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Mayor’s budget package, including 75-cent cigarette tax hike, sails through council committees

City Budget Director Alex Holt talks Ald. Ricardo Munoz (22nd) after Monday's Budget Committee meeting. | Fran Spielman~Sun-Times

City Budget Director Alex Holt talks to Ald. Ricardo Munoz (22nd) after Monday's Budget Committee meeting. | Fran Spielman~Sun-Times

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Updated: December 20, 2013 6:22AM

Mayor Rahm Emanuel’s $7 billion budget — and the $34.2 million new revenues needed to pay for it — sailed through a pair of City Council committees Monday, despite lingering opposition to the 75-cents-a-pack increase in the city’s cigarette tax.

Budget Director Alex Holt said Emanuel considered the possibility of a graduated increase — say 25 cents per pack in each of the next three years — to appease aldermen concerned about the street-corner sale of loose cigarettes and the loss of revenue to retailers, particularly near the city limits.

But, Holt said, the mayor ultimately rejected that idea because the smaller tax increase would not have the same public health benefits — convincing 5,500 adults to quit smoking and 6,400 kids not to take their first puff.

“When you do a small, graduated increase, it allows for both the cigarette companies as well as for individuals to adjust to that price. And it doesn’t have the same impact in terms of the decrease in the number of people who are smoking,” Holt said.

“Depending on how low you go and how far you do the graduation, we might not see much of a public health impact at all.”

Ald. Leslie Hairston (5th) didn’t buy it. She noted that cigarette tax revenues have dropped like a rock in recent years — from a high of $32.9 million in 2006 — to $16.5 million this year.

“People are still going to Indiana. People are still going outside of Cook County. . . . It’s kind of like smoke-and-mirrors. We’re not really impacting what we need to impact,” Hairston said.

“And . . . we are decimating some communities with the illegal trade that we have created,” she said.

Ald. Jason Ervin (28th) argued that the black market for loose cigarettes is already worse than it is for illegal drugs — and an increase that will leave Chicago with the highest combined state and local tax rate on cigarettes in the nation will only make it worse.

“I’m a little taken aback that the Health Department has given a [smoking] assessment, but the Police Department has not given an assessment on what they believe the impact of this tax will be on citizens, especially those already dealing with higher crime rates in other areas of the city,” said Ervin, who cast the only “no” vote against the revenue package.

Ervin also complained that Emanuel’s decision to raise the city’s property tax levy by $20 million to capture the “equalized assessed valuation” of expiring tax-increment-financing (TIF) districts was like a “back-door tax increase.” If TIFs are expiring, property taxes should be abated, he said.

Holt countered that without an increase in the levy, “You lose the opportunity to capture that growth in value that’s been dedicated just to TIFs. Nobody’s property taxes increase, but you’re allowed to capture that value and do things like pay for police officers or pay for garbage collection or pay for basic city services because of the growth in value that’s been created by that TIF.”

The $34.2 million in tax and fee hikes approved by the Finance Committee includes: a 50 percent hike in the amusement tax tacked on to cable television bills; $10 million more from higher parking fines and impounded vehicle storage fees and increases in zoning fees on large- and medium-sized developments, along with a premium for filing permit applications in person, instead of online.

An hour later, the Budget Committee approved the budget itself and put off until next week a $25 million amendment proposed by the Progressive Caucus that calls for hiring 500 additional police officers to address a manpower shortage masked by nearly $100 million in overtime spending in 2013.

“It’s obvious that the level of officers we have right now is insufficient to prevent crime. We need the additional officers,” said Ald. Ricardo Munoz (22nd), who is still far short of the 26 votes he needs for passage.

“Ninety-five percent of a policeman’s job is presence. If we can put more boots on the crime, we’re likely to be able to prevent more crime.”

Also on Monday, the Budget Committee agreed to spend $485,000 to give the City Council the independent budget office aldermen claim they need to assess future privatization deals and make the difficult decisions that will be required to solve the city’s $20 billion pension crisis.

To help bankroll the new office, the mayor initially proposed reducing — from $26,000 annually to $20,000 — the amount of money allotted to each of the 50 aldermen for hourly or contractual employees and folding that amount into the $73,280-a-year aldermanic expense allowance to get around Shakman complaints about contractual employees.

Aldermen would have had $6,000 a year less overall to spend.

The ordinance approved Monday cut the per-alderman penalty in half — to $3,000.


Twitter: @fspielman

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