Chicago has regained its financial footing because city officials made some tough decisions, Mayor Rahm Emanuel said Tuesday in his 2017 budget address.
“Five years ago, Chicago was on the financial brink,” Emanuel declared. “Today, Chicago is back on solid ground.”
Emanuel called the spending plan “unlike any other we have seen in recent memory. … It is a budget free of an immediate pension crisis, free of the black cloud of insolvency threatening the retirements of city employees and the financial future of Chicago.”
It is a budget, he said, balanced “not with gimmicks, but with honesty and shared responsibility.”
And, he said, it is a budget that shows the city was willing to face problems head-on.
“For too long Chicago was not honest with taxpayers and employees about the true cost of their pensions, and we allowed that dishonesty to turn into a real financial burden,” Emanuel said. “This Council took a different approach: confronting both our pensions and our broken politics. … As a result, for the first time in a long time, all four Chicago pension funds have dedicated and reliable revenue sources and new city employees will share responsibility for funding their benefits.”
Emanuel arrived at the City Council chambers to deliver the address around 10:50 a.m. with dark circles under his eyes. He had been up until the wee hours to monitor talks with the Chicago Teachers Union that ultimately averted what would have been Chicago’s second teachers strike in four years.
Asked if he’d slept, the mayor replied: “Four hours.” Despite the short night, Emanuel made it a point to say that he had gotten up at the crack of dawn to start the day with his usual swim.
Compared to the parade of tax increases aldermen were asked to approve a year ago and again a month ago to solve the city’s $30 billion pension crisis, the 2017 budget will be a relative piece of cake.
The city, Emanuel said, is “saving for Chicago’s future instead of selling it short.”
There will be no major tax increases — not even after Emanuel begins to deliver on a two-year promise to hire 970 additional Chicago Police officers to combat a 50 percent surge in homicides and shootings.
Half of the $133.8 million price tag for the new officers will be “built into” a budget with a structural deficit that’s been reduced by $600 million since Emanuel took office.
“The shortfall is such now that we will be able to absorb it without a tax increase and still be able to hire police. They feel, based on the revenue projections and what we’ve done in the last couple years, that we’ll be able to do this without an increase,” said Ald. Pat O’Connor (40th), the mayor’s City Council floor leader.
“What I’m happiest about is that we’re seeing the benefits of the votes we’ve taken. It’s not what we’ll have to do this time. It’s at least being able to say that because of what we’ve done, we’re actually seeing some benefits. Anybody who has looked at what has taken place in the Council in the last four or five years knows that it hasn’t been real pleasant. But, this is a benefit.”
The mayor’s budget assumes $148 million in revenue growth, driven by increases in sales, personal property lease tax and city sticker fees.
It also includes $33.7 million in “reforms” and spending cuts. They include: $9.4 million in energy savings; $17.5 million from so-called “zero-based budgeting’ $1.3 million from consolidating leases; $3.5 million for the sale of city-owned land and $2 million in savings generated, simply by reducing the cost of printing, copying and leasing machinery.
Under the category titled “improved fiscal management,” Emanuel anticipates generating $86.4 million by “sweeping aging revenue accounts, TIF reform” and through investment reforms implemented by City Treasurer Kurt Summers.
The revenue package is a relatively small, $25.4 million. That includes the new disposable bag tax, a so-called “downtown loading zone reform pilot” and a “special events congestion pricing” pilot. Details of those pilot programs were not immediately available.
The Chicago Sun-Times reported last week that Emanuel plans $30 million in “targeted” taxes fines and fees, even as it closes “loopholes” and holds the line on property, sales and gasoline taxes.
That includes a 7-cents-a-bag tax on paper and plastic bags to give consumers an incentive to bring re-usable bags on shopping trips.
The bag tax is likely to leave already beleaguered Chicago consumers feeling nickel-and-dimed.
That’s because they will pay it every time they go to the grocery story or any other Chicago retailer without reusable bags.
The purpose is three-fold: penalize consumers for using disposable bags that clog the city’s waste stream and drive up landfill costs; stop a ploy by major retailers to get around the city’s partial ban on plastic bags by using thicker plastic bags; and raise as much as $13 million in annual revenue for the city.
After a closed-door briefing that preceded the mayor’s budget address, O’Connor tried to sell the bag tax as a tax cut.
“Theoretically, you’re gonna end up paying less because you pay a dime for a plastic bag in grocery stores now if you don’t bring you own bag,” O’Connor said.
“Every time I go to my grocery store if I don’t bring a bag, I can get a paper bag for free. But, if I want a plastic bag with handles, it costs me a dime. This is gonna cost less. They’ll be able to go to the lesser thickness and they’ll be able to charge just what we’re suggesting. For the consumer in my community, it’ll be a reduction.”
Southwest Side Ald. Mike Zalewski (23rd) didn’t quite buy that argument.
He called the 7 cents-a-bag tax on paper and plastic bags is a “concern for all of the border wards” like his.
Vanquished mayoral challenger Jesus “Chuy” Garcia accused Emanuel of focusing on downtown development at the expense of Chicago’s most impoverished neighborhoods.
To continue his campaign to conquer that image as “Mayor 1 percent,” Emanuel plans to launch a so-called “Chicago Community Catalyst Fund.” It will provide “targeted investments in businesses and community projects” in Chicago neighborhoods “most in need.”
The goal appears to be similar to the share-the-wealth plan approved by the City Council earlier this year that Emanuel hopes will will generate a pot of money to rebuild struggling neighborhoods at the expense of downtown developers.
Despite concerns that it would create a mayoral “slush fund” akin to tax-increment-financing, aldermen agreed to revised density bonuses that will let developers in an expanded larger downtown area – about 20 percent bigger, with 800 additional acres – build bigger and taller projects to generate millions to rebuild long-ignored neighborhoods on the city’s South and West Sides.
Emanuel described the new Community Catalyst Fund as a “separate fund that will be registered as a qualified investment vehicle that can accept and invest funds from the city and private investors.”
The city intends to allocate “at least $100 million” to the fund over the next three years, the mayor said.
The mayor also addressed the use of surplus tax-increment financing money to help Chicago Public Schools, which was key to the tentative deal reached late Monday.
“As we make changes to TIFs to give more support to schools,” Emanuel said, the city must “rethink the way we invest” in neighborhoods.
“Do we have decades of under-investment in neighborhoods we must reverse? Yes,” Emanuel said, but he believes this budget rises to meet those challenges. The city, he said, has shut down 15 TIF districts, and is about to close three more. And besides, he added, most TIF revenues are spent on schools, parks and libraries.
His speech concluded with a standing ovation from aldermen — aldermen relieved they won’t have to walk the tax plank again.