Chicago taxpayers face yet another property tax increase for police and fire pensions in 2020 — and another hike the following year in the tax tacked onto water and sewer bills to save the Municipal Employees pension fund, aldermen learned on the first day of City Council budget hearings.
Following five-year “ramp-up” periods, the additional increases will be needed to honor the city’s statutory promise to keep all four city government pension funds on the road to 90 percent funding by 2048.
By the city’s own estimate, police and fire pension costs will rise by $297.3 million, or 36 percent, in 2020. The Municipal and Laborers plan costs will grow by $330.4 million, or 50 percent, in 2022.
“We’ve done the biggest [property tax] increases,” Chicago Chief Financial Officer Carole Brown said Monday. “But there will be an increase in 2020 for police and fire. The increase for Muni and Laborers will happen a couple years later. . . .
“When this Council passed the water and sewer tax last year, there were assumed increases in the tax from the first year to correspond to increases in the ramp. We would anticipate that if those were the revenue sources assigned on a going-forward basis after we got to actuarial funding, there would need to be increases in those revenues.”
Molly Poppe, a spokesperson for the city’s Office of Budget and Management, insisted later that Brown had been referring only to the state-mandated increase in the city’s contribution to the police and fire pension funds. Brown “indicated that Police and Fire pension contributions will increase in 2020; she did not say property taxes will increase in 2020,” Poppe said in an email.
Later, Brown issued a statement of her own saying, “This budget is for 2018 and was just completed last week, and at no point did I say the City will increase property taxes in 2020. Plain and simple.”
But during the exchange with Ald. Joe Moore (49th), Brown was specifically asked where the city would find the money to pay for that higher contribution.
That’s when Brown replied that, although the worst of the property tax increases was the $543 million increase approved two years ago, another increase was inevitable.
This year’s contribution to all four city employee pension funds is $1.18 billion. By 2021, that actuarially required contribution will rise to $1.8 billion.
Chicago taxpayers have been hit with nearly $1.1 billion in property tax increases, primarily for police, fire and teacher pensions and school construction; a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund; a 56 percent telephone tax hike in 2014 and another 28.2 percent next year for the Laborers fund; a new garbage collection fee; a bag tax; and increases in water, sewer and city sticker fees, hotel and parking taxes and parking fines, among others.
Ald. Pat Dowell (3rd) questioned the fairness of Emanuel’s plan to raise the monthly tax tacked on to Chicago telephone bills by $1.10 — from $3.90 to $5 — and apply it to every one of the 1.53 million cell phones and 733,893 land lines in the city.
The money will be used, in part, to overhaul Chicago’s 20-year-old 911 emergency system to accept photos and text messages.
“I’m concerned about that being charged against land lines, where you can’t send a picture. You can’t send a text and you can’t send video. Yet, these people are being asked to pay towards that system,” Dowell said.
“This is a regressive tax anyway . . . This would be an unfair burden on people who have land lines.”
Budget Director Samantha Fields acknowledged that Dowell had raised a “very fair point.” But Fields argued that all Chicagoans would benefit from a 911 system that allows first responders to “better coordinate” with each other.
Another pressure point was Emanuel’s plan to bankroll an amusement tax waiver for neighborhood theaters by raising the amusement tax on major concerts like those at the United Center from 5 percent to 9 percent.
“A lot of us benefit from the patrons who go to those events. They come to our wards. They spend a lot of money in the restaurants and bars, transportation, Ubers and all that stuff,” said Ald. Walter Burnett (27th), whose ward includes the United Center.
“These guys are talking about competition with Rosemont and other venues near the city. I don’t want us to, as they say, cut our nose off to spite our face.”
Fields countered that the increase would cost the average concertgoer “less than $4 or $5.”
“So, if you have an expensive Beyonce ticket that you’re purchasing, hopefully it wouldn’t be as much of a burden as one would think,” Fields said.
Ald. Anthony Beale (9th), chairman of the City Council’s Tranportation Committee, continued to hammer away at Emanuel’s plan to raise ride-hailing fees by just 15 cents a ride next year and another nickel in 2019.
The City Council’s champion for the struggling taxicab industry continued to push for an additional 50-cents-a-ride on Uber and Lyft to bankroll some measure of tax relief and instead of imposing a smaller increase and shipping the money to the CTA.
“When’s the last time we gave something back to residents of this great city? Beale said.
“Just like the unpopular soda tax was causing people to go to Indiana, to go outside the city, it’s the same thing with the bag tax. People are leaving the city because they don’t want to pay that 7 cents. Let’s look at $1 [a-ride]. And instead of letting [Uber and Lyft] walk away with billions, give the people back 7-cents-per-bag.”