Mayor Rahm Emanuel on Tuesday urged Gov. Bruce Rauner to go along with a plan to raise the homeowner exemption to soften the blow of a $500 million property tax increase and expressed confidence his old friend will agree — not just be the political fall guy.
“He’s talked about reforms and things that you have to change. That’s why, in four years, we’ve never raised property taxes to balance a budget. We did the tough things of rolling up our sleeves — making the cuts and reforms. In this budget, we’re going to make another $170 million of cuts and changes on top of the $500 million we’ve already done,” Emanuel said.
“But we are going to address our challenges. When the governor looks at the whole budget, he’ll see that we didn’t leave any stone unturned,” he said.
Rauner has insisted on a two-year, statewide property tax freeze. Signing off on Emanuel’s plan to raise the $7,000 homeowner exemption to hold harmless owner-occupied homes valued at less than $250,000 might saddle the governor with some of the blame for the largest property tax increase in modern Chicago history.
Without the exemption, the $500 million increase would cost that same homeowner an extra $500 a year.
That’s apparently why the reception from the governor’s office was so frosty amid a continuing budget stalemate with Democratic legislative leaders over Rauner’s demand for pro-business, anti-union reforms.
“Raising taxes alone won’t fix our problems. We need structural reforms to help cities like Chicago control costs,” Rauner’s spokeswoman Catherine Kelly said this week.
But Emanuel argued Tuesday that the homeowner exemption has “never been controversial” in the past and shouldn’t be now. In fact, the mayor believes it’s one thing warring factions in Springfield should be able to unite behind.
“I’m committed to making sure that seniors on fixed incomes — people who go from paycheck to paycheck at the end of the month — are held harmless. . . . It is fair. It is equitable. It’s progressive,” the mayor said.
“Given the fact that it will also help middle-class homeowners, [Rauner] will see it’s consistent with what he aspired to when he talked about property taxes himself,” he said.
In an emailed statement, Rauner’s spokesman Mike Schrimpf said: “We applaud the Mayor for proposing a property tax freeze for some families, but he should support a property tax freeze for all Chicagoans. The Mayor should only consider a property tax increase in the context of structural reforms that give homeowners and job creators faith in the future of Chicago.”
Rauner’s reforms are a package of pro-business, anti-union measures including workers compensation reform, tort reforms and changes collective bargaining rules.
In Cook County, commercial property is assessed at a rate of 25 percent of market value compared with 10 percent for residential property. The higher the homeowner exemption goes, the more businesses will have to pay.
That’s why downtown Ald. Brendan Reilly (42nd) said he’s been getting an earful from the owners and tenants of large commercial buildings. They’re concerned about a massive property tax increase and the impact it might have on the rent that businesses pay.
Reilly said they’re concerned the increase — and the corresponding pressure that an increased homeowner exemption might place on commercial assessments — might even reverse some of the 34 corporate relocations the mayor has touted over the past four years.
But Emanuel argued Tuesday that he’s heard that song before.
“In my first budget, we increased the hotel tax. A lot of the hotel industry was nervous then. They were critical. That was 8,000 rooms ago. We’ve added 8,000 rooms both built and being built right now. Record tourism, convention and hospitality growth in the city. And as you know, we have two new office buildings going up in the city. One of ’em was done on spec,” Emanuel said.
“So, while there will be a change, it will be done fair and progressive, and we’ll continue to promote a business environment that fills up these office buildings in a way that also has built up our hotels,” he said.
Greg Brown, chairman and CEO of Motorola Solutions, was asked whether the impending $500 million property tax increase was a factor in his decision to move the global headquarters of Motorola Solutions from Schaumburg to Chicago. That’s a move that will bring 800 jobs to the city.
“It’s important to look at things in composite. What I like is that the mayor will face into the wind and make the calls he needs to make to make this city fiscally responsible for the long term,” Brown said.
“There’s always [give] and take. There’ll be people who will save a lot on reverse commute as well. When you put all of the ingredients into the blender, I feel very good about the composite — not only strategic implications, but the long-term economics of this move as well. We feel good about it.”