Mayor Rahm Emanuel may seek new taxes on downtown businesses, “high net-worth individuals” or both to dig the Chicago Public Schools out of a $596 million hole without state help, City Hall sources said Monday.
Last week, Emanuel said he was prepared to do “some very difficult things” to stave off a threatened early closing of Chicago Public Schools that would run contrary to the longer school year he was able to achieve only by enduring a teachers strike.
Now, the local rescue is taking shape in a way that helps explain why aldermanic briefings on the subject have been postponed twice.
Sources said the new taxes Emanuel is exploring would raise $400 million to $600 million in annual revenue.
Theresa Mintle, the former Emanuel chief of staff now serving as president and CEO of the Chicagoland Chamber of Commerce, urged Emanuel not to add to the mountain of taxes and government mandates imposed on Chicago businesses in recent years.
That mountain already includes: a higher minimum wage; an $838 million property tax increase for police, fire and teacher pensions paid “disproportionately” by the business community; increases in the Cook County sales and hotel taxes and an ordinance requiring Chicago employers large and small to provide their employees with at least five paid sick days each year.
More recently, the City Council imposed a 7-cents-a-bag tax on paper and plastic bags that has left consumers feeling even more nickeled-and-dimed. That’s because they pay it every time they go to the grocery or any other Chicago store without bringing their own reusable bags.
The piling on has also included regulations and taxes on tobacco products, as well as Emanuel’s plan to raise the smoking age to 21.
“We are already paying more. The property tax over three years is almost $1 billion. The cloud tax. The water and sewer tax. … The sweetened beverage tax. We have a mandated minimum wage increase. We have mandated paid sick leave,” Mintle said.
“The business community has been disproportionately hit over the last two years with revenue and regulatory initiatives that are really starting to make a difference in our ability to create jobs and drive economic activity.”
Mintle said she “appreciates the mayor’s creativity” and recognizes that “he’s in a bind because the governor and the four legislative leaders are not doing their job.”
But, she said: “We cannot continue to fund government on the backs of businesses. It is just too much to take. What we need is a balanced budget with economic reforms so that Chicago and every other municipality and school district in this state can educate our students, create jobs and drive economic activity.”
Emanuel walked away from the microphones when asked about the local rescue he has been crafting ever since a judge threw out a long-shot CPS lawsuit that accused the state of distributing school aid in a way that discriminates against districts such as Chicago that serve predominantly poor and minority students.
Instead, the mayor tried to keep the heat on Gov. Bruce Rauner and the Illinois General Assembly with just two weeks to go in the spring session.
“My entire focus is making the best use of the time in the remaining two weeks [so] that Springfield fulfills their obligation to the children of the state of Illinois and, therefore, the children of the city of Chicago [so] that that the children of Chicago are not treated as second-class citizens,” Emanuel said.
“It’s 22 months without a budget. Never presented by the governor. Never having funded education to the level of our kids’ academic and future needs. When they do make commitments, they don’t live up to ’em. The biggest deadbeat in the state of Illinois is the State of Illinois,” the mayor added.
“It’s in the Constitution that the State of Illinois is the primary funder of education. I expect ’em to live up to their responsibilities. … The biggest piece of the funding issue for the city of Chicago is the state of Illinois is dead last in funding education and dead last in meeting their obligations once they set ’em. That has to be done.”
Ald. Edward Burke (14th), chairman of the City Council’s Finance Committee, said the last time he checked with Chief Financial Officer Carole Brown, he got the sense that the mayor’s approach to a local rescue was “changing by the day.”
Burke was asked whether the mayor would face resistance if he tried to raise local taxes again to save CPS from aldermen who have already walked the tax plank three times to solve the city’s $30 billion pension crisis.
“Was there not a sentiment when we raised the taxes in the last go-around to go for a larger amount and get it over with and not come back piecemeal?” Burke said.
“I’m sure there’ll be some discussions about that. But frankly, we can’t look back. We have to look forward. … There’s what, about 16 days left? It might be foolhardy to delay any longer, given the track record down in Springfield.”
Some aldermen have privately argued that Emanuel made a mistake by riding to the rescue.
They believe the mayor might have been better off allowing the schools to close on June 1 and blaming the governor instead of promising a local solution that lets the state off the hook.
Burke is not among those doubters.
“The upheaval that would occur for the families of the students in the schools is rather frightening. Closing the schools early is a last, drastic choice,” the chairman said.
“I’m sure that there’s a sentiment among the members of the City Council that keeping the kids in school is of critical importance. But we’d have to see what the proposal is.. I don’t know how much more the property tax can be raised. But clearly the municipality has limited choices.”