Five days after agreeing to raise property taxes by another $250 million for teachers pensions, Mayor Rahm Emanuel on Tuesday defended the record increase for police and fire pensions and school construction reflected in property tax bills now landing like a thud in Chicago mailboxes.
The mayor was asked if he had “any words of consolation” for those taxpayers “stunned or even outraged” by their property tax bills, which reflect the $588 million property tax increase approved by the City Council last fall.
His response essentially was, “I told you so.”
“When I ran for office, one of the major issues was removing the doubt over our economic future [caused by] unfunded pensions. All four of ’em were unfunded. I was clear that the period of time in which we put our politics ahead of our responsibility had ended. That we were gonna do the tough things necessary to put our fiscal house in order,” Emanuel said.
“For too long, a number of elected leaders — not just political — a number of people across the spectrum politically, denied, deferred and delayed the day of judgment. . . . I understand it’s not popular. But I have to weigh the politically unpopular against the fiscal irresponsibility of leaving four pensions unfunded. And I was upfront to people. I told ’em in both elections: `We have to fix this and do it in a responsible way.’ ”
With some outraged homeowners already lighting up the phones, the Emanuel administration is scrambling to find the $10 million to $50 million needed to bankroll an after-the-fact city rebate to inoculate the mayor and aldermen from at least some of the political fallout.
It won’t hold a candle to Emanuel’s original promise to double the homeowners’ exemption so homes worth less than $250,000 would be held harmless. That plan went nowhere in Springfield.
But at least it’s something.
“We will obviously have a homeowners rebate for seniors and others, middle-class families, to make sure that, as we deal with our pensions, the burden does not fall squarely on them,” the mayor said.
“And the good news is, as it relates to Laborers and others, they will be contributing more,” he said. “And going forward for all new hires, we will not be repeating the mistakes of the past.”
Last week, Emanuel agreed to a legislative compromise to save the nearly bankrupt Chicago Public Schools that calls for beleaguered Chicago property owners to take a far bigger hit for teacher pensions.
Instead of the $170 million increase the mayor talked about a year ago, the increase for teachers pensions will be $250 million. And that’s on top of the $588 million property tax increase approved by the City Council last fall.
The larger-than-expected increase for teachers pensions, which will not need City Council approval, makes it more likely than not that Emanuel will steer clear of a third property tax increase to save the largest of four city employee pension funds.
Even if he does, Chicago homeowners whose property taxes have been a relative bargain compared to surrounding suburbs will see the tax that everybody loves to hate rise by a combined $838 million over the next few years. Talk about sticker shock.
On Tuesday, Ald. Ameya Pawar (47th) made no apologies for the parade of increases even as he braced for the political fallout.
“We expect people to be upset. But we’ve been preparing them for a few years. The decision to raise property taxes was the absolute right thing to do,” Pawar said.
“The wrong thing was not raising them incrementally over the past 30 years and creating the false narrative that incremental increases to revenue are the third-rail of Chicago politics,” Pawar said. “If you’re sick of things like the parking meter deal, that was a result of city government trying to provide services without actually raising revenue to pay for them.”
Ald. Scott Waguespack (32nd) said he’s already gotten an earful from some of his constituents over the long holiday weekend.
“People were pretty upset. They’re seeing some pretty big increases. In some cases, we’re talking 30 percent or 40 percent higher. In other cases doubling. That may have to do with triennial [reassessments] hitting at the same time as the property tax hike,” Waguespack said.
Waguespack said he’s not worried about the political fallout as much as he is concerned about making certain that, when it comes to saving the Municipal Employees Pension Fund, there are “other sources of revenue to try and alleviate that burden.”
Emanuel is seriously considering a “stormwater stress tax” on big-box stores and other business giants that put pressure on the sewer system, as proposed by the Waguespack-led Preogressive Caucus.
“We have to try to shift away from the complete reliance on the property tax. That system is broken — unless you have a really good attorney,” Waguespack said.
Civic Federation President Laurence Msall has questioned whether a city that needs “additional tax revenue” to save its largest employee pension fund and an additional property tax increase for teacher pensions can afford to bankroll even a token property tax rebate.