Property tax flexibility to fund teacher pensions OKed by Senate

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Senate President John Cullerton, D-Chicago, speaks to reporters last week. (AP File Photo/Seth Perlman)

A bill that would give the Chicago City Council the power to raise property taxes to fund its teacher pensions met approval in the Illinois Senate on Friday.

The education bill includes a provision that lifts the property tax cap to allow Mayor Rahm Emanuel to do what he has long promised to do: raise property taxes by $175 million for teacher pensions. That was part of the teachers’ contract that was rejected by the Chicago Teachers Union’s 40-person bargaining unit. Emanuel first made that promise more than a year ago

After a 20-minute debate, in which many Republicans requested more time to review the complex bill, the Illinois Senate voted 31-19 to approve the measure. It must now be passed in the Illinois House as the clock ticks to a May 31 deadline.

The measure proposed by Illinois Senate President John Cullerton allows the City Council to create a property tax levy of not more than 0.26 percent for teacher pensions. If approved, the city could net $175 million for pensions.

Another provision of the bill includes pension parity for CPS – with the state paying the normal cost of teacher pensions. It also includes a three-year freeze of the current school funding formula to ensure districts are getting the same level of funding.

Cullerton’s bill is tied to Madigan’s spending bill, which cleared the House earlier this week. In that bill, there’s a $700 million equity grant. In Cullerton’s bill, that money would be distributed to low income districts. On the Senate floor, Cullerton said the equity fund plan would be moot should Madigan’s budget bill not clear the Illinois Senate.

Mayor Rahm Emanuel knows it won’t be easy to win City Council approval of, yet another massive property tax increase.

But, he made the case for it during a taping of the WLS-AM Radio program, “Connected to Chicago,” to be broadcast at 7 p.m. Sunday.

“Now, if you remember about a year ago, I outlined a three-way handshake. And that is that the state had to step up for $200 million and do their job. We would ask taxpayers to return to what they used to do, which is to have a line [on the property tax bill] to pay directly into the teachers pensions. And teachers would have to step up and start paying their fair share. That’s how you stabilize the funds,” the mayor said.

“We have paid more into the teachers pensions in Chicago in the last two years than the preceding fifteen years when I was mayor. Because the state, the city and CPS — everybody took a walk. And half the problem we have today in the Chicago Public School finances is because everybody agreed to what was wrong. Doubling down on the way the state under-funds school districts like Chicago, but across the state where you have kids who grew up in homes of poverty.”

The final piece of the three-way agreement must come from the Chicago Teachers Union in the form of phasing out a seven percent “pension pick-up” granted to teachers years ago in lieu of a pay raise, the mayor said.

“We’ve been very clear — and even a third-party, non-partisan negotiator agreed — that the teachers have to start paying their part of the pension.

In a rare agreement with the mayor, CTU Vice President Jesse Sharkey on Friday said the union is in support of the bill.

“We hope this legislation passes because we need to fund schools,” Sharkey said. “That’s our number one priority. Billions of dollars in cuts is unacceptable. We have been saying we need a progressive way of funding schools. I think the mayor and the governor and the other political leaders have failed to address that and so that’s why we’ve wound up where we’re in a situation where we can’t turn our backs because it would be a disaster. … This is the lesser of two evils.”

Last year, Emanuel offered to raise property taxes by $175 million for teacher pensions, but only if it was part of an “all-in” bargain where teachers absorb their entire, 9 percent pension payment and the state reimburses CPS for “normal” pension costs.

“I want Springfield . . . to get off their duff, start providing the political leadership to make decisions to right the decades worth of political wrongs that have existed over the years that got all of us to this point,” the mayor said on that day.

At the time, Emanuel gave Springfield a choice. Either create one “uniform pension system” for all teachers across the state or require teachers to take the equivalent of a 7 percent pay cut while the General Assembly “re-writes” the school funding formula in a way that “recognizes the special burden” born by districts with large percentages of students who live in poverty, don’t speak English and have special needs.

Either way, the mayor acknowledged that the City Council would be required to reinstate the property tax increase for teacher pensions eliminated in 1995.

“I don’t easily go to taxpayers. But part of the solution is you’re willing to give up things that you don’t support in an effort to get other things that you think are essential to the solution,” the mayor said.

In February, the mayor dramatically altered his earlier promise in hopes of averting another teachers strike.

In a contract offer ultimately rejected by the Chicago Teachers Union’s 40-person bargaining unit, the mayor promised to forge ahead with the school property tax increase even if Springfield did not do its part.

At the time, a top mayoral aide said a City Council vote may or may not be required after all. It all depended on how state legislation reinstating the teacher pension levy was worded.

If the language is the same as it was before the teacher pension levy was abolished in 1995, the City Council would be off the hook. The appointed Chicago Board of Education could wear the jacket.

If Rauner, who has crusaded for property tax caps, refuses to sign legislation reinstating the teacher pension levy without a vote by the elected representatives of Chicago taxpayers, then the City Council would be required to walk the political plank again.

Now, the die has been cast. Aldermen will be forced to take, yet another tough vote.

Rookie Ald. Brian Hopkins (2nd) was non-committal.

“I took a pledge that I wouldn’t vote for a property tax increase and I voted ‘no’ on the last one. But, that was more for general purposes. This is something specific and dedicated to education. The voters of my ward may feel differently about this than the property tax increase we just passed,” Hopkins said.

“I’m gonna have to take it to the neighborhoods I represent. They’re just as concerned about the condition of our school system as any other community. There’s always alternatives. There’s always other revenue sources and additional cuts. But, we do seem to be running out of alternatives and we’re running out of time.”

“I’m not feeling it. I’m telling you right now. Going back to the trough again is risky and not a good move. We’ve already asked property taxpayers to come up with a record-breaking tax increase. To hit ‘em again is not fair,” said Ald. Roderick Sawyer (6th), chairman of the City Council’s Black Caucus.

“We knew last year the amount we raised was not going to be enough to satisfy us going forward. We should have done it last year. We should have only had to go to taxpayers one time. Going back a second time is gonna lead to a revolt and I wouldn’t blame anybody for doing that.”

Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, said another property tax increase of any size would be “a difficult thing to do from a political standpoint.”

But, O’Connor said there is a “pretty compelling argument” to be made for the $175 million increase “from an educational standpoint.”

“The budget was fairly tough and that was 35 [yes] votes. I imagine it’s gonna be as tough. I frankly question the wisdom of them doing it this way,” O’Connor said.

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