Emanuel unveils 2018 budget; Chicago ‘on firmer financial footing’

Mayor Rahm Emanuel bragged about his administration’s fiscal record Wednesday and declared he had “charted a better course” as he presented next year’s budget to the City Council.

“For six years Chicago has come together, rolled up our sleeves and done the hard work of confronting our fiscal challenges,” Emanuel said. “Together, we took on a broken budget.”

His address was part State-of-the-City and part campaign kick-off for what is expected to be an uphill battle for a third-term.

“This year, Chicago is on firmer financial footing that we have been in many years. Together, we addressed longstanding challenges within the city, overcame obstacles in Springfield and confronted new headwinds in Washington,” the mayor said.

“We reaffirmed our Welcoming City Ordinance and Chicago’s promise to Dreamers. We re-doubled our commitment to the Paris Climate Agreement. … We rejected the Trump administration’s blind eye to police reform,” Emanuel said.

The budget was generally well-received by the City Council — primarily because, as Ald. Pat Dowell (3rd) put it: “We’re not whacking Chicagoans over the head with a bunch of new fines and fees like previous budgets.”

Still, Dowell says she’s concerned about the impact of asking “my seniors” to pay $1.10 more every month for each cell phone and landline in their household.

“I would like to see some give-back to the citizens of Chicago,” Dowell said. “I would like to see some discussion about how we lessen the impact on seniors, who probably have landlines and a cellphone. I don’t know what that would look like — whether it’s a reduction in the amount or a removal if they’re over a certain age. But, that’s something I will be pushing for. Poor families, too.”

Budget Committee Chairman Carrie Austin (34th) had no problem with the telephone tax hike, the second in three years.

“A telephone, a cell phone, a smart phone is a luxury. It’s not a necessity,” Austin said.

Emanuel also touted what he called “historic progress in Springfield. Our children and our taxpayers are finally being treated fairly by the State of Illinois. Our pensions are on the path to solvency. Our taxpayers are saving millions of dollars and our future is brighter than it has been in a while.”

Emanuel also acknowledged the tough votes already taken and tax increases already approved to solve the city’s pension crisis that have made his seventh budget comparatively painless.

“There were political risks over the years. But, you knew that politics as usual would not fix the challenges we inherited. In fact, it was politics as usual that got us in this problem in the first place,” the mayor told aldermen.

“I want to thank all of Chicago’s taxpayers for doing their part to solve Chicago’s financial problems and usher in a better day.”

Emanuel said the city is ahead of schedule in providing mentors to every young man in 8th, 9th and 10th grade in the city’s 20 most challenging neighborhoods.

He then recognized his wife, Amy Rule, and the work she does mentoring children. His voice breaking, the mayor also talked about students he has mentored.

“They are not invisible. They deserve a chance, just like our children,” Emanuel said.

One of those students, Germin Sims, credits mentoring with turning his life around, Emanuel said. Sims, now a senior, is applying to five colleges.

CPS, in fact, now requires high school seniors to have a “post-graduation plan” to receive a diploma. But Emanuel did not mention that the district doesn’t have nearly enough counselors to help each student develop that plan.

As always, details of the mayor’s spending plan have been trickled out over the last week to bring attention to the things Emanuel wants to highlight.

That includes more spending for summers jobs, after school programs and new early learning centers.

The budget also has $1 million in reinforcements for Chicago’s never-ending war on rats and $500,000 to replace stolen or broken garbage carts.

Eight new neighborhood libraries are expected to open next year, prompting a $5.2 million increase in library funding. And the city will hire 11 new food inspectors and 10 more environmental inspectors in response to a shortage pinpointed by Inspector General Joe Ferguson.

The mayor has also set aside $27.4 million for police reform — $17 million of it to add 100 field training officers. That’s in addition to the 92 FTO’s included in the mayor’s two-year hiring surge.

The U.S. Justice Department’s scathing indictment of the Chicago Police Department described the field training program as a “hot mess” with too many officers assigned to each mentor and too many trainers openly undermining what officers are taught at the police academy.

Illinois Attorney General Lisa Madigan has filed a lawsuit against the city seeking federal court oversight over the Police Department that will culminate in the hiring of a federal monitor.

Madigan was not consulted before Emanuel arrived at the $27.4 million police reform figure. She may have other ideas and is almost certain to demand even more spending.

In advance of the speech, Emanuel also highlighted an amusement tax restructuring that will give neighborhood theaters with fewer than 1,500 seats a complete pass. But that will require raising the amusement tax on tickets to “Hamilton” and shows and concerts and stadiums and large downtown theaters; that tax would increase to 9 percent from its current 5 percent.

Chicago’s major sports teams are resisting the change, which is expected to raise the city’s annual take from the amusement tax by $15.8 million.

Thanks to the General Assembly, there’s also a $3,000 increase in the homeowners’ exemption — from $7,000 to $10,000. That should soften the blow of a previously-approved, $63 million property tax increase for police and fire pensions.

Because of that increase and Year Two of a previously-approved, 29.5 percent surcharge on water and sewer rates, Emanuel can claim he has tried his best to keep his hands out of taxpayers’ pockets.

The water and sewer surcharge alone will cost homeowners and businesses an extra $1.28 for every 1,000 gallons used.

But the 28.2 percent increase in the monthly tax tacked on to Chicago telephone bills—both cell phones and land lines — is still a bitter pill to swallow.

It will cost a family of four with four cellphones and a land line an extra $66-a-year and an extra $150 annually, when coupled with the 56 percent telephone tax hike approved by the City Council just three years ago.

The new increase is expected to raise $30 million for 911 center improvements, freeing up $19 million to shore up the Laborers Pension Fund until 2023.

There’s also the 15-cent hike in ride-sharing fees next year and a nickel more in 2019.

The revenue — $16 million the first year and $21 million the second — will be funneled to the CTA to help bankroll unspecified improvements that Emanuel maintained will strengthen Chicago’s bid for Amazon’s second North American headquarters.

After the speech, Ald. John Arena (45th) accused Emanuel of “going easy” on Uber, whose investors include the mayor’s brother, Hollywood super-agent Ari Emanuel.

“They’re actually decreasing peoples’ use of CTA. … What that industry has taken away from hard-working cab owners and small businesses they represent—they need to a bigger participant in helping us balance our books,” Arena said.

Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, was pushing hard for an additional 50-cents-a-ride on Uber and Lyft as well as an increase in the $5 fee tacked on to every pick-up and drop-off at O’Hare and Midway Airports, McCormick Place and Navy Pier.

Beale called the 15-cents-a-ride fee in 2018 a “bail-out for the CTA” and said that money should be used, instead, to provide relief for beleaguered Chicago taxpayers.

“We need to bail out our residents. Give them something back. Get rid of the garbage fee if we have extra money. Get rid of the bag tax. Those are some small things that we can give back to the people. We need to be looking at that, versus trying to bail out CPS and CTA,” Beale said.

Ald. Gilbert Villegas (36th), chairman of the City Council’s Hispanic Caucus, says he “doesn’t like setting the precedent of funding sister agencies” over which alderman have “no oversight” except for ratifying the mayor’s appointment of board members.

He pointed to the fact that $66 million of the city’s $166.9 million tax-increment-financing (TIF) surplus will go to the Chicago Public Schools to pay for security, Safe Passage and after-school programs.

Villegas plans to introduce an ordinance that would require City Council approval of the CPS and CTA budget.

“If we’re gonna be giving them money in perpetuity, now they fall under our umbrella. And just like we do hearings with the Water department or any other agency, those agencies open themselves up to coming in front of the City Council for hearings as well,” Villegas said.

Chief Financial Officer Carole Brown has argued that if Emanuel gets the blame as “CEO” for the entire city, it makes total sense for the city to take responsibility for it, even if it puts the city on the hook.

Although Emanuel brags about ending scoop-and-toss borrowing a year earlier than planned, the $288 million shortfall that includes the cost of hiring 495 more police officers was eliminated, in part, with one-time revenues.

The $3 billion borrowing plan that isolates sales tax revenue in a special fund is expected to generate $94 million in savings next year and a similar amount in 2019.

Investors have warned the city not to rely on that money because it won’t always be there. The budget also benefits from $50.3 million in growth in “economically-sensitive” revenues like fuel, hotel and telecommunications taxes.

There’s also the $166.9 million TIF surplus that won’t always be there when TIF’s ultimately expire.

Civic Federation President Laurence Msall said he understands why Emanuel is assuming financial responsibility for the CTA and Chicago Public Schools, two separate agencies of local government.

But, he’s concerned about the dangerous precedent it sets it sets and the use of $66 million in TIF surplus funds to finance school security “in perpetuity.”

“We basically established a tax-increment-financing surplus as routine within the city. There’s a question about how sustainable that is,” Msall said.

“At some point, we will not have that [TIF] surplus to rely on.”