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Tax Big Companies, Dip Into TIF Funds To Fill CPS Budget Gap, Aldermen Say

 Ald. Carlos Ramirez-Rosa (35th) said any further cuts to schools could prompt students to walk out of class in protest.
Ald. Carlos Ramirez-Rosa (35th) said any further cuts to schools could prompt students to walk out of class in protest.
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DNAinfo/Heather Cherone

CITY HALL — Fed up with waiting for Mayor Rahm Emanuel to detail how he plans to fill the $129 million budget gap facing the Chicago Public Schools, a group of aldermen and community activists on Tuesday unveiled their own plan to prevent more cuts to city schools by dipping into redevelopment funds and taxing big firms.

Ald. Carlos Ramirez-Rosa (35th) said it was "ridiculous" that Emanuel has twice postponed scheduled briefings for aldermen on how he proposes to keep students in class until the end of the regularly scheduled academic year in spite of the financial crisis that has engulfed the schools.

"Rahm either has no plan, or he has kept us in the dark," Ramirez-Rosa said, flanked by members of the Chicago Teachers Union, Northside Action for Justice and the Brighton Park Neighborhood Council. "We have to put our grownup pants on."

Chief Finance Officer Carole Brown said city and school district officials were working to find a "responsible solution that doesn't harm taxpayers."

"We are looking at every option," Brown said in an interview with DNAinfo. "Right now, everything is on the table."

Ramirez-Rosa — along with 29 other aldermen — has proposed using tax increment financing funds to keep classroom lights on until June 20, the regularly scheduled end of the year.

TIF districts capture all growth in the property tax base in a designated area for a set period of time, usually 20 years or more, and divert it into a special fund for projects designed to spur redevelopment and eradicate blight.

City officials don't know yet how much more money those districts will actually collect until later this year, Brown said, adding that she also didn't know how much unspent money the city had in TIF districts.

Ramirez-Rosa said the city could have as much as $700 million in unspent TIF funds, with another $140-$215 million in surplus funds. The property tax increase approved by the City Council in 2015 could add another $100 million to those accounts, the alderman said.

Ramirez-Rosa also called on the mayor to tax firms with more than 50 employees $33 per worker per month. That would add $106 million to the city's bottom line to be used for CPS, the rookie alderman said. Eighteen aldermen support that measure, short of the 26 needed to approve the tax.

Employers would not have to pay the tax for employees who live in one of the 20 Chicago community areas that have the highest rates of poverty and unemployment — an attempt to encourage companies to hire Chicagoans from disadvantaged neighborhoods, Ramirez-Rosa said.

However, Emanuel frequently touts the elimination of the $4-per-employee monthly tax by the City Council in 2011 at his request as a key reform that helped spur millions of dollars of economic activity in the city and prompted dozens of companies to relocate to Chicago.

Ramirez-Rosa said ending that tax amounted to a break for Emanuel's largest campaign contributors.

"Our children have paid enough," Ramirez-Rosa said.

Brown did not rule out the tax on the number of employees or using TIF money. As recently as April 18, Emanuel said city money should not be used to fill the school budget gap.

But the mayor said he was left with no other option but to step in and make sure school did not end three weeks early after a judge tossed a lawsuit filed by Chicago Public Schools officials on April 30 claiming the state's funding formula is discriminatory.

Ald. David Moore (17th) said the mayor must act to help Chicago's school children.

"My heart is so broken," Moore said. "This mayor has to step up."

Ald. Millie Santiago (31st) acknowledged that the city doesn't have direct control of the school district budget.

"But we have a responsibility," Santiago said.

City officials also could decide to tap the city's emergency or "rainy day" funds, or to take out a loan on behalf of CPS. Additional cuts to schools are also possible.

However, Ramirez-Rosa said if the mayor — who appoints the members of the Chicago Board of Education — imposes additional cuts on schools the "community will rise up" and students will walk out of class in protest.

Brown said additional cuts would only be an "option of last resort" for Emanuel.

School district CEO Forrest Claypool said in February that there were "no good options" left.

CPS must pay its employees' pension fund $721 million by June 30, something it could no longer afford to do after Rauner vetoed a bill in November that would have given Chicago's schools $215 million.

Rauner said Illinois Senate President John Cullerton broke a compromise signed last June that allowed schools to open in September. Part of that deal promised more money for Chicago schools in return for statewide "pension reform," a long-held goal of the governor.

In January, Claypool ordered four unpaid furlough days for all CPS employees to save $35 million. He also canceled professional development events for CPS central office staff to save $5 million and slashed charter school budgets by $15 million by the end of the year, officials said.

In February, Claypool cut another $31 million by freezing a portion of schools' discretionary funds, which can be used to buy textbooks and technology and pay for after-school programs, field trips and hourly staff.

Those cuts have whittled CPS' deficit to $129 million, officials said.