Editorial: Not so fast on county sales tax hike

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Back in 2010, Cook County Board President Toni Preckwinkle’s promise to reverse a tax hike that had given Chicago the highest sales taxes of any major U.S. city came at the right time. It sent a clear message: The days of bloated bureaucracy were over.

But her announcement this week that she wants to send the county’s sales tax back up by a penny is premature. Any tax increases should be part of a formal budgeting process. The County Board will take up its 2016 budget in the fall. That’s the time to debate any new taxes.

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Preckwinkle has earned high marks for chopping the budget since her election in 2010and running a leaner, more efficient government. She is no Todd Stroger, the County Board president who hiked the sales tax. But there is more work to be done. A new round of cost-cutting ideas must be aired during the budget process, before the talk of any tax hike begins in earnest.

Preckwinkle, who ran unopposed for re-election in November, must have known for quite some time that the county would need a pile of money to fix its underfunded pensions. If she could wait until after November to float the idea of new revenues, why can’t she wait until the county’s fall budget hearings?

Unless she’s hoping to be the first to the taxpayer trough, beating out Chicago, the state and Chicago Public Schools, which are all looking for new revenues. We might not go as far as the Civic Federation — which thinks the city and county should coordinate requests for new revenues — but we don’t want a gold rush in which the first to stake a claim gets the mother lode.

Preckwinkle says she’s not rushing, just being mindful that “the longer we wait to address this issue, the more our [pension] liability grows.”

The sales tax first shot up by a penny under Stroger in 2008, an increase that was cut in half by the County Board two years later over Stroger’s veto. Preckwinkle ousted Stroger with a promise — memorialized in a TV ad in which she shook Ben Franklin’s hand — that she would eliminate the rest of it.

Admirably, Preckwinkle also went on to reduce the county work force by 8 percent, cutting spending by more than $465 million a year, and trimming county public health costs by more than half. She turned around a haven of patronage, insider dealing and waste.

But like the rest of the state, Cook County has a pension problem. Its worker retirement fund is $6.5 billion short and is expected to run out of money by 2038. Unlike Chicago and the state, though, Cook County always has made its full payment. The fund is short because of two market crashes and unfunded pension sweeteners blithely inserted by the Legislature.

Preckwinkle is pushing a bill in Springfield to cut some benefits and require the county to pay an additional $147 million a year. But so far, the bill, which we support, has gone nowhere.

The one-cent sales tax hike favored by Preckwinkle would generate more than $400 million a year, most of which would go toward pensions. Preckwinkle favors a sales tax increase because county commissioners are dead-set against a hike in the property tax, which hasn’t been touched since 1994.

But a tax increase of this size must be publicly aired and debated. As Preckwinkle said during the 2010 election, sales taxes are regressive and can drive businesses out of the county. A 2010 Civic Federation report said the earlier sales tax increase “appears to have hurt retail sales [and] also placed a greater proportion of the tax burden on low-income residents.” Any decrease in retail sales could hurt other agencies, such as the Regional Transportation Authority, that also depend on the sales tax.

The Civic Federation, which is open to a sales tax increase, has cited several areas ripe for cost-cutting reforms, including more cuts to the criminal justice system and a faster upgrade of the county’s back-office software.

As Franklin would say, those pennies saved would be pennies earned for taxpayers.

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