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Rauner won’t commit to signing Rahm’s property tax relief plan

Mayor Rahm Emanuel’s plan to raise the homeowner exemption will make the bitter pill of a $500 million property tax increase easier to swallow, aldermen said Monday, but Gov. Bruce Rauner’s office cast doubt on whether the Republican governor would sign such a bill.

City Hall sources said House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, are on board with the mayor’s plan and committed to shepherd the legislation through the General Assembly once final details are hammered out.

But so long as they are embroiled in a state budget stalemate with Rauner over the governor’s unyielding demand for pro-business, anti-union reforms, it appears that the mayor’s longtime friend could be a political roadblock.

On Monday, the governor’s office was asked whether Rauner would sign legislation raising a homeowner exemption that now stands at $7,000 of a home’s assessed valuation and is scheduled to drop to $6,000.

Before the bottom dropped out of the real estate market, the homeowner exemption was capped at $33,000 or 7 percent of assessed valuation.

“The governor has proposed legislation that would freeze property taxes and provide significant new support for CPS,” the governor’s spokesman Catherine Kelly wrote in an email to the Chicago Sun-Times.

“Raising taxes alone won’t fix our problems. We need structural reforms to help cities like Chicago control costs.”

Pressed for a yes or no about signing legislation raising the homeowner exemption, Kelly declined to comment further.

Rauner wasn’t the only one to question the mayor’s plan to hold owner-occupied homes valued at less than $250,000 harmless from a $500 million property tax increase that could otherwise cost their owners $500 more-a-year.

Downtown Ald. Brendan Reilly (42nd) said he’s been getting an earful from the owners and tenants of large commercial buildings. In Cook County, owners of commercial property are assessed at a rate of 25 percent of full market value — compared to just ten percent for residential property. The higher the homeowner exemption goes, the more businesses will have to pay to make up the difference.

“It’s not my concern — yet. But what I’ve been hearing is that some are concerned that the way these leases are structured in their buildings, the property taxes are passed directly to the tenant,” Reilly said, questioning the $500 million increase.

“And so for some new tenants who have been brought here through corporate headquarters victories — relocations by the mayor — that maybe we might lose some of those folks. That’s not my view. That’s the view I’m hearing from some of my constituents. I’m going to keep my powder dry until I get the full view of what the mayor is proposing here. [But] I’m concerned about the impact of a large property tax on the Central Business District.”

Reilly then shifted to the mayor’s plan to raise another $100 million by imposing a monthly garbage collection fee of roughly $11 to $12 a month per household.

“Ninety-eight percent of my constituents already pay for private waste hauling service. The current program is unsustainable. I’m inclined to support that revenue stream [a garbage collection fee] if it means we can take some pressure off the local property tax,” the alderman said.

Most aldermen said the property tax break — if and when it wins legislative approval — would make it easier for them to walk the political plank by approving a 60 percent property tax increase.

“Most of my property owners have condos worth less than $250,000, particularly since the recession. If this goes through, it helps to make property tax increase a little bit more progressive and shields from that increase the people least able to pay for it,” Ald. Joe Moore (49th) said.

“This would probably make the bitter pill a little bit easier to swallow. I can’t imagine any legislator voting against increasing the homeowners’ exemption. And I can’t imagine the governor vetoing something tantamount to tax relief for families. Unlike most of the stuff down there, this would have an excellent chance of getting passed.”

Ald. Ameya Pawar (47th) added, “The two legislative leaders are on board in providing some buffer to low-income families. It also falls in line with Gov. Rauner’s rhetoric on a property tax freeze. This should be something everyone can rally around.”

But he said, “Even without the deal, there isn’t much choice.” There’s no other way to stabilize the city’s finances and save the pensions for first-responders. There aren’t any other levers for us to pull.”

Ald. Will Burns (4th) said the mayor’s plan to “significantly increase” the homeowner exemption would “provide relief to people at the bottom of the economic ladder — people who may have property, but not a lot of income.”

“Increasing the property tax exemption makes it easier to build support for a property tax increase. It will provide relief to a segment of taxpayers. You’re trying to soften the blow and introduce progressivity into a regressive tax,” he said.

Ald. Patrick Daley Thompson (11th), the nephew of former Mayor Richard M. Daley and the grandson of former Mayor Richard J. Daley, urged Emanuel to go a step further, by tacking the garbage collection fee onto the property tax bill, instead of on water bills.

“If we add it to the property tax, at least the taxpayers get the benefit of the tax write-off. We have to look at it from that perspective as well,” Thompson said.