FAQ on Water-Sewer Tax for Municipal Pension Fund

How often are residents and businesses billed for water and sewer? And what are the current water and
sewer rates?
Residences and businesses will continue to be billed at the same frequency as their current billing cycle.
Metered properties are billed for water and sewer services every other month for the previous two
months of water and sewer usage. Current meter rates are $3.81 per 1,000 gallons, and sewer charges are
100 percent of the water bill.
Non-metered properties are billed for water and sewer service twice a year at a flat rate. Current nonmetered rates are an estimate of water usage based on the lot size, number of fixtures, and other factors.
Sewer charges are 100 percent of the water bill.
o Non-metered properties are billed from April through September for May-October (6 months) of
water and sewer use
o Non-metered properties are billed from October through March for November through April (6
months) of water and sewer use
How will Chicagos water-sewer rate compare to other large cities water and sewer fees and the
surrounding suburbs?
Chicagos water and sewer rates will continue to compare favorably to those of other major cities in
the Great Lakes region and nationally.
Further, assuming Chicagos suburban neighbors do not raise water rates over the next five years,
Chicagos water rate in 2021 will still be comparatively lower than 104 of 126 suburban customers
residential rates. This is based on 2015 suburban rates.
o Water rates in surrounding suburbs:
Harvey: $7.60 per 1,000 gallons of water
Maywood: $14.53 per 1,000 gallons of water
Oak Park: $8.37 per 1,000 gallons of water
Berwyn: $7.98 per 1,000 gallons of water
The charts below compare the single family residence cost per 7,500 gallons of water in Chicago to the
rates charged for the same level of usage in other U.S. cities.

How much will non-metered and metered residential accounts pay?

The chart below provides the water-sewer tax for the median metered and non-metered residential
accounts.
MEDIAN ANNUAL CHARGES
METERED

Year

Current
2017
2018
2019
2020
2021

Utility
Tax Per
1,000
gals

Tax
Rate

$$0.59
$1.28
$2.01
$2.51
$2.51

0%
7.7%
16.8%
26.4%
32.9%
32.9%

NON-METERED

Total
Annual
Charges
with
Utility
Tax

YearOverYear
Change

Total
Annual
Charges
with
Utility
Tax

YearOverYear
Change

$407.67
$439.24
$476.15
$515.21
$541.96
$541.96

$$31.57
$36.92
$39.05
$26.75
$-

$834.39
$899.00
$974.55
$1,054.49
$1,109.24
$1,109.24

$$64.61
$75.55
$79.94
$54.75
$-

Is the City providing any additional protections for seniors similar to the 50 percent reduction in the garbage
fee?
Seniors who receive the senior citizen sewer exemption (seniors who live in their own home and are
individually metered) will continue to receive the exemption.
This exemption reduces eligible seniors total water and sewer bill by 50 percent by removing sewer
charges. With this exemption, seniors will also see a 50 percent reduction in the tax on water-sewer usage
as the tax will only be charged to the water portion of a seniors bill.
Seniors that live in a condominium, co-op or townhouse without an individual meter may qualify for a
refund, in lieu of an exemption. Currently, the amount of the refund is $50.00 per qualified residence, per
calendar year.
How will non-metered accounts be taxed?
Non-metered properties will be charged the water-sewer tax based on assumed usage. This is the same
method used to calculate their water and sewer charges.
The City encourages all non-metered accounts to transition their properties to a water meter.
Chicagos MeterSave program installs residential water meters free of charge to promote water
conservation and save customers as much as 50 percent on their water and sewer costs. Homeowners
participating in MeterSave are eligible for seven-year guarantee that their home water bill will be no
higher than it would have been if the meter had not been installed.
Can the City tax all suburban customers the water-sewer tax?
Under State law, the City does not have the authority to tax activities that do not take place within its
corporate limits.

What is the Citys legal authority to impose a water-sewer tax?

Home rule municipalities, such as the City of Chicago, have the authority to impose various taxes, including
taxes on the sale, purchase, transfer or use of tangible personal property. This authority is set out in Article
VII Section 6 of the Illinois Constitution.
A State statute preempts home rule authority to impose certain taxes based on a percentage of selling
price, but the statute does not preempt the Citys home rule authority to impose per unit taxes.
The water and sewer tax is a per unit tax imposed on the use or consumption of water in Chicago, and on
the transfer of wastewater to the City sewer system from properties located in Chicago.
This tax is consistent with other home rule per unit taxes currently imposed by the City, including the Gas
Use Tax, Vehicle Fuel Tax, Liquor Tax and Bottled Water Tax.
Is it possible to increase water and sewer rates to all customers and abate the increased charges for only
Chicago residents?
The City is not allowed to charge suburban customers more per gallon for water usage than we charge
Chicago users.
The City may charge differential rates to Chicago users provided the charges are reasonable and
nondiscriminatory. However, all water and sewer fees are required to remain in the water and sewer funds
and cannot be used to meet the Citys pension obligations.
What are the next steps in Springfield?
The City will be introducing legislation in Springfield this fall during the veto session.
The legislation will seek authorization for increased employer contributions for the MEABF along with
increased contributions for new hires and a choice option for employees hired between January 1, 2011
and January 1, 2017.
Are the changes to benefit structure constitutional?
Yes, under State law, benefits may be adjusted for new hires.
With respect to current Tier II employees, these employees are given a choice to exchange a lower
retirement age for a higher contribution. These employees have the choice to take this option; they are by
no means required to take the option.
How much will the additional 3 percent in employee contributions generate in savings to Chicago
taxpayers?
Taxpayers will benefit as new employees pay for a larger share of their pension benefits. These savings will
accrue over time as current employees leave City service and new employees replace them.
Over the 40-year ARC, taxpayers will save approximately $2 billion with the increase in employee
contributions.
How will these ramp payments differ from SB1922?
Both this proposal and SB1922 increase the Citys contribution over a 5 year period (the ramp) and then
transition to an actuarially determined amount in the sixth year.
The Citys contribution during the ramp under SB1922 was determined by increasing the multiplier over a
five year period.
Under this proposal the Citys contribution during the ramp will be a set amount that increases each year
without regard for the multiplier.
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