Emanuel to increase ride-hailing fees, give extra money raised to CTA

Mayor Rahm Emanuel chatted with a Walgreens employee at the company's headquarters Tuesday. |Fran Spielman/Sun-Times

Mayor Rahm Emanuel appears to be headed for his most tranquil budget season after City Hall on Tuesday lifted the veil on the last bit of mystery surrounding his $10 billion spending plan: an increase in ride-hailing fees to bankroll CTA improvements.

Under the mayor’s plan, the 52 cent fee already tacked on to every ride on Uber and Lyft will rise to 67 cents next year and 72 cents in 2019.

The money — $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.

“People take our mass transit system. Something they’re not capable of doing right now in New York, D.C. and other areas because their mass transit system is broken,” Emanuel said Tuesday, on the eve of his 2018 budget address.

“I’ve made a big effort to modernize our mass transit system. It’s one of the big draws. … It’s also one of the top things that Amazon looked for. Having a modern transportation system — roads, bike lanes, mass transit and aviation — is a lure for companies.”

Emanuel laid the groundwork to raise taxes and fees on Uber and Lyft, claiming that phenomenal growth in the ride-sharing industry has cost the city and the CTA more than $40 million in lost revenue from other sources.

Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, has been pressuring the mayor to raise both the 52-cents-a-ride fee on Uber and Lyft and the $5 fee tacked on to pickups at O’Hare and Midway airports, Navy Pier and McCormick Place to help a shrinking taxicab industry fighting for survival.

Uber pushed back hard against any increases, but ultimately agreed to the incremental increase, acknowledging that, “The future of urban transportation will be a mix of public transit and ridesharing.”

For years, Emanuel has been accused of tilting the regulatory playing field in favor of Uber, whose investors include the mayor’s brother, Hollywood super-agent Ari Emanuel. The compromise could add fuel to that fire.

“I don’t think that any rational person is going to believe that he made a budget decision . . . to save an investment that his brother has. . . . That’s ludicrous,” said Ald. Pat O’Connor (40th), the mayor’s City Council floor leader.

The mayor’s decision to raise ride-hailing fees, but funnel the money to the CTA, leaves the $1.10 per line increase in the monthly tax tacked on to Chicago telephone bills — both cellphones and land lines — as the only major tax increase in Emanuel’s 2018 budget.

As a result, O’Connor predicted that it will be the most tranquil budget season since Emanuel took office in 2011.

The phone tax hike will cost a family of four with four cellphones and a land line an extra $66 a year. It’s expected to raise $30 million for 911 center improvements, freeing up $19 million to shore up the Laborers Pension Fund until 2023.

The budget also includes a previously approved $63 million property tax increase for police and fire pensions.

“You’d have to look hard to find reasons not to be supportive,” O’Connor said.

As expected, Emanuel is declaring a large tax-increment financing surplus — $166 million this time — with $66 million of it earmarked for Chicago Public Schools to pay for security, Safe Passage and after-school programs.

What happens when some of those TIF’s expire and there is no surplus?

“Hopefully, I’ll be sitting on a beach somewhere,” said Chief Financial Officer Carole Brown.

Brown was asked why a city that has struggled to put its own financial house in order was setting a dangerous precedent by assuming responsibility for CPS and the CTA.

“City residents want certainty with their schools. They want safe, clean, reliable transit. The mayor understands how important it is to attract residents and corporations to our city that we have those things,” Brown said.

The $3 billion borrowing plan that isolates sales tax revenue in a special fund is expected to generate $94 million in savings next year. It helped eliminate a $288 million gap that includes the second year of a police hiring surge.

“This will be the first budget free of any . . . fiscal gimmicks I inherited. We will not have any scoop-and-toss [borrowing]. We will not raid the rainy day fund. We will not be selling off assets,” Emanuel said.

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