Mayor Rahm Emanuel’s plan to cut the city’s amusement tax ran into a roadblock Wednesday from aldermen bracing for a painful rescue of the Chicago Public Schools.
Emanuel’s 2017 budget changed the way the city’s 9 percent amusement tax is applied to ticket resales.
Prior to that change, ticket resellers like Gold Coast Tickets were required to pay the tax at the normal rate of 5 percent or 9 percent, depending on the type of event. But the tax applied only to the ticket markup. That resulted in what the city called “difficult calculations” and lost tax revenue.
The new plan simplified the amusement tax rate on ticket resales to a flat 3.5 percent on the full resale price, regardless of the markup.
The change was billed as “revenue-neutral,” but it didn’t turn out that way. The city got an unexpected windfall. To make it right and keep his word to ticket resellers, Emanuel wanted to reduce the revised tax from 3.5 percent to 3 percent for large events and 2 percent for smaller ones.
But during a hearing on the change before the City Council’s Finance Committee, aldermen weren’t buying it.
Not when they’re preparing to walk the tax plank yet again to dig CPS out of a $596 million hole.
“Why not just keep the money? We need money,” said Ald. Patrick Daley Thompson (11th).
Ald. Harry Osterman (48th) said he “doesn’t feel comfortable” supporting the change.
“One, the city is broke and, two, we’ve got to find $600 million for Chicago Public Schools, which we’re still waiting for a briefing on. Dying to hear the ideas on that,” Osterman said. “The mayor has talked about taxing downtown businesses or high-wealth individuals, and we don’t know what else. But right now, we have a revenue stream, a small amount. . . . I’m not real comfortable giving the money back right now as, I would assume, a lot of these are really, really profitable companies.”
The opposition prompted the Finance Committee to put off a vote on the amusement tax change.
Molly Poppe, a spokeswoman for the city’s Office of Budget and Management, took the delay in stride.
“When we discussed this as part of the 2017 budget, we had always considered it be revenue-neutral. That was our intention. That’s how we factored it in. We don’t want to go back on that word,” Poppe said. “That’s why we submitted the amendment to take it down to 3 and 2 percent. . . . If the aldermen ultimately decide that they want to keep it at 3.5 percent, we’ll have that conversation with them.”
Poppe was asked why the city would even consider giving back found money when the City Council is bracing for another massive tax increase to keep the school afloat.
“We don’t look at it as giving back money. We look at it as remaining true to the way the revenue ordinance was drafted originally,” she said.
“It’s about $1 million. An additional half-percent on $1 million is a small amount,” Poppe said. “Yes, we need every penny. But we believe it’s important to stay true to our conversations with the public and the businesses.”
Chicago levies a 9 percent amusement tax on movies, concerts, sporting events, live theater and entertainment venues with a seating capacity of more than 750.
A lower rate of 5 percent applies to live theatrical, musical and cultural performances in smaller venues with less than 750 seats.
The change affecting ticket resales is not the first time Emanuel has tweaked the amusement tax to boost revenues.
Three years ago, he reduced and then eliminated entirely the amusement tax exemption that had long benefited cable television companies to offset their franchise fee.
The $12 million plan cost the average cable customer $2.40 more per month and $28.80 more per year.