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How can Chicago erase $838 million budget shortfall? Lightfoot asks aldermen for ideas

Some advised creating a city sticker for Uber and Lyft vehicles and raising parking meter rates but keeping the money instead of sending it to Chicago Parking Meters LLC, though that appears to violate their long-term lease.

Mayor Lori Lightfoot, shown at a news conference earlier this week with Chicago Police First Deputy Supt. Anthony Riccio.
Mayor Lori Lightfoot, shown at a news conference earlier this week with Chicago Police First Deputy Supt. Anthony Riccio, is seeking ideas from aldermen on addressing the city’s budget shortfall.
Fran Spielman/Sun-Times

Chicago aldermen are urging Mayor Lori Lightfoot to lift the city’s ban on video gambling, create a new city sticker for ride-hailing vehicles and, if a massive property tax increase is unavoidable, phase it in and make the bitter pill easier to swallow by abolishing the $9.50-a-month garbage collection fee.

Those are among the ideas floated during closed-door meetings with small groups of aldermen that Lightfoot’s financial team has been holding this week to solicit cost-cutting and revenue-raising ideas to eliminate Chicago’s $838 million shortfall.

Former Mayors Richard M. Daley and Rahm Emanuel did the same. It’s a way to appease aldermen, share the blame and build support for the difficult choices ahead.

Conspicuously absent from the list of aldermanic ideas obtained by the Chicago Sun-Times is the property tax increase Lightfoot wants desperately to avoid, but has refused to rule out.

Instead, aldermen have raised the two progressive revenue ideas Lightfoot would love to adopt if only the General Assembly would sign off: a graduated real estate transfer tax increase and a sales tax on professional services.

Both are long shots during a fall veto session that starts five days after the mayor is scheduled to deliver her budget address to the City Council.

That leaves another massive property tax increase as the only reliable, big-money alternative.

In 2015, Emanuel convinced 35 aldermen to approve a $588 million property tax increase for police and fire pensions and school construction. It was the largest property tax increase in Chicago history.

To minimize or prevent a property tax hike, aldermen have proposed Lightfoot consider: lifting the ban on video gambling in Chicago; raising fees on digital advertising and shared housing services like Airbnb; selling naming rights to public buildings and other city assets and imposing “in lieu of” payments for hospitals, universities and non-profits.

“Major universities and hospitals put a real burden on our infrastructure and benefit from city public safety services ... yet they don’t pay a dime in property taxes,” Ald. Maria Hadden (49th) was quoted as saying in a press release issued by the Progressive Caucus.

“These institutions have massive endowments and resources that enable them to fully pay their fair share.”

Although the widely-despised parking meter deal has 65 more years to run, aldermen have also suggested that the city raise meter rates frozen for the last five years and pocket the money, instead of forwarding it to the concessionaire.

However, that appears to violate this clause in the 75-year lease: “The Concessionaire shall, during the Term, have the right to collect and retain all of the Metered Parking Revenue derived from the Concession Metered Parking Spaces, and the right to pledge and assign such Metered Parking Revenues as security for any indebtedness incurred by the Concessionaire.”

Chicago parking meter rates were last raised in 2013, the last year of rate hikes outlined in the concession agreement.

For decades, parking meter rates remained ridiculously low because the mayor and City Council feared that raising them would alienate voters.

Rates went up only after former Mayor Richard M. Daley convinced the City Council to unload the meters to private investors who hail from as far away as Abu Dhabi.

In fact, steep rate hikes tied to the deal so incensed motorists, they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Parking meter revenues have since recovered nicely.

The aldermanic list championed by the Progressive Caucus and others also includes: re-instating the $4-a-month employee head tax that Emanuel abolished; imposing congestion taxes, which Lightfoot is considering; and ramping up permit fees for construction and rehabilitation of residential and commercial buildings and fees tied to vacant property.

Some aldermen told the Sun-Times they want any property tax increase phased in, as Emanuel did, with a sweetener: drop the garbage fee Chicagoans love to hate nearly as much as the parking meter deal.

Acknowledging the need for serious cost-cutting, aldermen also have suggested declaring another tax-increment-financing surplus and reforming TIF eligibility; targeting police overtime, absenteeism and abuse of the Family and Medical Leave Act; and finding efficiencies in “every department,” including the previously sacrosanct police and fire departments.

Some also suggested re-examining Chicago’s grid and 311 systems.

Asked this week about the parade of aldermanic suggestions, Lightfoot credited Budget Committee Chairman Pat Dowell (3rd) with being “very persistent” in soliciting suggestions.

“She’s had some interesting ideas. … We’re certainly taking that into consideration,” the mayor said.

“We will come back to the aldermen to talk to them about what we’ve heard — both at the town halls and in surveys and what information they have also shared with us. And we’ll do that again before we put the final framework around a budget. ... I feel very good about how this is progressing from the perspective of communicating with aldermen.”