed to municipalities based on population. Authorization: 35 ILCS 5/201, 5/901; 30 ILCS 115/1, 115/2.
Intergovernmental Tax Revenue: Consists of the City’s share of State Income Tax, Personal Property Replacement Tax, Municipal Auto Rental Tax, and Reimbursements for City Services. Internal Service Earnings: Reimbursements from other City funds to the Corporate Fund for services that are provided to other City funds. Certain internal service earnings are allocated using cost accounting methods, while others are reimbursed using intergovernmental purchase orders. Licenses and Permits: Licenses and permits are required for the operation of certain construction and business activities in the City of Chicago. Fees for these licenses and permits vary with the type of activity authorized.
Liquor Tax: A tax imposed on the retail sale of alcoholic beverages in the City of Chicago. Each wholesale dealer who sells to a retail dealer located in the City of Chicago collects the tax and any such retail alcoholic beverage dealer in turn collects the tax from the retail purchaser. The tax rate is $0.29 per gallon of beer, $0.36 per gallon for 2022 BUDGET OVERVIEW APPENDICES 191 alcoholic liquor containing 14.0 percent or less alcohol by volume, $0.89 per gallon for liquor containing more than 14.0 percent and less than 20.0 percent alcohol by volume, and $2.68 per gallon for liquor containing 20.0 percent or more alcohol by volume. Authorization: Municipal Code 3-44-030.
Local Funds: All funds used by the City for non-capital operations other than grant funds. Includes the Corporate Fund, Enterprise Funds, and Special Revenue Funds.
Local Non-Tax Revenue: Consists of fees charged for the issuance of licenses and permits; fines, forfeitures and penalties for traffic or other violations; various charges for services; municipal parking; leases, rentals and sales of City-owned property; internal service earnings; and interest and other revenue. Local Tax Revenue: Consists of taxes collected by the City, including utility, transportation, transaction, recreation, and business taxes.
Long-Term Debt: Used to finance infrastructure projects in neighborhoods including street and alley construction and improvements, lighting, sidewalk replacement, curb and gutter repairs and replacement, and transportation improvements, including street resurfacing, bridge rehabilitation and traffic safety improvements, as well as Enterprise Fund related projects.
Midway Airport Fund: A fund established to account for acquisition, operation, and maintenance of Midway International Airport. Modified Accrual Basis of Accounting: Under the modified accrual basis of accounting, revenues are recognized when they become measurable and available. Expenditures are recognized when the liability is incurred.
Motor Fuel Tax: A tax imposed by the State of Illinois on the sale of motor fuel within the State. The tax rate is $0.38 per gallon of gasoline and $0.455 per gallon of diesel fuel. A portion of the revenue is distributed to municipalities and townships based on population via a Statewide allocation formula. Authorization: 35 ILCS 505/2, 505/8.
Motor Fuel Tax Fund: A Special Revenue Fund comprised of revenue derived from the Motor Fuel Tax that funds expenses such as costs associated with streetlight energy, salt purchases for snow removal, street pavement and bridge maintenance, and related personnel costs.
Motor Vehicle Lessor Tax: A tax imposed on the leasing of motor vehicles in the City of Chicago to a lessee on a daily or weekly basis. The lessor is allowed to pass this tax on to lessees as a separate charge on rental bills or invoices. The tax is $2.75 per vehicle per rental period. Authorization: Municipal Code 3-48-030.
Municipal Hotel Operators’ Occupation Tax: A tax authorized by State legislation and imposed on the activity of renting hotel accommodations in the City of Chicago. The tax rate is 1.0 percent of gross receipts. The tax is administered and collected by the Illinois Department of Revenue and distributed monthly to the City. Authorization: Municipal Code 3-40-470.
Municipal Parking: A category of revenues that currently includes revenue generated by various parking permits. O’Hare Airport Fund: A fund established to account for acquisition, operation, and maintenance of O’Hare International Airport.
Parking Garage Tax: A tax imposed on the privilege of parking a motor vehicle in any commercial parking lot or garage in the City of Chicago. The tax rate is currently 22.0 percent for daily parking during the week as well as all weekly and monthly parking and 20.0 percent for daily parking on the weekends. Authorization: Municipal Code 4-236-020.
Personnel Services: Personnel-related costs, which include salaries and wages, pension contributions, healthcare, overtime pay, and unemployment compensation. Pension Funds: The City of Chicago’s employees are covered under four defined-benefit retirement plans established by State statute and administered by independent pension boards. These plans are the Municipal Employees’ Annuity and Benefit Fund, the Laborers’ Annuity and Benefit Fund, the Policemen’s Annuity and Benefit Fund, and the Firemen’s Annuity and Benefit Fund. Each independent pension board has authority to invest the assets of its respective plan subject to the limitations set forth in 40 ILCS 5/1-113.
Personal Property Lease Tax: A tax imposed on the lease, rental or use of rented, personal property or nonpossessory computer leases of software and infrastructure (referred to as cloud software and cloud infrastructure) in the City of Chicago is 9.0 percent. Authorization: Municipal Code 3-32-030.
Personal Property Replacement Tax: Two categories of taxes levied by the State and distributed to local governments to replace personal property taxes no 2022 BUDGET OVERVIEW APPENDICES 192 longer allowed under the Illinois Constitution: 1. An income-based tax on corporations, partnerships, and other business entities. The tax rate is 2.5 percent for corporations and 1.5 percent for partnerships, trusts, and subchapter S corporations. The tax allocation formula for local governments in Cook County is based on the 1976 distribution of the repealed personal property tax. Authorization: 35 ILCS 5/201(c), (d); 30 ILCS 115/12. 2. A tax on invested capital imposed by the State of Illinois on public utilities. The tax rate is 0.8 percent on invested capital. The tax allocation formula for local governments in Cook County is based on the 1976 distribution of the repealed personal property tax. Authorization: 35 ILCS 610/2a.1, 615/2a.1, 620/2a.1, 625/2a.1; 30 ILCS 115/12.
Prior Year Available Resources: Amounts remaining from prior years that are budgeted in the current year. Prior year available resources result from revenue exceeding expenditures through savings and sustainable revenue growth, along with spending controls and other efficiencies. Proceeds and Transfers In: Consists of amounts transferred into the Corporate Fund from outside sources. Proceeds of Debt: Funds generated from the sale of bonds or notes.
Property Tax: A tax levied on the equalized assessed valuation of real property in the City of Chicago. Cook County collects the tax with assistance from the Illinois Department of Revenue. Authorization for the City’s property tax levy occurs through bond ordinances and property tax levy ordinances in connection with the annual appropriation ordinances.
Real Property Transfer Tax: A tax imposed on the transfer of title to, or beneficial interest in, real property located in the City of Chicago. The tax rate is $3.75 per $500 of transfer price, or fraction thereof, and is paid by the transferee. Authorization: Municipal Code 3-33-030.
Real Property Transfer Tax—CTA Portion: A supplemental tax on the transfer of real property in the City of Chicago for the purpose of providing financial assistance to the Chicago Transit Authority. The tax rate is $1.50 per $500 of the transfer price or fraction thereof and is paid by the transferor. Authorization: Municipal Code 3-33-030.
Recreation Taxes: Consists of taxes on amusement activities and devices, boat moorings, liquor, cigarettes, non-alcoholic beverages, recreational cannabis, and offtrack betting. Reimbursements and Financial Expenses: Reimbursements consists of amounts transferred to the Corporate Fund from other City funds for central services such as information technology, police and fire services, street and building maintenance, and administrative services.
Reserves: Reserves are funds that the City sets aside as an economic safety net to mitigate current and future risks such as contingencies, emergencies, or revenue shortfalls. Restaurant and Other Places for Eating Tax: A tax imposed on each place for eating located in the City of Chicago. The tax rate is 0.50 percent of the selling price of all food and beverages sold at retail. Authorization: Municipal Code 3-30-030.
Sales Tax Securitization Corporation Residual Revenues: In October 2017, the City Council passed an ordinance authorizing the creation of a Sales Tax Securitization Corporation (STSC). This revenue securitization structure was developed because of legislation passed by the Illinois General Assembly, allowing all home rule municipalities to create a special purpose corporation organized for the sole purpose of issuing bonds paid for from revenues collected by the State. In December 2017, the City entered into a sale agreement (Agreement) with the STSC. Under the Agreement, the City sold to the STSC the City’s rights to receive Sales Tax revenues collected by the State. In return, the City received the proceeds of bonds issued by the STSC as well as a residual certificate. Sales Tax revenues received by the STSC are paid first to cover the STSC’s operating expenses and debt service on the STSC’s bonds. All remaining Sales Tax revenues are then paid to the City as the holder of the residual certificate and are budgeted as Proceeds and Transfers.
Sewer Fund: An Enterprise Fund that supports the operation, maintenance, and capital programs of the City’s sewer systems.
Simplified Telecommunications Tax: A tax imposed on the privilege of originating or receiving intrastate or interstate telecommunications within the City of Chicago. The tax rate is 7.0 percent of the gross charge for such telecommunications purchased at retail. Authorization: Municipal Code 3-73- 030.
Special Events and Municipal Hotel Operators’ Occupation Tax Fund: Includes revenues from the Municipal Hotel Operator’s Occupation Tax and is used to support the promotion of tourism, cultural and recreational activities. 2022 BUDGET OVERVIEW APPENDICES 193 Special Revenue Fund: A fund established to account for the operations of a specific activity and the revenue generated for carrying out that activity. Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) requiring separate accounting because of legal or regulatory provisions or administrative action.
Structural Budget Deficit: Any structural budget imbalance between existing revenues and existing expenses in the Corporate Fund for that budget year. Commonly referred to as the “gap”.
Tax Increment Financing (TIF): TIF is a funding tool used to improve neighborhood infrastructure and promote investment in communities across the city. The program is governed by a State law allowing municipalities to capture property tax revenues derived from the amount of incremental equalized assessed value (EAV) above the base EAV that existed before an area was designated as a TIF district.
Transaction Taxes: Consists of taxes on the transfer of real estate, the lease or rental of personal property, and the short-term lease of motor vehicles within the City. Transportation Network Providers (TNP): Rideshare companies that provide prearranged transportation services for compensation through an internet-enabled application or digital platform to connect passengers with drivers of vehicles for hire.
Transportation Taxes: Consists of taxes on vehicle fuel, garage parking, and hired ground transportation. Transfers-in: The movement of resources into local funds from reserves and other non-recurring revenue sources. Transfers-out: The movement of resources from local funds to reserves and other non-recurring revenue sources.
Use Tax for Non-Titled Personal Property: A tax imposed on the use of non-titled tangible personal property in the City of Chicago that is purchased at retail from a retailer located outside the City of Chicago. The tax rate is 1.0 percent of the property’s selling price. Authorization: Municipal Code 3-27-030.
Use Tax for Titled Personal Property: A tax imposed on the use of titled personal property in the City of Chicago that is purchased at retail from a retailer located outside the City of Chicago and titled or registered in the City. The tax rate is 1.25 percent of the property’s selling price. The Illinois Department of Revenue administers and collects the tax on behalf of the City when titled personal property is purchased from a retailer in Cook, DuPage, Lake, Kane, McHenry, or Will counties. Authorization: Municipal Code 3-28-030.
Utility Taxes and Fees: Consists of taxes on the purchase of telecommunication services, electricity, natural gas and cable television.
Vehicle Fuel Tax: A tax imposed on the purchase of vehicle fuel purchased or dispensed within the City of Chicago. The tax rate is $0.05 per gallon. Introduced with the 2021 Budget is a proposed $0.03 per gallon increase, bringing the total tax to $0.08 per gallon. Authorization: Municipal Code 3-52-020.
Vehicle Tax Fund: Includes revenue from vehicle sticker sales, impoundment fees, abandoned auto sale fees and pavement cut fees for the maintenance of the public way. Water Fund: An Enterprise Fund that supports the operation, maintenance, and capital programs of the City’s water systems.
Water and Sewer User Fees: A fee imposed on water and sewer usage within the City of Chicago. The revenue collected via water charges and the sewer surcharges on City utility bills. The water and sewer funds are segregated funds where water fund revenue is used to support the water system and sewer fund revenue is used to support the sewer system. Authorization: Municipal Code 11-12- 260.
Water and Sewer Tax: A utility tax assessed on water and sewer use within the City of Chicago. The rate is currently $2.51 per 1,000 gallons. Authorization: Municipal Code 3-08- 030, -040. Wheel Tax (referred to as the Vehicle Sticker Fee): An annual fee imposed on the privilege of operating a motor vehicle within the City of Chicago that is owned by a resident of the City of Chicago. The annual fee is $90.88 for smaller passenger automobiles (less than 4,500 pounds) and $144.33 for larger passenger automobiles (4,500 pounds or more). The fee varies for other vehicle classifications. Authorization: Municipal Code 3-56-050.