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Emanuel won’t rule out property tax hike to fill CPS budget hole

Mayor Rahm Emanuel announced changes parking meter contract thwill he claims will save city billidollars. | Rich Hein~Sun-Times

Mayor Rahm Emanuel announced changes to the parking meter contract that will he claims will save the city a billion dollars. | Rich Hein~Sun-Times

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Updated: July 13, 2013 6:35AM

Chicago homeowners and businesses have grown accustomed to up-to-the-limit school property tax increases, but they might be forced to endure even more pain to bail the Chicago Public Schools out of a $1 billion shortfall.

On Tuesday, Mayor Rahm Emanuel refused to rule out a worst-case scenario that his handpicked school team has already discussed with legislative leaders: asking the Illinois General Assembly to lift the property tax cap to pave the way for an even bigger increase than would otherwise be allowed.

Emanuel said he would turn first to yet another round of administrative cuts, now that the Legislature has adjourned without easing pension payments bearing down on CPS.

But, after that, he’s making no promises to steer clear of a property tax increase, which many view as the third-rail of politics.

“What we have to do is make the tough choices that they have done. And when I [say] tough choices, they made a lot of reforms in the central office so we could provide every child next year with a full day of kindergarten, which we never did as a city. We were one of the last few big cities in America that did not have a full day of kindergarten,” the mayor said.

“We’re gonna have to continue to make tough choices. We’ve done about $650 million to $750 million worth of savings in administrative areas, and we’re gonna continue to do that to protect the investments we’re making in the classroom.”

Last year — for the second year in a row — CPS used the full property tax cap, a 1.5 percent increase that generated an additional $41 million the district wanted to put toward paying for initiatives like the longer school day. At the time, the district faced a deficit of up to $700 million and said that state and federal revenues were down some $114 million and that the increase would cost the average homeowner $28 per year. The cap currently in place limits annual property tax increases to 5 percent or the rate of inflation, whichever is less. Last year, it was less.

School Board President David Vitale said Tuesday the district was talking with legislators about finding help for the cash-strapped district that, despite shuttering 48 schools this month, still faces a giant deficit.

“We’ve been talking in Springfield about additional revenue opportunities for the district,” he said. “That’s as far as I’ll go.”

Whether or not the state, also in a financial hole, will budge, “it’s our responsibility to ask,” Vitale said.

Meanwhile, CPS principals received drafts of their budgets for the 2013-14 school year, and many find themselves budgeting with less money than before.

“It’s big and it’s painful but we will find a way to close it, but it will have some impact on some of the schools,” Vitale said of the budget hole. “That’s part of the solution, unfortunately.”

The mayor was asked point-blank whether he was considering not only another up-to-the-limit property tax increase for schools, but also asking the Illinois General Assembly to allow for an even bigger increase.

“We’re not there yet. . . . The first and foremost activity since Day One . . . has been in and around making sure we make all of the administrative savings so we can do the type of investments we need to do” in the classroom, the mayor said.

“That’s where our priority is and I think we’re gonna make the tough calls, but I will say this: It’s gonna require other people being a partner in our efforts to find the type of savings that are necessary.”

The mayor was reminded that administrative costs are not a bottomless pit. Once he’s made all of those cuts, then what?

“We’re gonna continue to make the type of changes and they’re gonna be very difficult. . . . It’s a preliminary point” to discuss specifics, he said.

Last week, Emanuel defended his failed attempt to ease pension payments and did not rule out increases in property taxes or class sizes after coming up empty-handed.

The bill rejected by the General Assembly would have extended for two more years a so-called pension “holiday” that allowed CPS to pay just $196 million into the teachers retirement fund this year.

Those annual payments are scheduled to balloon to more than $612 million next year. But the failed bill would have eased those obligations — to $350 million next year and $500 million in 2015.

The decision to seek a pension holiday appeared to run contrary to Emanuel’s demand for reduced retirement benefits, instead of compounding the problem by postponing pension payments.

But the mayor doesn’t view it that way.

“Paying $500 million or paying $350 million a year is not a holiday by any stretch of the imagination. And it means that if you’re paying that, you’re not doing other things,” the mayor said.

“This was to provide us two years so Springfield could actually resolve the pension issues, give us a blueprint, so we could actually get that type of relief. But it had a step-up from where we are today, one year, and the second year a further step-up. So, I don’t consider that a holiday. I consider that making sure we have the time to do the hard work.”

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