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Emanuel Begins Selling Property Tax Hike To City Council

By Chuck Sudo in News on Apr 15, 2014 2:30PM

Image via Brookings Institution/YouTube screengrab.

With his pension reform plan only needing Gov. Pat Quinn’s signature to become law, Mayor Rahm Emanuel has turned his attention to rustling support with aldermen for one of the linchpins of the plan with citywide elections a year away.

Emanuel’s plan was passed by the Illinois Legislature without any mention of the five-year, $250 million property tax increase that would help square the laborers’ and municipal workers’ pension funds. Instead, Emanuel placed the property tax hike squarely on the shoulders of City Council. Ald. Ameya Pawar (47th) and Will Burns (4th) realized one of the unintended consequences of the property tax hike would be funneling more money to the city’s tax increment financing districts.” Burns and Pawar approached Emanuel with the idea of declaring an immediate TIF surplus on that revenue and returning it to other city departments strapped for cash like Chicago Public Schools and pension funds. According to the Sun-Times, that would earmark nearly $10 million to CPS and $4.6 million to pension payments. Pawar noted it isn’t much, but it is a good faith gesture to taxpayers fed up with the TIF districts and Emanuel is on board with the plan.

“This is what TIF reform looks like. We can say it’s not a lot of money. I get that. But, we want to make sure we’re building trust with taxpayers.”

But, he said, “You can’t bust TIF [districts] today. It’s just not possible. [Former] Mayor Daley issued $1 billion in bonds for Modern Schools Across Chicago. If you want to get rid of them and create a centralized fund, I’m all for that. But, that’s five or ten years down the road. And you need to put a plan together.”

He added, “It just looks to me like political maneuvering to avoid a tough decision. I understand that, if I vote for a tax increase, it might cost me my job. But voting `no’ just to save your political hide is the wrong reason to be in politics.”

A property tax increase could be unpalatable politically for Quinn’s re-election campaign and for aldermen heading into the 2015 city elections. Quinn has 60 days to act on the bill and has indicated he’ll use every second he has before deciding what he’ll do. Ald. Patrick O’Connor (40th), Emanuel’s floor leader at City Hall, stressed the property tax hike will be a difficult decision among aldermen.

Burns hopes this solution will make the bitter pill easier to swallow with his colleagues.

We want to hold the TIFs harmless, as if this property tax increase didn’t happen," said Burns. "It also takes an issue away from the property tax increase. There’s going to be opposition to the property tax increase. It takes another argument off the table in [terms of] opposition to the property tax increase. The TIF issue has been controversial in the city for the last few years. Being up-front on the front end about this makes sense.”

The proposal was discussed at length on Chicago Tonight Monday.

Another option to generate revenue to make the pension funds flush is a commuter tax proposed by Ald. Bob Fioretti (2nd). Long one of Emanuel's harshest critics, Fioretti said the city has a revenue problem.

"If those people who live outside the city, but work here, paid as little as 1% in their taxes we could generate more than $300 million annually," Fioretti says. "This could help stabilize our pension funds and reduce class size in CPS schools."

The Chicago Teachers Union is on board with Fioretti's commuter tax plan. Opponents of the plan such as Roosevelt University professor Paul Green said the commuter tax plan would set the stage for a city-suburbs struggle. "It's bad enough as they keep fighting for the various business locations as United and other places leave the suburbs and come to Chicago."