Rahm Wants A Utility Tax Hike To Help Cover City Pensions
By Stephen Gossett in News on Aug 3, 2016 7:44PM
Photo credit: Scott Olson/Getty Images
Stop us if you think you’ve heard this one before. Mayor Rahm Emanuel told aldermen on Wednesday that the city will impose a tax increase in order to bolster underfunded pensions. This one comes in the form of a utility-tax raise, about seven percent, that will help make solvent the Municipal Employees’ Annuity and Benefit Fund.
Ald. Ameya Pawar (47th Ward), one of the council members informed of the plan on Wednesday, told reporters that homeowners’ water and sewer bills would increase an average of $50 for three years and $200 in year four, according to reports. The municipal workers’ pension fund carries more than $18 million in unfunded obligations (the highest shortfall of the city's four pension funds) and was in danger of going bankrupt—a scenario that could cost up to an extra $1 billion per year, according to the Sun Times. Chicago saw its credit rating devalued to junk status in May of last year, prompted primarily by the unfunded pension crisis.
The added tax must be approved by the City Council before being implemented, but it does not require the approval of the state legislature.
The news comes short on the heels of homeowners receiving the first (and stiffest) leg of a record $588 million property-tax increase. (The City Council last month passed a modest rebate program to help alleviate the pinch.) Aldermen were reportedly reluctant to consider additional property taxes so soon afterward—which is probably a smart impulse. “There’s a lit of reticence to back to that well.” Pawar said, according to the Sun Times.
Emanuel is expected to detail more specifics at an investor conference later on Wednesday.