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No New Taxes Needed, Rahm Says — Other Than 2.5 Percent Property Tax Bump

By Heather Cherone | September 5, 2017 5:41pm | Updated on September 6, 2017 11:46am
 CPS will get $80 million to cover the cost for officers to patrol the schools, the mayor's office said.
CPS will get $80 million to cover the cost for officers to patrol the schools, the mayor's office said.
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DNAinfo/Heather Cherone

CITY HALL — City officials will not have to raise taxes to cover the looming budget gap of $114.2 million — or to bridge the remaining shortfall facing the Chicago Public Schools, city officials said Tuesday.

That means the only new tax hike facing most Chicago homeowners in the next year will be the 2.5 percent school property tax hike Emanuel has said is necessary to "avert a train wreck."

The spending plan released Aug. 11 by CPS officials relied on $269 million from the city that has yet to be approved by the City Council. However, because the new school-funding formula includes about $450 million more for Chicago schools than last year — including the authority to to generate $125 million by hiking property taxes about 2.5 percent for the average homeowner — the gap is roughly half as big as initially expected, said Adam Collins, a spokesman for Emanuel.

"With historic school funding reform now the law in Illinois, and with the state of Illinois now covering some of the costs of Chicago teacher pensions for the first time ever, CPS' financial outlook has improved dramatically," Collins said.

The city's 2018-19 spending plan — set to be released next month — will include between $70 million and $80 million to cover the cost for Chicago Police officers to patrol the schools, Collins said.

That won't trigger the need for another tax hike on top of the one expected to be approved by the Chicago Board of Education, Collins said.

"We believe we can balance the city's budget without a citywide tax increase," Collins said.

However, Emanuel is still 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.

The remaining CPS budget gap — estimated between $40 million and $50 million — will be covered through "savings from interest and through refinancing debt," Collins said, as well as "administrative efficiencies such as procurement rebates and additional Medicaid revenue."

When the city's annual budget forecast was released in July, 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 — under the authority of a federal judge — in the wake of the fatal shooting of Laquan McDonald.

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.

Emanuel has said he expects any new deal to include "savings in wages and benefits, health care and other places that are key to the city of Chicago’s future.”

The city's financial condition is also expected to benefit from a new authority to refinance up to $2.5 billion in debt under a new state law that could save taxpayers as much as $75 million a year, officials said. That method of debt management is already used in New York City, Philadelphia and Washington, and could raise the city's credit rating, officials said.

That refinancing is expected to be introduced to the City Council Wednesday, and could be approved in October.