Urging the City Council to go down in history “as the men and women who pulled Chicago back from the financial brink,” Mayor Rahm Emanuel vowed Tuesday to stand behind aldermen who support his $588 million property tax increase — whether or not a second term is his last as mayor.
“You know my record. I stand with my friends. I’ll always stand with my friends,” Emanuel told the Chicago Sun-Times Editorial Board.
“Don’t worry about my re-election. Worry about the future of Chicago,” said Emanuel, whose allies created a $5.2 million super PAC to re-elect him and strengthen his City Council majority.
The mayor also warned that he’s not done raising property taxes. He reaffirmed his support for a $170 million property tax increase for teacher pensions provided teachers accept the equivalent of a 7 percent pay cut and the state agrees to pick up “normal” pension costs.
“I’ve been honest. That’s in short supply sometimes. I’ve been up-front. The biggest fiscal challenge we face is for the schools,” Emanuel said.
Six months ago, Emanuel campaigned for re-election with a dire warning: Without state legislation to modify the structure of police and fire pensions and implement a “smart funding formula,” Chicago property tax bills would “explode” in 2016.
The “explosion” that Emanuel warned about in mid-March hit Chicago Tuesday as the mayor unveiled his $7.8 billion budget for 2016, and it wasn’t pretty — even with the risky assumption that Gov. Bruce Rauner will sign legislation giving Chicago 15 more years to ramp up to 90 percent funding of police and fire pensions.
To confront the pension crisis and eliminate the structural deficit he inherited, Emanuel’s $712 million package of tax and fee hikes includes: a four-year $588 million property tax increase for police and fire pensions and school construction; a $9.50-a-month garbage collection fee; $13 million in higher fees for building permits; a $1 million tax on e-cigarettes and $48 million in fees and surcharges on taxicabs and ride-sharing services that have siphoned business away from them.
The phased-in property tax increase would be the largest in Chicago history. Even so, the garbage fee has emerged as the biggest lightning rod — and Emanuel fully understands why.
It’s a new fee for a service many homeowners believe, “is kind of baked in” to the normal property tax bill that would add $114 to the annual cost heaped on 613,000 Chicago owners of single-family homes, two-, three- and four-flats that still get city pickups. Senior citizens would get a 50 percent discount.
But Emanuel argued Tuesday that he’s made $55 million worth of reforms to make garbage collection “more cost-efficient and smarter,” and he’s prepared to do even more to shrink the size of Chicago crews, many of which still have three employees on a truck.
“We have alleys. Some of those are going to be three [person crews, but] there’s about 44 routes where you could actually modernize the system to go with an electronic arm” that allows only one employee on a truck, Emanuel told the Editorial Board.
“So we’re constantly looking at savings. Don’t assume this is the end of the way of looking at efficiencies. . . . We looked at other changes that we can make and we’re not done making ‘em.”
Budget Director Alex Holt said the one-person crews would “have to be for curbside collection. Our alleys aren’t big enough.”
The garbage fee would be tacked on to water bills that arrive in mailboxes every other month. If homeowners refuse to pay, city crews would still pick up the trash.
But City Hall could ultimately threaten to cut off water service.
“We are adding rodent abatement crews. We’re not going to affect public health. . . . There’s other things that can happen — other licenses and fees — before we get to water,” Emanuel said.
“If Atlanta does it, Seattle does it, Berwyn does it. Evanston does it. We can make this work.”
Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, branded the garbage fee “unacceptable” and said he is determined to block it.
Instead, Beale wants to fold it into the property tax bill. That would force 400,000 Chicago households that already pay private scavengers to pick up their trash to carry the load as well.
“We constantly try to balance the budget on the backs of people who can least afford it,” Beale said.
During his speech, Emanuel took pains to credit the aldermen whose revenue ideas he embraced. They include Black Caucus Chairman Roderick Sawyer (6th), who proposed the garbage collection fee before getting cold feet.
Sawyer said he was skittish about the garbage fee after an initial backlash from his constituents. But he’s now willing to swallow hard and go along.
“The number is palatable with the $9.50 and maybe a discount for seniors. I’ve talked to a lot of my seniors in particular about this concept. They’re not crazy about it. But, they do understand it. I’m looking at it very seriously. I think it’s something that we can ride with,” he said.
During his speech to the City Council, Emanuel framed the choice confronting aldermen as a Chicago chapter in John F. Kennedy’s book, “Profiles in Courage.”
At a time when public service is “discredited” and voters hold politicians “in contempt” for worrying, only about getting re-elected, Emanuel said aldermen have an opportunity to prove those cynics wrong.
“If we are willing to finally confront our fiscal challenges, I believe that we will be remembered as the men and women who pulled Chicago back from the financial brink and made Chicago stronger,” he said.
“Now is the time. This is the Council. Let us commit to finishing this job,” Emanuel said.
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For the most part, aldermen responded affirmatively to the mayor’s challenge. Most said they were willing to make the tough vote for a property tax increase bigger than Chicago has ever seen — even if it costs them their jobs.
“I’m not thinking about re-election at this point. I’m thinking about how we save our city,” said Ald. Will Burns (4th), one of Emanuel’s staunches African-American supporters.
“We’ve got to pay these pension liabilities. We owe it to the policemen and firemen who put their lives on the line. My dad was a cop for 25 years. He was able to support himself in his short retirement with that police pension — and he earned it.”
Emanuel said the dire alternative to a property tax increase is 2,500 police layoffs, 2,000 fewer firefighters, 48 fire station closings and twice-a-month garbage collection, instead of weekly pickups.
Burns agreed there is simply no other way out, but to place the burden squarely on homeowners — with both the $588 million property tax increase and the garbage collection fee.
“I am out of magic beans and magic pixie dust,” Burns said.
To soften the blow of the record property tax increase, Emanuel hopes to convince the Illinois General Assembly and Rauner to increase the homeowner exemption to hold harmless homes valued at less than $250,000.
The mayor said that would literally mean that “one of every four dollars of this property tax increase will come from the Central Business District.”
Downtown Ald. Brendan Reilly (42nd) is not at all certain that’s a good thing. He noted that commercial property is already assessed at a rate 2.5 times the rate of residential property in Cook County.
“I represent downtown stakeholders. . . . This could be a very heavy burden for them to carry. They’re concerned that some of these revenue options could have a chilling effect on the downtown district. As their elected representative, it’s my responsibility to try and find other options to lessen that burden,” Reilly said.
“There’s a general principle that those who can afford to pay should pay a bit more,” he said. “The question is, at what point do we hit a tipping point for the city of Chicago’s economy? I don’t know that answer. I’m going to be spending a lot of time in these next few weeks listening.”
Mayor Rahm Emanuel receives a standing ovation after his 2016 budget address to the Chicago City Council. | Ashlee Rezin/For the Sun-Times
Ald. Ricardo Muñoz (22nd), center, listens as Mayor Rahm Emanuel delivers the budget address to the Chicago City Council. | Ashlee Rezin/For the Sun-Times