The job is not done.
As much as Mayor Rahm Emanuel has done to wrestle into submission Chicago’s massive pension debt — ignoring his polling numbers as he promotes new taxes nobody can stand — the hard fact is that the city is still not entirely coming to grip with this crisis.
We appreciate the significance of providing a revenue stream to bolster the Municipal Employees pension fund, as he and the City Council already have done for the city’s other three pension funds.
But when the increases show up for the first year on water and sewer bills — the dedicated funding source for the pension — it will be just a 7 percent tax, only a quarter of what will be added to the bills by the fourth year and thereafter. Even when the full tax is imposed, it’s expected the city may need to find another $20 million to $30 million a year on top of the tax to reach a sound level of funding if bond ratings don’t improve sufficiently.
And Chicago still needs to find money for teacher’s pensions, get a teachers contract signed and pursue school funding equity. Meanwhile, city services must be maintained, the local economy needs to be nurtured and bond-rating agencies need to be mollified.
We get the politics of this. The mayor and aldermen have been burning through political capital as it is, having just pushed through big tax increases to patch long-festering holes in the pension funds for laborers, police and firefighters. And we get the practical reality. Nobody wants to drive homeowners and business into the suburbs.
But as some aldermen in the City Council balk at the mayor’s proposal to stick water and sewer bills with a 28 percent tax hike to save the city’s largest pension fund, it is important to remember there is no certainty that future mayors and aldermen, with the wolf no longer at the door, will stick to this plan, especially if the economy goes south.
Whatever painful measures are taken today to shore up the city’s pension funds, the city’s leaders should be pushing Springfield toward long-term solutions — perhaps a progressive income tax — that shift the burden for paying those old debts off the backs of those who can least afford to do so.
A tax on water and sewer bills is regressive tax, meaning it hits residents with lower incomes just as hard as those who park Teslas in their heated garages. But virtually every tax in a city’s financial toolbox is regressive to a degree.
Emanuel is correct that the city can’t wait for Springfield and the federal government to sign off on other types of taxes. For one thing, it would take too long even in the best case scenarios. For another, there’s little likelihood Springfield would act at all. The state has moved into its second fiscal year without a budget. If it can’t get its own finances in order, the likelihood of quick help for the city seems remote.
Our hope is that Emanuel will visibly begin laying the groundwork now for a fairer, more progressive tax that would provide new revenue and replace more-regressive taxes.
The aim is to tax more fairly. And, if we had our way, the mayor might even pay off that old debt more quickly, getting this monkey off Chicago’s back faster.
Unlike in the past, this mayor’s plan doesn’t kick the can miles down the road. Left with a mess to clean up by his predecessor, he has moved honestly and boldly, leveling with the public, as he vowed he would do when he first ran for the job.
But he is kicking the can the distance of, oh, maybe a few blocks of two-flats.
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