Emanuel set to call for largest property tax hike in modern Chicago history
Mayor Rahm Emanuel is set to call for the largest property tax increase in modern Chicago history
to raise enough money to make a major pension payment for police and firefighters next year, the mayor's City Council floor leader and a City Hall source told the Chicago Tribune late Wednesday.
The mayor also plans to push a new garbage collection tax, a new per-ride fee on taxis and ride-hailing services such as Uber and a new tax on electronic cigarettes and smokeless tobacco products.
Ald. Patrick O'Connor, 40th, said the idea is to cut down on the annual budget hole that has plagued the city budget for years and further scale back some of the poor financial practices. That includes scoop-and-toss borrowing, in which the city takes debt that's coming due and kicks it out into the future at a higher cost. The administration also wants to put the police and fire pension systems on a road to solvency, he added.
The mayor is considering a property tax hike of between $450 million and $550 million for police and fire pensions, but he has yet to settle on a final number, a City Hall source said. O'Connor put the figure at $450 million for police and fire pensions, plus another $50 million for a Chicago Public Schools construction program. Aldermen would authorize the CPS property tax increase, and the Chicago Board of Education would approve it.
Chicagoans also would be set to join the residents of many suburbs in paying a garbage hauling fee. O'Connor put the garbage tax at $10 to $12 a month for single-family homes and two-flats. The veteran alderman said the tax would not cover the entire cost of garbage pickup, but would put a pretty good dent in it.
Fewer details were available on the e-cigarette tax and new taxi and ride-hailing fees. Ald. Edward Burke, 14th, previously had proposed a $1-per-ride fee on rides from taxis and companies such as Uber and Lyft. Emanuel alluded to that proposal this week when he was asked whether such a tax could be included in the budget he'll unveil Sept. 22.
"There's still a lot of pieces in motion here," O'Connor said.
During his first term, Emanuel avoided major tax hikes in favor of a series of smaller tax, fee and fine increases that together resulted in the equivalent of a 60 percent increase in city property taxes for the average homeowner. Still, come re-election time this year, Emanuel was able to tell voters he hadn't raised property, sales or gas taxes during his tenure.
Emanuel, however, did not set aside money for a major increase in police and fire pension payments that has been looming over City Hall since the General Assembly approved a state law when Mayor Richard M. Daley was in charge. Now the bill is due.
Pension payments this year total about $478 million. Next year, payments to police and fire pension funds will increase by $538 million under current state law, although Emanuel is hoping Gov. Bruce Rauner signs a bill that would allow the city to phase in the higher payments more gradually. Lawmakers approved that bill at the end of May, but have yet to send it to Rauner amid a broader stalemate at the Capitol.
The property tax increase Emanuel is mulling would far exceed what the mayor himself said during the campaign was the largest property tax increase in Chicago history. In 1987, under Mayor Harold Washington, property taxes rose by $79.9 million, which would be $167.8 million in today's dollars after adjusting for inflation. In 2008, under Daley, property taxes increased by $86.5 million, or $96 million in today's dollars.
During the campaign, Emanuel attacked his runoff challenger, Jesus "Chuy" Garcia, for voting for the Washington-era property tax hike. Now Emanuel is weighing a property tax hike that could triple the one his opponent backed.
For weeks, Emanuel has held a series of closed-door meetings with top aides to determine how to come up with enough money to make good on the city's pension commitments while also working to scale back the city's most expensive borrowing practices. Many aldermen have long suspected a major property tax increase would be a big part of the answer.
"It's not as if we weren't warned," said Ald. Joe Moore, 49th. "We have known for several years that the pension shortfall was going to cause us to make some really painful decisions, particularly if we didn't receive any relief from Springfield, and we didn't receive any relief from Springfield."