Mayor Rahm Emanuel’s sagging popularity — and public disdain for raising property taxes — will make it infinitely more difficult for the mayor to win City Council approval of a $250 million property tax increase to save two city employee pension funds, aldermen said Tuesday.
Even before the Chicago Sun-Times poll, aldermen nine months away from re-election were searching for alternatives to Emanuel’s plan to raise the city’s property tax levy by $50 million in each of the next five years — and overall property tax collections by $750 million over the same period.
Now, the poll gives them a tangible reason to fear political fall-out from a property tax increase favored by only one percent of those polled as a solution to the city’s pension crisis.
The poll also gives aldermen fewer reasons to fear retribution from a mayor with support from a mere 29 percent support of likely Chicago voters.
“It’s obviously going to be very difficult with that low [a level of] support” for the property tax, said Ald. “Proco” Joe Moreno (1st).
“Talking to my colleagues, there’s probably not the support there today. But, we’ll see what other options there are — if there are other options.”
Another alderman, who asked to remain anonymous, predicted that the mayor would have “a dozen, maybe 15” of the 26 votes needed for City Council approval if the vote were held today.
“Who’s gonna stick their neck out for somebody with approval ratings that low?” the alderman said.
“They’re gonna have to figure out something else other than the property tax. The mayor’s North Side base won’t even vote for it. If you can even call that his base.”
Ald. Joe Moore (49th), an outspoken critic of former Mayor Richard M. Daley who is now an Emanuel ally, said talk of a City Council showdown is “pre-mature.”
Gov. Pat Quinn has until June 12 to decide whether to sign or veto a bill that sets the stage for a $250 million property tax increase to save the Municipal Employees and Laborers pension funds by increasing employee contributions by 29 percent and reducing employee benefits.
“When aldermen are confronted with what the options truly are — not what people wish they would be, but what political and legal realities dictate — you’re gonnna get folks to take a look at the property tax increase as the lesser of the two evils. The greater evil being massive service cuts and layoffs in order to make our payments to pension funds,” Moore said.
“I don’t think anyone needed a poll to tell them a property tax was gonna be unpopular. But, we all need to do a better job of educating the public of what the true choices are. Is a transaction tax something that can really happen given the political climate in Springfield? I doubt it. A city income tax? It’s likely to meet more resistance than a property tax hike. There are no easy answers. We have no choice but to really be honest with public.”
Ald. Ameya Pawar (47th) argued that the Sun-Times poll was “flawed” because it asked respondents to choose from among four revenue options, only one of which is within the City Council’s power to enact unilaterally.
The others — including a city income tax, a transaction tax on LaSalle Street exchanges and a commuter tax on suburbanites who work in Chicago — need approval from the Il. General Assembly.
But, Pawar acknowledged that, “if people make decisions strictly on polling,” Emanuel could lose his first City Council vote.
“Right now, he’d have a tough time getting peoples’ votes, including mine. What’s the plan for police and fire [pensions]? What are the other revenue options? I’m not scared about making tough decisions, so long as there is a thoughtful process. For me, that includes being able to talk about it — not only at City Hall hearings, but out in my community,” Pawar said.
He added, “Everybody who retired, including the former mayor, propped up services and the city by selling it off and selling out our city. When they couldn’t sell anything else off, they left. It would be wonderful if we could find some magic pot of money to avoid raising property taxes. But I understand that, at some point this year or next, a property tax is highly likely. Poll or no poll, there is a $600 million cliff that’s real” for police and fire pensions.
Pawar has already convinced Emanuel to make the bitter pill a little easier to swallow — by promising to declare as a surplus all of the new property tax revenue generated by a $250 million tax increase — in Chicago’s 175 tax increment financing (TIF) districts. That would return roughly $10 million to the Chicago Public Schools, which has its own pension crisis, and $4.6 million to the city to be used toward pension payments.
Now, he’s urging the mayor to immediately begin the 2015 budget process instead of waiting until October.
“If you want to get people on board with what’s gonna happen and how dramatic service cuts can be if we have to come up with $600 million [to shore up police and fire pensions next year], you have to start the hearings today to provide context today,” Pawar said.
“Right now, he’s gonna have a tough time. All we hear is the back and forth. [Chicago Teachers Union President] Karen Lewis is saying one thing. Mayor Emanuel is saying another. People are trying to figure out what’s going on based on what’s in the newspaper. Police and fire are still up in the air. The governor is not saying what he’s gonna do. There’s a lot of uncertainty. When there’s uncertainty, people get nervous” and politicians run for the hills.
A top mayoral aide, who asked to remain anonymous, insisted that the poll results would have no impact on Emanuel’s ability to round up votes for the property tax increase.
“We have a series of difficult choices. We’re confident we’re going to be able to get done legislatively in the City Council what’s necessary to fix our pension problem and fund them,” the mayoral aide said.
“Passing any kind of tax increase is difficult. A poll or anything like that doesn’t make it any more difficult or easier,” the aide said.
Budget Director Alex Holt said the mayor has “always been willing to consider revenue sources” other than the property tax — either to reduce the $250 million increase or to save police and fire pension funds once those unions sign off on pension reform.
She noted that the mayor’s plan to raise property taxes by $50 million-a-year would only get the city half-way to the $100 million a year needed to save the Municipal Employees and Laborers pension funds. Another $30 million would come from airport and other “enterprise funds,” with $20 million coming from budget cuts or additional revenue.
“We appreciate the desire everybody has to come up with ideas that potentially push the burden to other people, but the reality is, they have to be something that’s legal. And it has to be to be sustainable. It can’t be a revenue source people can just walk away from,” Holt said.
“Many of the ideas that have been brought up are barred constitutionally. A commuter tax on people who work in the city is barred by the federal and state constitutions.”
Pressed to describe revenue ideas the administration considers workable, Holt specifically mentioned the sales tax on services that Emanuel suggested during the mayoral campaign, only to drop the idea after it was derisively branded the “Rahm tax.”
“The mayor has been clear on the fact that, the way the sales tax is implemented today hurts people buying basics, but does not tax luxuries. We need to take a wholesale look at the structure of the commodity-based sales tax that charges the basics people need,” Holt said.
But, she warned, “If the state were to make that kind of move, it would take some time to do that restructuring. It’s a long-term project. It’s not an immediate project.”