Bill Daley opens door to commuter tax to help fund pensions

Bill Daley on Wednesday unveiled a strategy to grow Chicago out of its financial crisis — to a population of 3 million within the next decade — even as he opened the door to a commuter tax and constitutional amendment to solve a looming pension crisis.

Mayor Rahm Emanuel has emphatically and repeatedly ruled out a commuter tax for fear it would put the kibosh on his efforts to lure corporate headquarters downtown.

Former Mayor Richard M. Daley, Bill Daley’s brother, also opposed a commuter tax.

But in a luncheon address to the City Club of Chicago, Bill Daley argued that the $42 billion in unfunded pension liabilities at the local level — $35,000 for every Chicago household — will require the next mayor to consider the previously unthinkable.

“We must find new revenues and everything must be on the table. Marijuana, casinos, commuter taxes, real estate transfer taxes and reforms to the system must all be on the table,” Daley said to the applause of his standing-room-only audience of movers and shakers.

Daley said the only revenue source he’ll take off the table is yet another property tax increase after a $1.2 billion avalanche of them under Emanuel and the double-whammy of skyrocketing assessments.

“I am determined to avoid new property taxes next year and, over my four years, I promise the taxpayers of Chicago that, for every dollar of new property taxes, there will be a dollar of cuts first,” he said.

“We will overhaul every agency of government with the objective to cut the waste. … Government does not exist for the insiders. That’s the old way. … If existing programs work, great. If they don’t, we will end them because we do not have a dollar of taxpayers’ money to waste.”

After the speech, Daley shrugged off concerns that a commuter tax would trigger a business exodus.

“They step up and pay their [fair share]. They’re paying it now. They’re paying enormous real estate taxes. Homeowners are. Businesses are paying that,” Daley said.

“They enjoy having a police department and a fire department to protect them. They enjoy getting workers from the city who go through our schools systems,” he added. “We’re all in this together.”

The Illinois Constitution’s pension protection clause states those benefits “shall not be diminished or impaired.” It’s why the Illinois Supreme Court overturned Emanuel’s plan to save two of four city employee pension funds.

Daley argued it’s high time to amend the state constitution.

“What we’re talking about is trying to save — not only the pension systems, but save government in the city. So everything has to be on the table,” he said.

Chicago Public Schools has 150,000 more seats than students. Much of that excess capacity is on the South and West Sides. Pressure is building for another round of school closings now that a five-year moratorium has expired.

Other mayoral candidates, except Paul Vallas, have run from the school-closing issue, well aware of the political price Emanuel paid for closing a record 50 public schools.

Not Daley. He called declining enrollment the “elephant in the room.”

“I have an opponent … who said, `We’re gonna re-open all the schools that were closed.’ That’s just politics speaking. There’s no logic to that. You shouldn’t lie to the people like that,” he said.

“We have 150,000 empty seats in our classrooms. In the private sector, you just saw Sears Roebuck close a whole bunch of stores because they have no business. Go out of business. That’s not gonna happen here.”

Ultimately, Daley said the answer lies in growing Chicago out of its financial crisis and reversing a black exodus tied to “crime and economic isolation.”

That will require a “major shake-up” at the Chicago Police Department, a laser-like focus on long-neglected inner-city neighborhoods and building “a bridge from the people to the jobs” that still exist, he said.

“We can target $1.5 billion in public projects to these communities over the next four years. If we’re strategic, we can turn $1.5 billion in public money into $5 billion or $6 billion in private money,” he said.

“We have state and federal tax credits…The Neighborhood [Opportunity] Fund. The affordable housing fund. TIFs. Federal opportunity zones in Chicago could be worth $1.5 billion. New Market Tax Credits could be another $50 million a year. Add it all up … and we can put $6 billion or $7 billion in struggling communities over the next four years.”

The capacity crowd underscored the business community’s concerns about Emanuel’s exit. They fear Chicago could make a sharp turn to the left, opening the door to instability and a host of anti-business tax increases.

In his speech, Daley played upon those fears.

“It is a moment of great promise and a moment of, equally great uncertainty,” Daley told those business leaders who desperately want stability. “In this critical moment, one path could take us forward. Another path could lead to … decline.”