Before Mayor Rahm Emanuel’s second inauguration, his own friends likened the crisis before him to the one President Harry Truman faced before dropping the atom bomb on Hiroshima and Nagasaki that ended World War II.
They argued that the solutions to Chicago’s $30 billion pension crisis would be so painful and politically unpopular, Emanuel would either be unable to run again or choose not to seek a third term.
Emanuel fueled that speculation by exhorting his staff and aldermen to “feel liberated” and “govern as if we ran our last election….What will you do then with that liberty?’ ”
Now, that moment of truth has arrived—and it hardly feels like liberation day.
As the Chicago Sun-Times first disclosed three weeks ago, Emanuel will lower the boom on Chicago taxpayers with a $500 million property tax increase for police and fire pensions and school construction and a first-ever, monthly garbage collection fee that’s likely to be whittled down to $9.50-per-household when all is said and done.
The 2016 budget that Emanuel will unveil Tuesday also includes: a new tax on e-cigarettes and other smokeless tobacco products; a 50-cents–a-ride surcharge on taxis and ride-hailing services; a 15 percent increase in cab fares and authorization for Uber to make pick-ups at McCormick Place, O’Hare and Midway Airports in exchange for a $5 surcharge on every pick-up and drop-off.
The mayor still hopes to soften the blow of the 60 percent property tax increase by convincing the Il. General Assembly to raise the homeowner exemption and hold harmless owner-occupied homes worth less than $250,000.
Il. House Speaker Michael Madigan (D-Chicago) has scheduled a hearing on that tax break for next week over the objections of Republican Gov. Bruce Rauner.
As a fall-back, rookie Ald. Carlos Ramirez-Rosa (35th) plans to introduce a “property tax rebate” ordinance similar to the widely-ignored, 2010 plan offered by then-Mayor Richard M. Daley. Daley set aside $35 million for rebate checks, but distributed only $2.1 million because most homeowners didn’t bother to apply.
If the mayor’s friends are right about a second term being Emanuel’s last, he’s uniquely positioned to solve the pension crisis and seal his place in history as the mayor who steered Chicago away from the financial cliff.
Without regard to political fall-out, Emanuel can propose the remedies needed to shore up police and fire pensions, eliminate the structural deficit he inherited over the next four years and end, what he calls the “gimmicks and shenanigans” former Daley used to “mask the real cost” of government.
Same goes for Ald. Pat O’Connor (40th), Emanuel’s City Council floor leader. He’s a 32-year-veteran who has told associates this will be his final term.
But, what about the 49 other aldermen who will be asked to join Emanuel in walking the political plank?
Are they prepared to kiss their political careers goodbye, if that’s what it takes to shed the junk bond rating that has already saddled taxpayers with tens of millions of dollars in penalties and borrowing costs?
“I’m going try to do this job to the best of my ability without regard to whatever backlash we might face at the ballot box later because there’s no way to please everybody in the situation we’re faced with. You just have to accept that and get over it,” said rookie Ald. Brian Hopkins (2nd).
“I know there’s going to be some more controversial votes after this year. This is not a one-and-done thing. We’re going to have to face this constantly. There’s no way around it….I’m absolutely prepared to do the right thing without regard to whatever consequences there may be.”
Downtown Ald. Brendan Reilly (42nd) said the level of political backlash will largely depend on Emanuel and his ability to frame the crisis in terms an angry electorate can understand.
“The mayor’s been doing a pretty good job describing how dire a situation we’re in. But, the next several weeks are going to require an education campaign to make sure people understand what’s at stake. What happens if we don’t address this crisis?” Reilly said.
“There’s certainly shock value here. No one in Chicago has had to grapple with something of this magnitude before. So, I can’t predict how folks are going to react. But, the next several weeks, people are going to be letting us know exactly how they feel. There may be components of the budget plan that they react to and embrace and others that are harder for them to swallow.”
The biggest point of contention is the garbage collection fee to be imposed on 613,000 Chicago households—so much so that has O’Connor publicly questioned whether he could round up 26 votes to pass it.
Black aldermen have urged Emanuel to trash it on grounds it will leave some neighborhoods filthy, breed widespread avoidance and, possibly, cost laborers their jobs.
The chairman of the City Council’s Hispanic Caucus has said it would be “very difficult to do both” a garbage fee and a $500 million property tax increase that amounts to a “double-whammy” on homeowners.
And Southwest Side Ald. Mike Zalewski (23rd), a former deputy commissioner at the city’s Department of Streets and Sanitation, has argued that the mayor’s plan lets homeowners who stockpile carts off too easy.
Ald. John Arena (45th) has also argued that the garbage fee should be “implemented in a way that encourages recycling,” by taxing the cart—not by “charging everybody equally.”
Sources said Emanuel plans to ignore all of those concerns and forge ahead with a flat monthly fee that Council negotiators have already whittled down from $11-a-month to $9.50-per-household while adding a 50 percent discount for senior citizens.
The fact that the per-household fee is not as fair as charging for each cart and won’t encourage recycling is less important than getting homeowners to accept, what will be a monumental change.
“The idea of trying to equalize it or make it more fair? We’re taking this a step at a time,” O’Connor said.
“We went to a grid a few years ago. We realized some savings. That grid has been revised to…realize more savings. So, this is a step. If we can make it more fair and more in line with use, that would be a great idea. However, the buildings with the most density and the most carts are perhaps the buildings with the least ability to pay. So, we have to be a little bit concerned about how we approach that issue.”
Ald. Chris Taliaferro (29th), a former Chicago Police sergeant, said he’s “still listening to the forces” of a West Side community “overwhelmingly” opposed to both the property tax increase and the garbage fee.
Taliaferro said his West Side constituents understand the magnitude of the financial crisis. But, they’re more concerned about the impact on their own wallets.
“We understand the position the city is in. We understand the position my personal [police] pension is in. It’s in jeopardy. But, you have to look at what they see as well. And what they see is their financial ability to afford a tax increase, what the consequences are to their personal finances,” he said.
“It definitely will have some type of impact from a political perspective and a re-election perspective. But, it’s something we need to address with our communities and let our communities have a voice in how we vote.”
Well aware of how tough a vote he’s asking aldermen to cast, sources said Emanuel is prepared to frame his 2016 spending plan as a vote—not just for this year, but for the next 20 years.
“People who make the right decision will get the mayor’s backing and support,” said an Emanuel confidante, who asked to remain anonymous.
And what happens if Emanuel doesn’t seek re-election and is not the political force he was in 2015, when his allies created a $4 million super PAC to re-elect him and strengthen his City Council majority?
“Nobody could argue that he’s not a formidable fundraiser with a formidable network,” even if he’s a lame-duck, the Emanuel confidante said.
Daley’s political playbook called for holding the line on taxes until the budget that immediately followed an election, then lowering the boom on taxpayers and giving them four years to get over it.
But that formula won’t work this time.
Emanuel has already offered to raise property taxes by an additional $170 million for the Chicago Public Schools if teachers accept the equivalent of a 7 percent pay cut and the state reimburses CPS for “normal” pension costs.
That would require the City Council to cast a second vote– this time to reinstate the old, dedicated property tax levy for teacher pensions—once the state budget stalemate ends and a new teachers contract is hammered out.
“I know that a lot of people are saying, `Let’s get this done early in the term so people will forget.’ But, I don’t believe in that. I think people will fully understand the impact once they see those tax bills and you have to convince them that what you voted on was the right thing and it will help the city in the future,” said Ald. Scott Waguespack (32nd), a leader of the anti-Emanuel Progressive Caucus.
“We’ve ignored a lot of these problems for many years. But at the same time, I don’t think we’ve done all we could so far to alleviate the property tax hike. We’re still working on that by providing a lot of other possible revenue streams and looking at alternatives to the property tax system the way it’s set up now and trying to equalize the impact on businesses and residents.”
Waguespack was asked whether he is prepared to cut short his political career, if that it takes to solve Chicago’s financial problems.
“People always told me that, if I voted against stuff in the past or voted `no’ or voted `yes’ on certain things that I’ll never make it in the City Council. But, some of us have survived on doing the right thing. So, I don’t see it as a problem,” Waguespack said.
O’Connor has the unenviable task of rounding up 26 votes to pass the biggest collection of tax and fee increase Chicagoans and their aldermen have ever seen.
Regardless of the political consequences for his colleagues, O’Connor firmly believes the votes will be there when the hand-wringing is done.
“We have made every effort consistently for the last decade or more to go to the property tax very judiciously. In most instances, we have not gone to the property tax. It is clear that Chicagoans pay less than in the surrounding suburbs,” O’Connor said.
“While we have a significant economic challenge ahead of us, people that live here and love this city realize that steps have to be taken to preserve our future. We cannot continue long-term with a junk-bond rating…Whether or not these things are popular, there is a point in time where elected officials have to do what is right and lead.”