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CPS Could Be Fully Funded Through Taxes on Services Like Haircuts: Expert

 Budget expert Ralph Martire, left, proposed taxing consumer services as one solution to solving CPS' perpetual funding woes.
Budget expert Ralph Martire, left, proposed taxing consumer services as one solution to solving CPS' perpetual funding woes.
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DNAinfo/Patty Wetli

LINCOLN SQUARE — Chicago Public Schools has been operating in financial crisis mode for years, and the solution to the district's perpetual funding woes could be as simple as taxing services like haircuts, according to one finance expert.

The idea was promoted by Ralph Martire, executive director of the Center for Tax and Budget Accountability, who was among the speakers at a budget forum hosted Monday night by the education advocacy group Raise Your Hand.

Illinois ranks dead last in state funding of education despite being the fifth richest in the U.S. with a $745 billion economy, noted Martire, one of the speakers at the meeting at Amundsen High School, 5110 N. Damen Ave.

The state needs to contribute more to education, and how it gets there is by raising the state income tax — to as much as 5 percent — and expanding the state sales tax to include not just goods but consumer services, he said.

"Seventy-three percent of Illinois' economy is the sale of services. You can't leave the largest and fastest growing side of the economy out of the tax base," said Martire.

Despite the infusion of funds courtesy of a stop-gap budget recently passed by the state legislature, CPS faces a budget shortfall that the advocacy group Raise Your Hand estimated could be as high as $377 million. (More than $200 million in promised state funds are contingent on the passage of pension reform.)

"There is nothing more that can be cut," said Ald. Carlos Ramirez-Rosa (35th). "You're sawing into bone."

Ramirez-Rosa and Ald. Ameya Pawar (47th) have both sponsored ordinances that would divert Tax Increment Finance surplus dollars to CPS.

RELATED: CPS Budget Obscures Millions in Cuts: 'It is the Twilight Zone'

State representatives Greg Harris and Ann Williams, both Chicago Democrats, have pushed for equitable state funding for CPS, but said the district's lack of transparency in providing budget figures makes it difficult, in the absence of authoritative numbers, to advocate for CPS.

Confusion has reigned since CPS released 2016-17 budgets to principals last week. The district's figures show funding gains, but after drilling down into the numbers, principals and Local School Council members say they're actually looking at losses.

Jeffrey Newman, a community representative on Amundsen High School's LSC, said he was concerned about approving a budget that might not reflect the reality of the situation at CPS. If the $200 million in state dollars that's contingent on reform never materializes, will schools be forced cut budgets mid-year? he asked.

The scenario is highly likely, Martire responded.

"I would set aside reserves," he said.

To view the entire forum, click on the video below.