BUDGET GETS BACKING, BUT...
Civic Federation has concerns over paying for police hiring, ‘ structural deficit,’ long- term pension funding plan
Chicago is in “much better shape” than it was when Mayor Rahm Emanuel took office five years ago, but it’s “not out of the woods yet,” the Civic Federation warned Tuesday.
In a 97- page analysis, the taxpayers’ watchdog group endorsed Emanuel’s proposed $ 8.2 billion budget as “relatively good news” for Chicago taxpayers.
That’s because it holds the line on general tax increases, confronts the city’s $ 30 billion pension crisis and makes “significant improvements” on the bad financial habits that masked the true cost of government and got the city into this mess.
They include “scoop- and- toss” borrowing that saddles future generations with debt and borrowing money to pay legal settlements and judgments against the city.
But Civic Federation Laurence Msall said he has lingering concerns.
Although permanent funding sources have now been identified for all four city employee pension funds, Msall noted that reforms and revenues tied to deals that saved the Laborers and Municipal Employees pension funds still need approval from the Illinois General Assembly.
Msall said he also has concerns about the “future cost and sustainability” of Emanuel’s plan to hire 970 additional police officers over the next two years over and above the number of officers needed to fill hundreds of vacancies and keep pace with a surge of retirements tied to the expiring offer of free health care for officers who retire at age 55.
Other lingering concerns surround: Chicago’s “continued structural deficit” and “relatively high debt burden”; a “lack of detail” surrounding a long- term pension funding plan and the “financial uncertainty” in Springfield tied to the marathon budget impasse and a socalled “lock- box” amendment that would declare transportation funds off limits for other purposes.
“Overall, the Civic Federation finds that the city of Chicago is in much better shape than it was just a few years ago. But there remains a great deal of work that has to be done,” Msall said.
“One of the largest concerns we have is regarding the dramatic increase in police staffing and how that will be paid for going forward. The only revenue that has been identified for that is the one- time revenue source of the TIF surplus. The city’s continued structural deficit, which this administration has effectively reduced by 80 percent, still exists. Chicago still has a very high debt burden. That is going to continue under this budget . . . [ And] we’re still using scoopandtoss. It’s a balancing act. There’s just so many tax increases
“OVERALL, THE CIVIC FEDERATION FINDS THAT THE CITY OF CHICAGO IS IN MUCH BETTER SHAPE THAN ITWAS JUST A FEW YEARS AGO. BUT THERE REMAINS A GREAT DEAL OF WORK THAT HAS TO BE DONE.’’ LAURENCE MSALL, president of the Civic Federation
residents can bear.”
Testifying at the one and only public hearing on the budget, Msall embraced the mayor’s plan to slap a 7- cent tax on paper and plastic bags.
“It is beneficial to the environment. And it is a tax that can easily be avoided by citizens who seek to use their own recyclable bags,” Msall told aldermen.
But Msall urged the mayor and aldermen to re- evaluate the use of tax- increment financing funds beyond the one- time surplus Emanuel used to deliver the $ 87.8 million the Chicago Public Schools needed to avert another teachers strike.
The Civic Federation further recommended that Emanuel re- examine a $ 21 million property tax rebate implemented to soften the blow of the largest property tax increase in Chicago history and develop a longterm financial plan for both city operations and employee pension funds.
“Yes, we’ve identified some revenue sources that will carry us for the first five years, hopefully. But we need to be examining whether that money is sufficient to stabilize those funds each year and how the city will pay for it once the ramp of five years has ended,” Msall said.
During his budget address to the City Council, Emanuel talked of inheriting a city “on the financial brink” five years ago and putting it “back on solid ground” by confronting pension challenges that had been festering for decades.
Chicago taxpayers have paid a heavy price for easing the city’s $ 30 billion pension crisis.
They have been hit with $ 838 million in property tax increases for police, fire and teacher pensions; a 29.5 percent tax onwater and sewer bills to save the Municipal Employees pension fund; and a 56 percent increase in the monthly tax on telephone bills — cellphones and land lines — for the Laborers Pension fund.