Aldermen searching everywhere for alternatives to property tax hike
BY FRAN SPIELMAN City Hall Reporter April 16, 2014 1:49AM
From left,Chicago Ald. William Burns (4th) and Ald. Bob Fioretti (2nd) confer during the City Council meeting on Monday, March 5, 2014. | Chandler West/For Sun-Times Media
Updated: May 17, 2014 6:35AM
A London-style congestion fee on motorists who drive into downtown Chicago during weekday business hours.
A new and lower sales tax on high-end professional services performed in Chicago.
Going along with Gov. Pat Quinn’s plan to make permanent a temporary increase in the state income tax, only if municipal revenue sharing is restored to bring Chicago $150 million-a-year.
Mayor Rahm Emanuel’s plan to raise property taxes by $250 million to shore up the Municipal Employees and Laborers pension funds — and a looming, $600 million payment to stabilize police and fire pension funds — has aldermen looking under every rock for alternative sources of revenue.
Ald. Bob Fioretti (2nd) has already proposed a one percent commuter tax on 620,000 suburbanities who earn their paychecks in Chicago.
On Tuesday, Ald. Will Burns (4th) took the wraps off his ideas. They include a congestion fee that would require motorists driving into the downtown area to pay a toll for the privilege.
“The property tax has to be part of the mix. But, we also need to find other revenue options that are fairer than the property tax. If you’re able to generate more revenue from other sources, maybe the property tax goes down,” Burns said.
“Congestion pricing is a way, given the limited tools the city has, to generate revenue based on one’s ability to pay. Most low- and moderate-income people tend to use public transportation if they have to travel to the Central Business District. Folks who tend to drive downtown and park in garages are higher-income folks.”
Burns said he and Ald. Ameya Pawar (47th) are meeting with transportation policy experts later this week to determine how to structure the congestion fee and precisely where to impose it.
“In London, it’s 7 a.m.- 6 p.m. Monday through Friday. You’re capturing people going to work. They turn it off in the evening and on weekends and holidays and invest the money in transportation projects. I would not limit it to that. I would look at using that revenue for operating expenses, including paying down pension liabilities,” he said.
As for the sales tax on services, Mayor Rahm Emanuel suggested it himself during the mayoral campaign only to drop the idea after it was derisively branded the “Rahm tax.”
Burns envisions a Chicago-only sales tax on services that would be considerably lower than the general sales tax and confined to “high-end” professional services like attorneys, accountants, lawn care and computer services.
“I would draw the line on services like haircuts and hairdressers. You want to avoid taxing everyday people. We have to keep the city affordable,” Burns said.
“The service sector is the growth area of the economy and our sales tax structure doesn’t reflect those changes. A bunch of economic activity is effectively going untaxed. We have a tax structure set up as if it’s 1955 with lots of factories and manufacturing jobs. We have the inverse of that now.”
Burns said Quinn’s decision to strip municipal revenue sharing from the temporary income tax increase has deprived Chicago of $569 million since 2011.
“I’m sure Gov. Quinn wants to help the city. One of the things that would be very helpful would be to make sure cities get an appropriate share of the income tax increase,” the alderman said.
In 2007, Finance Committee Chairman Edward Burke (14th) proposed a London-style congestion fee to ease traffic jams, reduce air pollution and provide a bonanza of CTA funding, only to be shot down by then-Mayor Richard M. Daley.
At the time, Daley noted that London is a city “built centuries ago” with narrow streets and no alleys.
“I’m just saying it’s completely different. Let’s not rush to that and scare everybody off. We’re trying to keep businesses here and constantly move businesses into the city and relocate businesses,” Daley said then.
“Are you gonna put it on all the aldermen [who] drive down every day? Do you start off with them? . . . Can citizens drive down from [elsewhere in] the city? Are they excluded? . . . How about all the trucks coming downtown? . . . That’s what you have to look at.”
Three years ago, Inspector General Joe Ferguson revived the idea as part of a $3 billion roadmap to financial stability offered to Emanuel.
At the time, Ferguson claimed that imposing a $5 fee on vehicles entering the city’s Central Business District during the morning and evening rush periods could raise $375 million, even after a 20 percent reduction in traffic to 400,000 vehicles-a-day.
Last week, Emanuel said it was “not my priority” to go back to the property tax to save police and fire pension funds that are closer to the brink than the Municipal Employees and Laborers pension funds that a bill on Quinn’s desk is designed to save.
But, he wouldn’t rule it out, either.
What the mayor did rule out — pointedly and specifically — was a city income tax increase, and a commercial lease tax like the one championed by Mayor Harold Washington during the mid-1980’s.
A Circuit Court judge overturned the 6 percent tax lease tax in 1986. The City Council repealed the tax before the city’s appeal was heard.