A post-election property tax increase is inevitable to solve Chicago’s $20 billion pension crisis, one of Mayor Rahm Emanuel’s most powerful City Council allies warned Monday, arguing that anybody who claims otherwise is living in a dream world.
Nine aldermen allied with Emanuel joined his campaign co-chair, City Clerk Susana Mendoza, at a City Hall news conference to put the heat on mayoral challenger Jesus “Chuy Garcia” for making $1.9 billion in promises that, they claim, would force the owner of a $250,000 home to pay $1,900 more in annual property taxes.
But Ald. Carrie Austin (34th), chairman of the City Council’s Budget Committee, inadvertently put the spotlight on Emanuel when she acknowledged under questioning that Chicagoans need to brace for a property tax increase in any event — even if Emanuel wins the April 7 runoff.
“I believe we can truly say that it will happen, but [the only question is] how much?” Austin said of a post-election property tax hike.
“I was on record saying that if we have to raise the property taxes, then that’s a bullet that we will have to bite because we have to right our ship. I still feel the same way . . . We have a long way to go in order to get to that. But I believe that nothing is off the table. And we should be honest with the people to [let them] know that everything is being considered.”
During a debate on Jan. 30 before the Chicago Sun-Times editorial board, Emanuel ruled out a post-election property tax increase but confined the guarantee to the city’s $300 million operating shortfall.
That prompted Ald. Bob Fioretti (2nd) to warn of a “massive” property tax hike for pensions if Emanuel is re-elected.
Austin’s comments only underscore that point.
But Ald. Brendan Reilly (42nd), Austin’s Budget Committee co-chairman, tried to turn the tables back on Garcia.
“We’re four weeks away from electing a new mayor, yet we have received no information whatsoever from Mr. Garcia on how we’re gonna pay for these things,” Reilly said.
“We’re at a time now — the taxpayers certainly are — where they want to see the beef. And so far, all we’ve gotten from Mr. Garcia is a lot of baloney. . . . By my math, $1.9 billion in program spending. He needs to find a way to pay for that. What that means for local taxpayers is $1,900-per-year-per-person in the city of Chicago that local families can’t afford.”
Emanuel initially proposed raising property taxes by $250 million over five years to bankroll the city’s increased contribution to the Municipal Employees and Laborers pension funds. He agreed to substitute a 56 percent increase in Chicago’s telephone tax for the city’s first-year contribution — but only after then-Gov. Pat Quinn balked at a pre-election property tax hike.
The mayor has refused to say how he plans to meet the city’s increased obligations to the two funds after the first year, when the telephone tax will run short.
He has also put off until December a decision on how Chicago will meet a state-mandated, $550 million payment to shore up police and fire pension funds.
The decision to put off Chicago’s financial day of reckoning has left Emanuel as open to criticism as Garcia.
Austin was asked why she doesn’t put more heat on Emanuel to also be more specific about the shared sacrifice that lies ahead — particularly after Moody’s Investors Service dropped Chicago’s bond rating another notch to two levels above junk status.
“We have done that. We’ve been the aldermen working with the mayor. We need specifics. [which is] the reason why we’re asking for Mr. Garcia’s specifics,” Austin said.
“The mayor has shared some of his concerns, some of his ideas, with us, but not to the fullest extent as to say we want to put them out before he does.”
Austin strongly disagreed with Gov. Bruce Rauner that Chicago is on the brink of bankruptcy. She argued that Chicago has a diverse economy and is nothing like Detroit.
But she said, “We all will have to bear some of the burden. Be it the pensioners. Be it we, the homeowners, will have to have some of that. But we all have to share in that burden.”
To get to $1.9 billion in campaign promises by Garcia, the mayor’s allies counted: $1.2 billion in pension payments without reform, a $350 million operating deficit, $150 million to bankroll Garcia’s promise to end debt refinancing, $120 million to hire 1,000 additional police officers and $85 million to honor Garcia’s promise to abolish red-light cameras.
Garcia’s campaign manager Andrew Sharp accused the Emanuel campaign of using “scare tactics” to “distract” voters who have already rejected Emanuel’s “slash-and-burn approach” to the city budget.
Sharp specifically pointed to the mayor’s decision to close half the city’s mental health clinics, reduce library hours and staffing, phase out the city’s 55 percent subsidy for retiree health care and “nickel-and-dime Chicagoans with revenue scams like red-light and speed cameras.”
“As mayor, Chuy will invest in resources and services for Chicago’s neighborhoods, like 1,000 new police officers to keep our communities safe. He’ll get our fiscal house in order by ending irresponsible practices like ‘scoop and toss’ bond schemes that have led to the downgrade of Chicago’s credit rating. And he’ll ask the very wealthy and big corporations to pay their fair share, instead of balancing the books on the backs of working people and seniors,” Sharp said in an emailed statement.
Sharp said the $1.9 billion price tag put on Garcia’s promises “by the people who brought you the parking meter deal and five financial downgrades in the last four years have zero credibility” and “would flunk any third-grade math test.”
Helping to orchestrate the City Hall news conference on Monday was Emanuel campaign spokesman Steve Mayberry. He was standing near the podium when Austin detoured from the script and cut off the questioning shortly thereafter.
Hours later, Mayberry tried to put the best possible face on Austin’s claim that Chicagoans should brace for a property tax hike, no matter who is elected mayor.
“A property tax increase for police and fire pensions is coming at us. Our best chance to avert that is with a mayor who is willing to be straight with the public and make the reforms and changes necessary to lead the city through this mess. As Mayor Emanuel has said, it would be irresponsible and dishonest to flatly rule out a property tax increase,” Mayberry wrote in an emailed statement.
“The question for the public is which candidate gives us the best chance to avoid such an increase. Rahm Emanuel has done it for four years. Chuy Garcia has raised taxes in every legislative job he has had and still, after four months campaigning, he has not identified a single reform to save taxpayer money.”
Garcia has promised to release his long-awaited financial plan later this week. It’s expected to rely heavily on tax-increment-financing (TIF) reform.
“They’re looking at scaling back — not just the number of TIFs compared to other cities, but the overall amount that goes into the general tax fund and doesn’t come back out,” said a source familiar with Garcia’s plan.
“If we’re putting aside $500 million a year and that’s detracting from the overall tax base, what he’s gonna be looking at it is trying to restructure that so we’re not looking at $1.7 billion and we don’t know where all the money is going. A lot of it committed [to projects], but not all of it. And no one knows where all of those funds are going except the mayor.”
Garcia has also demanded that the Democratic-controlled Illinois General Assembly checkmate Rauner’s doomsday budget and replace every one of the devastating cuts with new revenue.
Pressed for specifics, Garcia has talked about everything from a graduated income tax and making permanent the recently expired state income tax hike to an idea championed by both Rauner and Emanuel: broadening the sales tax umbrella to an array of services not now covered.
The so-called “millionaire” tax proposed by Illinois House Speaker Michael Madigan (D-Chicago) and a financial transaction tax on La Salle Street exchanges should also be on the table, Garcia has said.
That’s a tax now prohibited by state and federal law; Emanuel adamantly opposes such a tax, fearing it might push the exchanges to leave Chicago, turning the financial district into a ghost town.