(as published in the October 7-13 Chicago Defender)
When Chicago Mayor Rahm Emanuel announced that he would be proposing over a $588 million property tax increase in the city of Chicago, a collective groan was heard across the neighborhoods. While many knew that the day of pension reckoning was finally upon us, the shock of actually hearing Emanuel deliver the message was palpable. While he discussed a wide range of services savings and cuts, most Chicagoans fixated on the $500 million property tax increase.
A $588 million increase that equates to an approximate 58.1% increase over what Chicagoans had been paying. That increased property tax assessment could potentially have a dire effect on the Black community whose property values are rapidly increasing, while their incomes are not. Combine that with the fact that the Black community has not fully recovered as quickly as others from the recession, while struggling to hold on to their homes. At the same time, White developers are buying every bit of property they can get their hands in anticipation of the Obama library on the South Side, and Silicon Valley 2.0 which is being built on the near West Side.
In an effort to provide some relief from the enormous tax increase, and prevent some of those things from happening, Mayor Emmanuel proposed an exemption for homes that are valued under $250,000. The move was hailed as an attempt to ensure that the cities most vulnerable homeowners would be spared the massive increase that would eventually drive them from their homes and communities, a fact that members of the Chicago Aldermanic Black Caucus applaud.
“I believe it will encourage investment, while lessening the impact on people with less income,” said 27th Ward Alderman Walter Burnett, Jr. who represents a portion of the West Side and West Loop, where high-income development is booming.
But to get the necessary relief, the mayor’s budget relies on approval from a dysfunctional Springfield that has not been able to pass its own budget. As a matter of fact the state of Illinois has been operating without a budget for the past five months with no solution in the foreseeable future. In spite of that, Burnett remains optimistic that “Governor Rauner will do the right thing, help the city of Chicago, and low income residents.”
While all parties would agree that the city of Chicago is on the brink of financial peril all parties do not agree on the solution, the most important of which is Governor Rauner, who has called for a statewide property tax freeze. Combine that with the fact that when Governor Rauner addressed the Chicago City Council back in July, he made it perfectly clear that if Chicago expected to get any relief from the state he expected that they would make concessions in Springfield. Regardless of Rauner’s ominous statements, Springfield insiders remain optimistic that they will be able to pass the property tax exemption and get Governor Rauner to sign it.
Assistant Majority Leader Art Turner, Jr. (D-Chicago) is one of those insiders. “Most of the constituents I represent would benefit from the exemption and I am for it. It’s progressive which is something that we should look at on the state level as well. Those who can pay more should,” Turner states.
“The City of Chicago is the largest economic engine in the state, and while I think it will be tougher to get through Springfield, I am confident that the Governor understands how important Chicago is to the rest of the state. Mayor Emanuel has taken the first step in fixing the situation, but because he and the Governor have a working relationship and talk regularly, I think we will get a bill passed and signed,” Turner explained.
Turner’s optimism is based on Emanuel and Rauner’s relationship, because Rauner’s relationship with Democratic leaders in Springfield is tense to say the least. Governor Rauner and Illinois Speaker of the House Mike Madigan are currently locked in a budget fight to the death over who will control Springfield, and neither seems willing to compromise. But if the city of Chicago hopes to plug its budget holes and pension problems, it must rely upon cooperation with legislators, leaders and the Governor to get it done. But so far no party has shown any willingness to give, which is what makes Emanuel’s role in the situation so crucial.
Mayor Emanuel has stated, we must fix the “structural deficit” and we cannot “kick the can down the road any longer” as he has so often accused the previous administration of. And, while he is careful not to blame the Daley administration by name, one only need listen to Emanuel talk about the city’s financial situation to know that he will not wear the jacket for the massive property tax increase alone.
One thing is clear, if the City of Chicago wants to keep growing, it must tackle the financial woes created by years of underfunding police and fire pensions. The intentional underfunding of police and fire pensions have reduced Chicago’s bond ratings to junk status, driving the cost of borrowing money to unmanageable levels. But with the property tax increase, Emanuel and the Chicago City Council still have to convince voters why they should accept such a large property tax with very few to no new services.
To combat the perception, Emanuel has also proposed using a rare state law that allows the city to levy a $45 million school improvement tax to ease the tensions associated with such a large increase. Emanuel has also tried to make the increase more palatable by phasing it in over 3 years, with increases being $318 million in 2015, $109 million in 2016, $53 million in 2017, and $63 million in 2018.
But none of that will make a difference if he can’t get Springfield to work together, something they have been unable to do for the last five months. Emanuel needs them to if he hopes to save Chicago from being devoured by its pension obligation.
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