Editorial: Water and sewer tax a good bet on Chicago’s future

Chicago aldermen will be asked to take a tough vote Wednesday and approve a big tax on water and sewer bills.

The only responsible vote, as we see it, is to back the tax. Chicago’s future is on the line. And we hope our fellow Chicagoans, though understandably frustrated by yet another tax hike, agree this must be done. Until Chicago gets back on sound financial footing, the city will never turn its full attention to other pressing matters, such as beefing up the police force, improving schools, paving roads and fixing bridges.

Remember when Chicago was called the “city that works”? We haven’t heard that in a long time. Let’s earn back our bragging rights.

All taxes are unpopular, but this utilities tax has particular limitations. We get that. It is inherently regressive, for one, meaning it does not take into account a person’s ability to pay. You will pay the same 29.5 percent tax on your water and sewer bill whether you are rich or poor, a resident of the Gold Coast or Hegewisch.

And we believe Mayor Rahm Emanuel initially oversold the tax as something of a cure-all, leaving a vague impression that it would generate enough additional revenue to sufficiently fund the city’s biggest city worker pension fund. He described it as the final piece in the puzzle to save the city’s four pension funds. In truth, as the mayor’s people later acknowledged, further savings or revenue — higher taxes or fees — will be needed beginning four or five years out.

But what Emanuel has done — or will have done, if the City Council backs him up — is create reliable streams of revenue to fund the city’s pension systems. Utility and property taxes are steady, strong and predictable sources of municipal revenue. There are no gimmicks here, no selling off of city assets — such as parking meters or the Chicago Skyway — for one-time cash windfalls that would only delay the day of reckoning.

Civic Federation President Laurence Msall, in an interview with Sun-Times City Hall reporter Fran Spielman, has called the proposed utility tax “a positive and politically reasonable step,” but stressed it won’t be enough to completely shore up the Municipal Employees Pension Fund. The next five years, he said, will still see “more benefits going out than coming in.”

Fair enough. The task before the mayor and the Council, then, is to set to work right away, as soon as the water and sewer tax is approved, on finding still other sources of revenue — and cost savings — to completely resolve this crisis of underfunded pension systems. Many of the alternative tax solutions championed by critics of the regressive utility tax, such as a graduated city income tax or a suburban commuter tax, would require state approval and could take years to enact, if they stood a chance at all. A tax on financial transactions — the so-called LaSalle Street tax — would require both state and federal approval.

In the meantime, any alderman who votes against Emanuel’s proposed 29.5 percent water and sewer tax Wednesday is living in a state of denial, not in the city of Chicago. Fuzzy and politically impractical alternatives such as a commuter tax won’t do a thing to set Chicago’s finances right now, which must be done if only to stabilize the city’s bond rating and ability to borrow.

Like after a big snowstorm, Chicago has no choice but to dig itself out.

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