Emanuel’s CPS rescue plan gets cool reception from aldermen
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Chicago aldermen reacted coolly Tuesday to Mayor Rahm Emanuel’s plan to tax downtown businesses, high net-worth individuals or both to dig the Chicago Public Schools out of a $596 million hole without state help.
Ald. Carrie Austin (34th), powerful chairman of the City Council’s Budget Committee, did not mince her words — as usual.
After walking the tax plank three times to solve the city’s $30 billion pension crisis, Austin said she has no interest in going down that lonely road a fourth time.
“Why do we have to do that? Why is it always a strain on us, the city of Chicago? Why? Nobody ever asks that question. You don’t see this going on in any other school district except for Chicago,” Austin said.
“How much can we lay on our businesses and lay on our residents? … Why do we keep punishing them? That’s all we ever go after because that’s the highest volume of money. Why do we have to keep going at them and don’t go at the one that is causing it? And that would be Rauner. … Somebody needs to take Rauner by his neck and wring it.”
Rauner’s spokesperson Eleni Demertzis said Austin’s “outlandish rhetoric can’t paper over the years of fiscal mismanagement that triggered” the financial crisis at CPS.
”Rather than throwing unnecessary insults, it would be helpful if all sides would come together and work on an agreement that balances the state budget along with property tax relief and job-creating reforms that will grow our economy,” Demertzis wrote in an email.
Austin acknowledged that Emanuel needs to prepare for the worst in the event that the marathon state budget stalemate drags on.
But if it does, she would much rather drain the tax-increment financing surplus — just as the mayor did, to the tune of $87.5 million — to stave off a teachers strike.
Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, agreed this is not the time to hammer downtown businesses already shouldering a heavy tax and regulatory burden.
“We’ve done a good job of trying to roll back some of the things that inhibited businesses from being in the central business district and from coming into Chicago. I frankly would prefer not to try and [tax downtown businesses] because it might begin to roll back what has been a very nice trend,” O’Connor said.
“I don’t think it’s a good way to do it. But it might be the only way to do it. The door is closed on property taxes. … You look at some of the increases that have gone along the lakefront and Lincoln Park. They’re almost making those homes unaffordable. Once that dynamic begins to develop then neighborhoods begin to die.”
Like Austin, O’Connor said he would rather keep the political heat on Rauner and Democratic legislative leaders to break their two-year stalemate.
“It’s just an incredible phenomenon that, by saying we’re gonna try and shoulder this burden, it has become our burden and those guys are just off the hook,” O’Connor said.
“It’s so aggravating that because we’re trying to be responsible, the people who actually have the responsibility legally and morally just abandon the field.”
Ald. Carlos Ramirez-Rosa (35th) argued that his plan to reinstate the $4-per-employee head tax that Emanuel proudly eliminated should be part of any local rescue. But Ramirez-Rosa wants to set the tax at $33-a-head, which he said would raise $106 million a year.
Ramirez-Rosa has filed a notice with the city clerk’s office seeking to discharge the Rules Committee, where the head tax ordinance was sent to die, and force a vote on the plan.
South Side Aldermen Pat Dowell (3rd) said she’s been supportive of a commuter tax, which is “another way of getting to that population” of high net-worth individuals.
But, she said, “We have given at the office, so to speak, a number of times. Not to mention that many of us have used TIF dollars in our own areas to augment the deficiency in the CPS budget. … You can only do that so much. At some point we have to have a sustainable funding source. But, we cannot continue to give the state a pass.”
Emanuel has been crafting the local rescue ever since he nixed Claypool’s plan to cut the school year short after a judge threw out a long-shot lawsuit filed by CPS. That lawsuit accused the state of distributing state school aid in a way that discriminates against districts like Chicago that serve predominantly poor and minority students.
The Chicago Sun-Times reported earlier this week that the mayor is exploring the possibility of imposing a new tax on high-net worth individuals, downtown businesses or a combination of the two to raise the $400 million-to-$600 million in annual revenue he needs to go it alone.
The alternative, City Hall sources, said, is to close 100 schools and lay off 2,000 teachers.
O’Connor, former longtime chairman of the City Council’s Education Committee, said CPS needs to do a better job of articulating those dire alternatives.
“That type of scenario is what is creating this need. I don’t think we’re doing a good enough job of making sure people understand what hole we’re trying to plug, what we’re trying to prevent from happening,” the alderman said.
In retrospect, O’Connor said it was probably a mistake for Claypool to threaten the June 1 closing.
“We threaten that the schools could shut down. But when they don’t shut down, people think it’s just another cry wolf and they begin to doubt that these crises are really crises,” O’Connor said.
The mayor’s plan to craft a more permanent fix, O’Connor said, is the only way to prevent CPS from dragging the city’s own shaky finances under.
“It’s not drastic, it’s realistic. What’s not realistic is trying to find ways to give one-time infusions of cash and strip all of our cash resources and all of our ability to raise money and jeopardize our bond rating for some days of school,” he said.