Mayor Rahm Emanuel on Wednesday ruled out pre-election increases in property, sales or gasoline taxes but pointedly refused to say whether he would steer clear of any other taxes, fines or fees.
“We’ve balanced three budgets in a row holding the line on property, sales and gas taxes and finding efficiencies and reforms in the system. . . . We eliminated the per-employee head tax . . . and we put money back in the rainy day fund,” the mayor said.
“On my fourth budget, we will hold the line on property, sales and gas taxes and put money back in the rainy day fund and continue to look at the system as a whole to find efficiencies and reforms and things that were duplicative where you could do better.”
The mayor was asked twice whether he could rule out all other tax increases or hikes in fines and fees tapped repeatedly since he took office in May 2011. He refused to answer.
The pre-election promise to hold the line on major taxes is not a surprise, since the political version of heavy lifting has already been done.
In late May, the City Council approved a 56 percent increase in the monthly surcharge tacked on to telephone bills to meet the city’s increased obligations to the Municipal Employees and Laborers pension funds.
That allowed the mayor to cancel his plan to raise property taxes by $250 million over five years and honor a promise made to Gov. Pat Quinn in exchange for the governor’s signature on the Chicago pension reform bill.
Emanuel has refused to say how the city would meet those rising obligations going forward, when the telephone surcharge will fall short.
In 2016, state law requires the city to make a $550 million contribution to shore up police and fire pension funds that have assets to cover just 30 percent and 24 percent of their respective liabilities.
If Emanuel chooses to fund the payment with property taxes, the city’s levy must be raised in 2015 so bills issued the following year reflect the increase.
But instead of including that payment in the financial analysis now used as a substitute for Chicago’s preliminary budget, the mayor left it out, assuming he will get both revenue and reform before the payment is due.
Civic Federation President Laurence Msall has argued that Emanuel is actually making two risky assumptions that put off the day of reckoning until after the mayoral election.
One is that he’ll get police and fire pension reform this fall, even though a recent Illinois Supreme Court ruling on retiree health care has some members “questioning whether they will take up pension reform.”
The other assumption is that, even if he doesn’t get it, he’s not required to increase the city’s property tax levy until December 2015.
“To us, the statute appears vague. It doesn’t say ‘tax year.’ It says `2015.’ Our assumption is, if you’re required in 2015 to make the contribution, you have to include it in your 2015 levy,” Msall has said.
“What will become critical when the mayor presents his budget in October is that, if he has not been successful, what’s the back-up plan to either make this contribution — either through taxes or budget cuts — that would not jeopardize the city violating state law.”
Budget Director Alex Holt has refused to discuss “Plan B.” She would only say that, historically, pensions have been funded from a “variety of sources” — not just the property tax.
“There might be a statewide revenue solution, as opposed to just a local revenue solution because it’s actually a statewide problem,” Holt said in July, raising the possibility of a sales tax on services or an increase in the local share of the state income tax.
“We don’t need to make the increased payment until 2016, giving us time to work with police and fire, work with the state, work with the other municipalities. . . Once we know what the reform package looks like, then we can have a conversation about what the revenue package looks like. We’ve got a year and a half to make that decision.”
Although Emanuel brags about holding the line on the three most sensitive taxes, he doubled water and sewer fees, raised parking taxes, fines and city sticker fees and counted on $130 million in fines this year from speed cameras and red-light cameras.