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City Faces $114M Budget Gap In 2018 — Smallest Since Rahm Was Elected Mayor

"We are more financially secure today than we were six years ago,” Mayor Rahm Emanuel said.
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DNAinfo/Heather Cherone

CITY HALL — City officials face a budget gap of $114.2 million as they begin to craft a spending plan for 2018, according to the city's annual budget forecast released Monday.

That is the smallest projected budget deficit since Mayor Rahm Emanuel took office in 2011, allowing him to bolster his claim that he has put the city on solid financial footing. That is expected to be at the center of Emanuel's likely bid for a third term as mayor of Chicago.

"We are more financially secure today than we were six years ago,” Emanuel said in a statement. He faced a $635.7 million gap after taking over from former Mayor Richard M. Daley.

However, the stability touted by Emanuel is largely due to several massive tax increases, including the largest property tax increase in Chicago's history — approved in 2015 — and a 30 percent increase in the water and sewer tax — approved in 2016.

At an unrelated event Monday, Emanuel declined to say whether more tax hikes were looming to bridge the projected gap — or to cover the second installment coming due on the mayor's promise to expand the Chicago Police Department by 970 positions.

City officials have announced plans to hire 266 police officers, 100 detectives and 75 sergeants in 2018, which is expected to cost approximately $60 million.

In addition, it is not clear how much the city will have to pay to reform the Police Department in the wake of the fatal shooting of Laquan McDonald.

Emanuel has promised there will be "no U-turns" on the road to reform.

Labor agreements with 90 percent of the city's 30,0000-member workforce expired June 30, meaning personnel costs could also rise more than anticipated by the annual budget forecast.

Given the green light by legislation approved by state lawmakers, Emanuel is expected to ask aldermen to hike taxes on cell phones and land lines by 28 percent. That will keep the laborers' pension fund out of the red, officials said.

In 2014, the Council agreed to hike the city's telephone tax by 56 percent to help the same pension fund — adding $1.40 per month to the bills for every landline and cell phone in Chicago.

"All four pensions are now right-side-up,” Emanuel said, referring to the city's four pension funds.

In addition, it is not clear whether the city will seek to solve the perennial budget crisis afflicting the Chicago Public Schools by adding more money to the district's coffers.

Ald. Carlos Ramirez-Rosa (35th) has 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.

On Monday, Emanuel did not respond to questions shouted by reporters about whether more tax hikes are looming.

As he did Monday, Emanuel has repeatedly blamed Gov. Bruce Rauner for CPS' financial woes, saying Illinois does not fund Chicago schools adequately.

Emanuel is scheduled to present his 2018 budget proposal to the City Council this fall, officials said.