Rahm introduces phone tax hike to chip away at pension crisis

The monthly surcharge tacked on to telephone bills in Chicago, both cellphones and land lines, would rise by 56 percent on Sept. 1, under a mayoral plan proposed Wednesday to chip away at Chicago’s $20 billion pension crisis.

Mayor Rahm Emanuel made a promise to Gov. Pat Quinn that he would steer clear of the property tax to meet the city’s new obligations to put the Municipal Employees and Laborers pension funds on the road to financial health.

The promise persuaded Quinn to sign a bill increasing employee contributions by 29 percent and reducing employee benefits to save the two funds.

On Wednesday, Emanuel wasted no time in honoring the promise by substituting the phone tax for the $50 million property tax he originally planned.

The ordinance was cosponsored by 36 of Chicago’s 50 aldermen. That’s how eager they all are to avoid a property tax increase eight months before the election.

Beginning Sept. 1, the ordinance would increase the monthly surcharge tacked on to phone bills by 56 percent per line, from $2.50 currently to $3.90. That’s the maximum increase recently authorized by the Illinois General Assembly. A 9 percent increase in the tax on pre-paid phones would take effect Oct. 1.

The $52 million will be used to “fully fund” Chicago’s 911 emergency center and the Office of Emergency Management and Communications that runs it, thereby freeing up $50 million “to be contributed for the first payment” to reform the Municipal Employees and Laborers pension funds, officials said.

On Wednesday, Emanuel denied that the phone tax was part of a “shell game” to get past the Nov. 4 gubernatorial election and the Feb. 24 city election for mayor and aldermen, then sock it to taxpayers.

“We’ve introduced this $1.40 addition as a way to avoid increasing property taxes and providing the time so we could search for other revenues,” the mayor said.