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Rahm Delivers 2016 Budget to Council with $600M Hike in Property Taxes

By Ted Cox | September 22, 2015 6:27am | Updated on September 22, 2015 12:21pm
 Mayor Rahm Emanuel prepares to present his 2016 budget proposal to the City Council.
Mayor Rahm Emanuel prepares to present his 2016 budget proposal to the City Council.
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DNAinfo/Ted Cox

CITY HALL — Insisting Chicago is "thriving" and "growing stronger every day," Mayor Rahm Emanuel called on aldermen to pass a $9.32 billion 2016 budget Tuesday that includes a $600 million increase in property taxes and a host of new fees and taxes including $9.50 a month for garbage collection.

Faced with a "$600 million pension cliff" that requires overdue police and firefighter pension payments, Emanuel said, "We cannot cut our way out of this crisis," laying out a calamitous scenario with fewer police officers and more potholes if they attempted that.

Instead, he asked aldermen to respond to a higher calling in public service and "confront our greatest challenges instead of simply passing them along."

 Mayor Rahm Emanuel called on aldermen to act.
Mayor Rahm Emanuel called on aldermen to act.
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DNAinfo/Ted Cox

"The bill is due today. And that is the choice in front of us. I know where I stand," he said.

Emanuel insisted the Chicago economy is sound, "but if we want things to keep going right, we have to right our city's financial ship."

Emanuel hammered the themes of "finishing the job" to reform city finances begun four years ago and that the City Council must act while other politicians dither.

"We all know that public service is discredited today," Emanuel said. "Many people hold politicians in contempt and believe that our highest inspiration is simply to get re-elected. They look at Washington and Springfield and for good reason conclude that nothing is getting done — like watching paint dry.

"We in this chamber have the opportunity to show the public that elected officials can make a difference," he added, "if we are willing to confront our greatest challenges instead of simply passing them along."

About half the City Council rose to applaud at the end of Emanuel's address. Ald. Joe Moore (49th) called it a "very strong, forceful speech." Yet others were more skeptical.

"Instead of delivering the ‘progressive’ budget we were promised, Mayor Emanuel unveiled more of the same with a budget proposal that continues to nickel-and-dime regular Chicagoans via a garbage fee, a massive property tax hike and ride-share surcharges that amount to a giveaway to his brother — Uber investor Ari Emanuel," said first-term Ald. Carlos Ramirez-Rosa (35th).

"Mayor Emanuel’s 2016 budget proposal shows that he will continue to govern in the interest of the rich and big corporations, and not in the interest of Chicago’s working families and our neighborhoods," he added. "Emanuel's budget shows us he lacks the political courage to ask his rich campaign contributors to pay their fair share."

"There wasn't much content," said Ald. Scott Waguespack (32nd). He called reforms the mayor talked about — such as moving 300 more police officers from desk duty to the street, and declaring a surplus in Tax Increment Finance districts — "too little too late."

Waguespack was caught by surprise when the mayor suggested privatizing 311 service, saying, "Why we're outsourcing 311, I'm not really sure."

"That's a big concern of mine," added Ald. John Arena (45th). "Are we going to cut city jobs, to what magnitude, and where are these jobs going?"

Otherwise, the so-called doomsday budget had been dreaded since before Emanuel warned of it two years ago.

Emanuel opened his remarks Tuesday by calling it "a challenge that has been building for decades."

Emanuel said the city had promised more to retirees than it had set aside to pay for it. "For decades, the state permitted — and the city funded — the bare minimum required," he added. "Now the bill has come due."

Here's Rahm's Speech To The City Council

Emanuel laid out the choice to be made: "Either we muster the political courage to deal with this mounting challenge we inherited or we repeat the same practices and allow the financial challenges to grow."

Emanuel said he planned to completely eradicate the structural budget deficit and end refinancing "gimmicks" by 2019, as well as cutting $170 million from the budget through savings, efficiencies and reforms. Yet the cost of replenishing the pension funds was to be undeniably harsh.

Emanuel took pains to emphasize that the city's operational budget is balanced through those cuts, and that the tax hike is entirely due to pension payments passed up during the Daley administration and now made mandatory by the General Assembly.

According to Emanuel, a $544 million property tax increase would be phased in over four years, starting with $318 million this year. Combined with a $45 million Chicago Public Schools tax levy, it would approach a $600 million increase.

It's estimated it would cost the owner of a $250,000 house an additional $588 a year when fully implemented.

Staggered aldermen sought ways to ease the burden on homeowners. Aldermen Joe Moreno (1st) and Ramirez-Rosa have submitted competing proposals to provide rebates to low-income homeowners. Ramirez-Rosa's plan, submitted along with the 11-member Progressive Reform Caucus, would provide $400 to eligible homeowners, intended to almost cover an estimated $475 immediate increase on a $250,000 home.

It would kick in for families that make less than four times the poverty level, estimated at $47,000 for an individual, $64,000 for a couple and $97,000 for a family of four. Moreno's plan would also be tied to household income, but would provide slightly smaller rebates.

Emanuel countered with an idea to expand the homeowners' exemption, but others have dismissed that as a red herring, pointing out it requires General Assembly approval, and state legislators are locked in their own budget impasse with Gov. Bruce Rauner.

Emanuel said he had the support of House Speaker Michael Madigan (D-Chicago) and state Senate President John Cullerton (D-Chicago), but made no mention of Rauner during the speech.

Waguespack said he was doubtful it would pass and be signed into law, adding, "I don't see how it could if he doesn't have the governor onboard."

 Ald. Scott Waguespack is doubtful the mayor can get a wider homeowners' exemption passed in Springfield.
Ald. Scott Waguespack is doubtful the mayor can get a wider homeowners' exemption passed in Springfield.
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DNAinfo/Ted Cox

The Chicagoland Chamber of Commerce also resisted, issuing a statement saying it "opposes all efforts to increase the homeowners' exemption for residential properties," in that businesses would be forced to make up the difference.

Emanuel acknowledged that "the lion's share of the burden will be borne by our thriving central business district and commercial area, and by those with homes that exceed $250,000 in value."

The public policy group Innovation Illinois chimed in, saying, "Gov. Rauner is overstepping his authority and creating obstacles to the democratic process by threatening to veto the mayor's request for a change in the property-tax exemption. Instead of supporting property-tax relief for Chicago homeowners, the governor is interfering in the city’s operations by insisting that Mayor Emanuel follow his lead by engaging in union busting as a quid pro quo for the governor's signature."

The Progressive Caucus proposed redistributing Tax Increment Finance funds, reviving an amnesty program for delinquent tickets, curbing reforms for ride-sharing services and setting what they called an "alternative minimum tax" for Downtown properties that frequently have their assessments reduced through appeals. They called on the mayor to beef up the Law Department to fight those appeals.

Those ideas and others figure to percolate in the budget process over the next months, with a final vote scheduled for late October.

At the end of Tuesday's meeting, an emotional Ald. Carrie Austin (34th) said departmental hearings would begin Monday. The chairman of the Budget Committee has been suffering health woes, and in fact an arrangement of flowers had to be removed from her desk in the Council Chamber when she suddenly showed up for the mayor's address. She received a standing ovation from her council colleagues.

Ald. Patrick O'Connor (40th), Emanuel's floor leader on the council, said he expects the budget to pass, but "there's a lot of budget hearings between now and that vote."

Emanuel's other council allies echoed his sentiment that difficult choices are required.

"Today, we have to make hard decisions," said Ald. Walter Burnett Jr. (27th).

"I think it's very clear that we do have some tough choices to make. Some range from bad to worse," Moore said. "I don't think the mayor's proposed budget will be approved without some changes."

Emanuel suggested a host of new fees and taxes, including a $9.50-a-month charge for garbage collection after aldermen sought last week to hold it under $11.

"I understand this is new," he said. "But it is necessary to provide the level of services that Chicagoans depend on."

He also appeared ready to impose additional 50-cent charges on taxis and ride-sharing services to the tune of an extra $48 million, insisting 80 percent of that would be paid by ride-sharing firms like Uber and Lyft. Yet progressives like Ald. Roderick Sawyer (6th) said it wasn't worth the cost of allowing ride-sharing drivers access to city airports and McCormick Place.

Cab Drivers United/AFSCME Local 2500 lashed out at the proposal, calling it "a sweetheart deal for Uber, a $50 billion enterprise that doesn’t need another giveaway, but a job-killer for hard-working Chicago cab drivers."

Emanuel also moved to increase taxes on e-cigarettes, but that would produce a relatively meager $1 million, with that designated to support community health services as well.

"We owe it to our city and to the generations who come after us to do what is right — even when it is hard," Emanuel concluded. "I believe we will rise to the occasion. I am confident that we will go down in history as the elected leaders who stepped up when Chicago needed us the most."

"It's great rhetoric for him," Arena responded. "He's gotta do that. He's still a politician. My job now is to make sure we've vetted this budget very thoroughly and make sure we continue to push for truly progressive solutions to the budget problems."

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