Read Rahm’s lips: No new taxes in next city budget
BY FRAN SPIELMAN City Hall Reporter email@example.com September 28, 2012 9:10PM
Mayor Rahm Emanuel
Updated: November 1, 2012 6:40AM
Mayor Rahm Emanuel says he’s decided to hold the line on taxes, fines and fees in his 2013 budget and count on rebounding revenues, continued cost-cutting and dunning deadbeats to erase a revised $298 million shortfall.
“Through the reforms and cuts and efficiencies, we’ll be able to have a budget that’s balanced without any taxes, fines or fees that we control. The only tax that will be dealt with is the employee head tax—and that will be eliminated,” Emanuel said.
“We’re in a different place than we were in 2011. Health care costs have come down north of $100 million. We really, as a city, never went after corporations and dead-beats who owed the city money. We’ve improved collections. And revenue is up from hotel and sales [and real property transfer] taxes.”
The mayor refused to say what city services would be cut and how many, if any, employees would be laid off. Nor would he discuss his plans for police hiring in 2013.
He would only say, “We made some tough calls before. We’re gonna make tough calls in this budget. ... You’re gonna see more of it. We’re gonna continue to do managed competition [between city employees and private contractors]. Through consolidations and reforms, the path we’re on we’re gonna stay on and keep driving.”
Civic Federation President Laurence Msall said the mayor’s surprise decision to hold the line on taxes “reflects the financial challenge most Chicagoans face in the struggle to maintain their homes in the face of declining property values.”
Msall further noted that Chicago is “already at the high end” of most taxes and fees with little room to maneuver.
“The Civic Federation is pleased that the focus is on right-sizing city government to match up with existing revenues,” Msall said.
“But, there will have to be significant cuts in expenditures to balance the budget without one-time gimmicks or borrowing. And there are very large structural challenges, including the pensions, which need action in Springfield to stabilize this government.”
Slowly but surely, Emanuel has taken tax increases off the table.
He started by ruling out a property tax increase after signing off on a $41 million increase for Chicago Public Schools with the prospect of three more years of up-to-the-limit property tax hikes to finance the new teachers contract.
A sales tax increase was also a no-no after the, soon-to-be-fully repealed sales tax hike that sealed the fate of former County Board President Todd Stroger.
Earlier this week, the mayor declared the gas tax and amusement tax off limits, but kept alive an increase in the cigarette tax provided the money was spent on improving children’s health. He also promised to kill the hated head tax six months earlier than planned.
Now, the cigarette tax has also been snuffed out — along with all other taxes, fines and fees.
Although Emanuel refused to discuss the hot-button issue of police hiring amid a 25 spike in homicides, sources said he intends to hire roughly 500 new officers in 2013 — 125 per quarter. That’s barely enough to keep pace with attrition in a force that stands at 11,799 after a three-year hiring slowdown.
Fraternal Order of Police President Mike Shields said he’s disappointed that Emanuel has chosen to keep his hands out of taxpayers’ pockets at the expense of public safety.
“We need to hire more police officers, regardless of where the revenue comes from,” he said.
“The 2012 budget was, without question, balanced on the back of public safety by eliminating nearly 1,400 police vacancies. We can’t have that in 2013. Holding the line on the number of officers is going to translate into an even greater increase in homicides next year. And it’s already higher than any other city.”
By holding the line on taxes, fines and fees, Emanuel is deviating from the script that calls for Chicago mayors to stick it to taxpayers in the first two years after an election to build up enough of a cushion to coast through the final two years without alienating voters before they go to the polls again.
Former Mayor Richard M. Daley followed that playbook to the letter for 22 years. Emanuel did the same last year. But, he has apparently decided to stop there after locking in inflationary increases in two key areas that will now kick in automatically.
The mayor’s first budget was balanced with $220 million in taxes, fines and fees and 535 layoffs.
It doubled water and sewer rates over the next four years, locked in annual cost-of-living increases after that and raised city sticker fees by $10-to-$15, also followed by annual inflationary increases.
It raised the city’s hotel tax from 3.5 percent to 4.5 percent, hiked a laundry list of criminal, nuisance and parking fines and imposed a $2-a-weekday hike in parking taxes billed as a “congestion fee,” even though it is confined neither to rush periods nor congested downtown and River North areas.
Aldermen also signed off on the mayor’s plan to close three district police stations and save $82 million by eliminating the charade of budgeting police vacancies with no intention of hiring those officers.
This year, a shortfall that’s less than half the size of the budget abyss projected a year ago has several major unknowns.
Police and fire cuts that could be substantial must await the outcome of contract talks with those unions. That will force Emanuel to include a placeholder pay raise for police officers, firefighters and paramedics that may or may not be big enough.
If the raise ultimately awarded — either at the bargaining table or by an arbitrator — is bigger than the money allocated, a supplemental appropriation and, possibly a tax increase, may be needed some time next year.
By holding the line on new revenue for now, Emanuel is also holding open the possibility that a massive tax increase of some kind will be needed to solve the city’s pension crisis — even if union leaders ultimately agree to pension reforms.
Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, is scheduled to hold a day-long hearing on the pension crisis on Monday, featuring testimony from the five city employee pension funds.
“You can’t fix this with money alone. That would forestall a financial Armageddon. But, the model is not sustainable. There are structural problems that must be addressed,” O’Connor said.
Holding the line on taxes, fines and fees in Year Two is not the only way Emanuel has altered the traditional budget script.
While Daley held a series of public hearings on the preliminary budget — and sometimes subjected himself to catcalls and tough questioning — Emanuel has chosen to avoid the abuse in favor of meeting with small groups of taxpayers across the city.
The friendlier audiences have kept Emanuel firmly in control — which is precisely the way he likes it.