Mayor Rahm Emanuel acknowledged Thursday that it will be tough for homeowners and their aldermen to swallow a $500 million property tax increase but said he’ll get it done and soften the blow with “fair and progressive” relief for seniors and working families.
“This will be, obviously, difficult. And I don’t underestimate the difficulty. That’s why it’s going to be done in the most fair and progressive manner,” the mayor said.
“I know it’s tough. That’s why other people in past years never confronted Chicago’s future head-on.”
With aldermanic opposition mounting, Emanuel was asked to rate his chances of rounding up the 26 votes needed to approve a 60 percent property tax increase and a garbage-collection fee widely viewed as a back-door property tax hike.
“I said we’re going to do it in a fair and progressive way. . . . If you’re asking me, do I believe we’ll get it done? The short answer is, yes, because I actually believe the aldermen are up to the task of charting a new course for Chicago’s future,” he said.
The Chicago Sun-Times first reported this week that Emanuel was poised to raise property taxes by $500 million for police and fire pensions and school construction and impose a garbage-collection fee to generate $100 million more.
Emanuel to seek $500 million record property tax hike
The $500 million property tax increase will cost the owner of a home valued at $250,000 roughly $500 more a year. The garbage fee will be a monthly assessment of roughly $11 to $12 per household.
The mayor’s 2016 budget will also include a tax on e-cigarettes and other smokeless tobacco products and a $1-a-ride surcharge on Uber and other ride-hailing services. A penny-an-ounce tax on sugary soft drinks may also be part of the mix.
Together, they make up the largest collection of tax and fee hikes Chicagoans have ever seen.
But Emanuel said Thursday there is no other way to restore Chicago’s junk bond rating and pull the city away from the financial cliff.
“By the time we’re done in the four years, the structural deficit we inherited in 2011 will be eliminated. All the gimmicks and shenanigans that were built up in the system to mask what the real cost of our government was — from scoop-and-toss [borrowing] to raiding the rainy day fund to borrowing from the future to pay [for] the present to using one-time revenue sources — all of those gimmicks will be out of the system. And we will have finally righted our financial ship,” he said.
“As it relates to police and fire pensions, we will also put that on a [stabilizing] course to respect the hard work of the men and women who protect us every day and do it in a way that’s also consistent with our value of being fair and progressive.”
Chicago aldermen knew they would face the music after the election to meet a state-mandated, $550 million payment to shore up police and fire pensions and restore a city bond rating reduced to junk status.
But that doesn’t make the music any easier to hear — especially when the strident notes include a double-whammy on beleaguered homeowners.
“It would be hard for me to support a garbage tax with an increase in the property tax at the level this mayor has proposed,” Ald. Pat Dowell (3rd) said.
“I definitely see a property tax increase being part of the mix. But if it’s a $500 increase on a $250,000 home, that’s a lot to ask from a taxpayer who also has to pay a garbage fee. I would like to see the administration look [instead] at ways of taxing corporations or getting money from financial institutions.”
Before lowering the boom on homeowners, Aldermen John Arena (45th) and Carlos Ramirez-Rosa (35th) said Emanuel should turn first to some of the ideas championed by the anti-Emanuel Progressive Caucus: a “storm water stress” tax on big-box stores and an “alternative minimum tax” on downtown buildings.
“If we’re hitting homeowners with a straight, massive property tax increase when they’re already struggling to make ends meet, they’re going to be priced out of the their homes and they won’t be around to spend money in local stores,” Arena said.
“The two increases together will stall the neighborhood economy that’s just starting to revive. Go back to the drawing board and spread the burden. We cannot just use a blunt instrument to solve this problem. Just going to a straight property tax increase is a blunt instrument.”
Warning that the tax hike would “destabilize” neighborhoods, Ramirez-Rosa demanded rebates in low-income communities still rebounding from the foreclosure crisis and “shared sacrifice” from aldermen.
“If we’re going to raise property taxes, we need to show we understand the crisis we’re in by cutting our own salaries. I don’t think aldemanic salaries have to increase every single time the consumer price increase goes up. I want a formula that would tie an increase to cuts in aldermanic salaries and a corresponding cut in mayoral appointees earning over $100,000,” the rookie alderman said.
Even Aldermen Mike Zalewski (23rd) and George Cardenas (12th), who are normally reliable votes for Emanuel, said they are not prepared to walk the political plank just yet.
“I want to make sure that my ward is truly represented in all aspects of services. That goes for schools and parks. Right now, that’s not the case. I see many projects throughout the city that I’m not seeing out here, whether it’s school additions or turf field in parks,” Zalewski said.
Cardenas said his phone has been ringing off the hook with irate constituents since the Sun-Times story hit the streets and the web.
“We’re getting calls that are pretty abusive. It’s going to be very difficult to do both” a property tax hike and a garbage fee, Cardenas said.
“People know they’re already paying a property tax that’s supposed to cover garbage. Giving them two bills for the same thing, as a resident put, ‘It’s an insult that you would think I’m that stupid.’ ”
In spite of all the griping, Zoning Committee Chairman Danny Solis (25th) flatly predicted that Emanuel would have the votes when the time comes.
“It may be too much. It may not be enough. But we’re not blind. We know we need the revenue. A lot of people are taking the attitude the mayor has been talking about — that this may be our last term, but we have to make the decisions,” Solis said.
So long as the record property tax increase is “carved out and dedicated to pensions,” Ald. Ameya Pawar (47th) said he’s prepared to take what he called the “tough vote.”
“We knew this day was coming. The courts have basically said there’s nothing you can do. Pensions are inviolate. There likely will be a second [property tax] vote for teacher pensions,” Pawar said.
“Unless the governor’s office is willing to sign onto a more progressive form of revenue, we have to do our job. If we don’t come up with the revenue for police and fire, the state is authorized to hold back revenue due to the city. I have no doubt the governor would do that.”
Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, said he won’t start counting votes until the mayor’s budget team is through cutting costs. But he, too, is confident the votes will be there.
“We’re dealing with 50 individuals who understood the dire straits the city was in during the last election cycle. No one came into this with the expectation that everything was fine with city finances. I’m hoping they understand there’s an obligation to help the city rectify the issues we face,” O’Connor said.
“I’m hoping we have enough responsible individuals to help us carry the day. Nobody wants to be on the record as saying this is wonderful. But why pretend a solution to some of these problem exists in Springfield? They haven’t passed their own budget. They’re deadlocked with the governor. Why continue to pretend we’re going to get a casino tomorrow or other things a day after? This reflect our current reality.”
Civic Federation President Laurence Msall said the “magnitude” of the increases disclosed by the Sun-Times “should not come as a surprise to anybody who is watching the city’s financial condition and the high cost the city has been paying by relying on borrowing for operations and having a junk bond rating.”