EDITORIAL: How mayoral candidates plan to raise $42 billion for pensions
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Chicago is on the hook for $42 billion in unfunded pension liabilities, which works out to $35,000 for every household, from bungalow dwellers to lakefront swells.
We asked the folks running for mayor where they would find the money.
Not surprisingly, they all called for new or higher taxes on a lot of stuff that won’t be a bother to the average Chicago voter — such as a tax on pot — but won’t solve the problem, either.
And who can blame them? We might take evasive action, too, if we were running for mayor.
Our own view, though — safely expressed from the sidelines — is that Chicago’s financial crisis is so severe that another property tax hike is almost inevitable in the next few years. And an expansion of the sales tax is likely, too. All the other solutions are only partial, or unworkable, or could make matters worse.
We generally favor, for example, the legalization and taxation of marijuana, as does every mayoral candidate we asked, except John Kozlar. But nobody can say how quickly a pot tax will come become a reality, or how much money it will really generate, or what percentage of the cut will go to the city rather than the state.
In the same way, we support building a casino in Chicago and taxing it heavily, but casino revenues can be extremely unreliable, a problem that will grow as online betting takes hold. Chicago can’t count on a take of $300 million a year, which is the estimated tax revenue often cited, and even that sum would only begin to solve the city’s financial problems.
Ultimately, as all the candidates say, the solution won’t be a single tax or levy, but some combination of new revenues, and the challenge will be to settle on the right mix. To their credit, most of the candidates don’t entirely rule out a property tax hike, though you get the sense they’d rather not say that loudly. It would be, as they say, “a last resort.”
We asked the candidates where they stood on eight frequently mentioned proposed sources of new revenue. We also asked them to cite at least one other revenue-generating idea of their own. We have summed up their responses in the accompanying chart.
It’s important to stress, though, that the candidates often responded at length — saying far more than what the chart reflects — and we urge you to read their full answers here.
Where the candidates stand on local taxes is, of course, of the utmost importance to all Chicagoans. Our hope is that this editorial package, presenting and contrasting their views, will give a greater understanding.
Among the potential sources of revenue we asked the candidates to take a stand on, they were in the greatest agreement on the need for a Chicago casino. Twelve of the 14 candidates who responded to our questionnaire said they support the idea, and nobody was opposed. Bill Daley wrote that he is “open to the idea,” and only Amara Enyia took no position.
On the other end of the acceptability spectrum, as expected, nobody was keen on a property tax increase, but their caveats were revealing.
Daley, for one, ruled out a property tax hike in his first year as mayor, and said he would then match “every dollar of increased tax with a dollar of cuts.”
Lori Lightfoot said she would not raise property taxes until the “broken property tax system is fixed.” But given that a new Cook County assessor, Fritz Kaegi, is at work doing just that, it’s conceivable to us that a Mayor Lightfoot at some point could declare that system is fixed and raise taxes.
Garry McCarthy did his opponents one better, politically speaking, by saying he would use surplus tax increment financing funds to give the people of Chicago a $400 property tax cut.
And Paul Vallas offered the most thoughtfully precise answer. He said he would cap property tax increases on homeowners, landlords and businesses to the rate of inflation or 5 percent, whichever is less. This would be part of a more extensive financial strategy by Vallas, which he details on his website, and which includes the city ending an “illegal diversion” of corporate personal property tax revenues.
One surprise to us was the cool reception the mayoral candidates gave to the idea of a commuter tax — a tax on suburban residents who work in the city.
In the last few weeks, we have interviewed several dozen candidates for alderman, as part of our endorsement process, and many of them have praised the brilliance of a commuter tax. But among the candidates for mayor, only one — Bob Fioretti — supports such a tax. Most of the others seem to be of a mind with Toni Preckwinkle, who said it’s “not good public policy.” The fear is that new businesses would choose the burbs over Chicago, and the suburbs would retaliate against commuters from the big city.
As you read the candidates’ answers in full, we urge you to give particular attention to their proposed alternative sources of revenue. Some ideas, such as Dorothy Brown’s proposal to register bicycles to make money, strike us as odd. Others deserve serious consideration. We’re thinking here of Jerry Joyce’s suggestion for a passenger facility charge at Chicago airports.
Just about everybody, we should mention, favors amending the Illinois Constitution to allow for a graduated income tax, which would increase the tax rate for wealthier people.
We’re all in with that one, too, and maybe someday it will happen. But not soon enough.
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