Emanuel’s 2014 budget passes City Council with ease, but smooth-sailing days over
BY FRAN SPIELMAN City Hall Reporter November 26, 2013 9:39AM
Mayor Rahm Emanuel looks onto members of the City Council before the start of the budget meeting at City Hall on Tuesday, November 26, 2013. | Michael Jarecki/For Sun-Times Media
BY THE NUMBERS
◆ $7 billion in city spending.
◆ 50 percent increase in city’s cigarette tax — to $7.17 a pack — to raise $7 million.
◆ 50 percent increase in amusement tax tacked on to cable television bills.
◆ $16.7 million in higher parking fines, storage and development fees.
◆ $2.5 million increase in storage fees for towed vehicles.
◆ $4 million in higher zoning fees on large- and medium-sized developments and on developers who file applications in-person.
◆ $70 million 2014 revenues expected from speed cameras near 50 schools and parks.
◆ $60 million in fines from red-light cameras, even after 36 cameras are removed Jan. 31 at 18 intersections.
◆ 12,538: authorized number of sworn police officers.
◆ $23.7 million in savings city expects to realize by embarking on three-year phase-out of 55 percent subsidy for retiree health care.
◆ $4,400: annual cost to some retirees in 2014.
◆ $150 million in debt refinancing.
◆ $600 million contribution Chicago is required by state law to make in 2016 to stabilize police and fire pension funds.
◆ $20 million increase in city’s property tax levy to capture the “equalized assessed valuation” of expiring tax-increment financing districts without raising anybody’s bill.
◆ $3.9 million more spending for tree-trimming, graffiti removal, rat control and lot cleaning.
◆ 45,000 CPS students to get free vision exams and eyewear, up 15,000 from 2013.
◆ 16,000 kids served by after-school programs, up 3,000 over 2013.
◆ 15,000 uninsured kids to be enrolled in Medicaid.
◆ $5 million to be returned to rainy day fund.
◆ $485,000 for City Council Office of Financial Analysis.
◆ $3,000 reduction in aldermanic expense allowance needed to pay for the new office.
Updated: December 28, 2013 6:20AM
Mayor Rahm Emanuel’s $7 billion 2014 budget — and the $33.2 million in new revenues needed to pay for it — breezed through the City Council Tuesday, but the smooth-sailing days are over, courtesy of the city’s pension crisis.
The wolf is at Chicago’s door. In little more than a year, state law requires the city to make a $600 million contribution to stabilize police and fire pension funds that now have assets to cover just 30.5 and 25 percent of their respective liabilities.
That will require a painful mix of new revenues and employee concessions that only the state legislature can mandate.
Emanuel can only hope that next week’s special session produces an elusive solution to lllinois’ $100 billion pension crisis so Chicago can be next in line.
“They cannot spike the ball on the 20-yard line and say, ‘We’re done,’ just because they dealt with the four state [pension] funds. They must also deal with ours,” the mayor said Tuesday.
Emanuel wants the General Assembly to put off the balloon payment for police and fire pensions until 2023 to give the city and organized labor a chance to craft a compromise.
He has already convinced state lawmakers to solve the Chicago Park District’s pension crisis in a way he hopes will be a “blueprint” for other unions to follow.
“You cannot do this on the backs of taxpayers alone. And you cannot do it on the backs of employees alone. It’s going to require revenue and reform. But, they go together. We would be the only city — if we did one without the other — that tried that and it won’t work,” the mayor said.
Civic Federation President Laurence Msall said the 2014 budget approved Tuesday by a 45-to-5 vote is a “reasonable short-term plan,” but little more than that.
Wall Street rating agencies that ordered an unprecedented triple-drop in Chicago’s bond rating — citing the city’s “very large and growing” pension liabilities, “unrelenting public safety demands” and “significant” debt service payments — have no reason to change their view of the city’s shaky finances.
The mayor is planning yet another round of refinancing that will add at least $150 million to that mountain of debt. The so-called “scoop-and-toss” technique will stave off even higher taxes and fees, but it will saddle another generation of Chicagoans with debt that should be paid off today.
“The rating agencies, the Civic Federation and anyone else who looks at the city’s financial situation is concerned there is no obvious plan for how that $20 billion unfunded liability is either going to be reduced or paid for going forward,” Msall said of the pension crisis.
Emanuel countered that his 2014 budget makes strategic investments in children’s programs, small businesses and neighborhood services and still “takes a whack” out of Chicago’s structural deficit — by beginning a three-year phaseout of the city’s 55 percent subsidy for retiree health care.
He doesn’t consider debt refinancing a “smoke-and-mirrors” gimmick like the ones former Mayor Richard M. Daley used to paper over Chicago’s problems.
“All of the things you’ve identified . . . have happened over 30 years. It would be reckless to try to change all of ’em immediately within three years. You’ll throw the economy into a deep recession. After two years of people finally moving back into the city, you’ll create another exodus,” the mayor said.
“You have to do it in a responsible way that gets our long-term finances in order in a way that doesn’t overburden our taxpayers. You have to solve it in a way that doesn’t begin the flight out of the city.”
The 2014 budget approved Tuesday will leave Chicago with the nation’s highest state and local tax on cigarettes at $7.17 per pack.
It also uses $75 million in police overtime to mask a manpower shortage and relies on $130 million in fines from red light and speed cameras and $33.2 million in new taxes, fines and fees.
That includes a 50 percent hike in the amusement tax tacked on to cable television bills, $16.7 million more from higher parking fines, 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.
The $33.2 million does not include the mayor’s decision to quietly raise the city’s property tax levy by $20 million to capture the “equalized assessed valuation” of expiring tax increment financing districts. Ald. Jason Ervin (28th) has branded that a “back-door tax increase,” arguing that property taxes should be abated after TIFs expire.
Ald. Bob Fioretti (2nd) was the only dissenting aldermen to explain why on the City Council floor.
Fioretti said he’s concerned about long-term borrowing, about the mayor’s heavy reliance on speed camera revenues and about Emanuel’s decision to phase out the retiree health care subsidy, at a cost to some retirees of $4,400 next year.
Most of all, Fioretti said he is angry that the mayor’s forces buried a $25 million plan to hire hundreds of additional police officers instead of relying so heavily on “stop-gap” measures like police overtime.
“While hiring more police officers won’t solve the problem of street violence in and of itself, it is clear” that Chicago needs more police officers, Fioretti said.
“I cannot in good conscience support a budget that fails to address our fundamental needs.”
Budget Committee Chairman Carrie Austin (34th) countered that the $25 million amendment was “not buried — just put on hold” until aldermen can find the money to hire 500 additional police officers.
“$25 million was not going to get us there,” she said.