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| HITTING THE DOOR SOON |
Attention Dear Chicago Alderman, please be careful what you vote for. The pension fix will have long-term implications for our city and may even be irreversible. Most of you hold your office because of a sincere devotion to what Chicago stands for and because you actually give a damn. The guy that is proposing some of this stuff cares only about packaging a quick fix and hitting the door. He cares not about the lasting effect. Keep that in mind.
Mayor Rahm Emanuel's proposed pension deal with city unions representing about half of its workforce would cost property owners much more than the city initially admitted, with the city's gross property tax levy destined to rise almost a third by 2020 if the deal is implemented as proposed, city officials now are conceding.
And the proposed agreement does not include the potential cost of deals that have yet to be struck covering city police, firefighters and Chicago Public Schools teachers — or the cost of a recently finalized pact for Chicago Park District workers.
Add all of that together and Chicago's home, office and retail owners could be on the hook to pay hundreds of millions of dollars a year in higher taxes, with at least some impact on the city's business climate.
Related:
The deal announced last night covers about 30 unions which represent non-sworn city personnel, mostly office workers and building trades workers. Some unions, especially those representing laborers and construction workers, have tacitly signed on to the proposal, while others led by the American Federation of State, County and Municipal Employees have vowed to do what they can to block a needed approval in the Illinois General Assembly.
One little piece of good news for Mr. Emanuel: Though the Chicago Teachers Union, in a press alert today, termed the deal a "heist," I have confirmed that the Service Employees International Union will be neutral on the bill.
But even as the unions gripe about reduced benefits their members would be forced to swallow, taxpayers, too, would be really clobbered.
Crain's and other outlets reported this morning that the city's property tax levy would go up $250 million over the next five years to pay for the deal. The figure came from briefings by city officials, officials who stuck with that figure even when repeatedly challenged.
But this morning, citing "confusion" amid a flurry of announcements and briefings, a city spokeswoman conceded that, in fact, the tax hike will generate $750 million in revenue over five years.
Specifically, the city now says, the city's property tax levy will rise $50 million in 2015, and keep rising by an additional $50 million a year over the following four years. Thus, the city's gross property levy will be $50 million higher in fiscal 2015 than it is now, $100 million higher than now in 2016, and so forth, reaching a level $250 million higher than now in five years.
Thus, over the five years cumulatively, the city would pull in $750 million more for worker pensions than now. That's somewhat different from the $250 million tax hike over five years that was widely reported today.
For an average household, that works out to an extra $250 per year by 2020.
CHECKING THE MATH
The new, higher numbers are confirmed by Laurence Msall, president of the watchdog Civic Federation.
"They basically are proposing to increase the property tax level $50 million a year for five years, until they reach the level" demanded by pension-system actuaries. That means, Mr. Msall says, that the city's gross property-tax levy will grow from $801 million this year to $1.051 billion in five years.
A city spokeswoman declined to comment immediately on the potential business impact of hiking taxes that much for these unions, police, firefighters and teachers. The recently agreed-to Park District deal will force it to contribute an additional $50 million a year by 2019, probably all or most of it from property taxes.
In fairness to Mr. Emanuel, taxpayers ought to keep two things in mind.
One, the city's business climate already has suffered from credit downgrades of city debt. Those downgrades by Moody's Investors Service and other firms were based on the city's long-standing failure to deal with its pension woes, a problem that long predates Mr. Emanuel.
Second, the city's share of the total property-tax bill is only about a quarter. Most of the tab comes from Chicago Public Schools, and we don't know yet what it's going to do about its pension problems.
But it's not too early to say this: Clearly a day of reckoning has arrived for Chicago property owners.
1:30 P.M. UPDATE
In an appearance at the 1871 tech startup incubator, Mr. Emanuel argued that the tax hike would have been far larger if the entire load was on taxpayers, rather than being shared with workers. “Workers (will) contribute $300 a year more to their pensions. The homeowner contributes $50 a year more.”
The latter figure, though will increase by $50 a year, hitting $250 a year in 2020.
Mr. Emanuel also argued that the measure will pass constitutional test. “Nobody's benefits gets cut. It continues to grow, but not at the rate it once did.”
My thanks to colleague John Pletz for catching the press conference and the mayor's remarks.
Meanwhile, I hear Mr. Emanuel is seeking to fast track action in Springfield, with a vote maybe yet this week. Keep an eye onS.B. 1922, now in the House and being sponsored by Speaker Michael Madigan, who could amend it at any time.
Follow Greg on Twitter at @GregHinz.
Mayors office is just a stepping stone. He is a DC type.
ReplyDeleteMatt cares.
ReplyDeleteEither file for bankruptcy and save the city or raise taxes and pitch Chicago to hell. Our leaders have a choice. They won't have that choice for long.
ReplyDeleteDisaster
ReplyDeleteSome have called for the city to file bankruptcy. I see two obstacles to this:
ReplyDelete1. The city has been spending like a drunken sailor for years. They seem to have plenty of money for everything but pension obligations, and
2. The city has maintained an artificially-low property tax rate for many years, apparently to ensure free-flowing campaign contributions and the re-election of public officials. In many cases, the city rate is half that of nearby suburbs. It would not be unreasonable to raise property tax rates to meet financial obligations.
The biggest problem with pensions is that they have grown beyond reasonable for most of the "real world" citizenry. Through the DemocRATS they have been in collusion with the public sector unions at OUR expense. Who do I mean by OUR? That would be us the actual tax PAYERS. We are being forced to work harder, longer, with typically far less of the perks you govt workers get. Retire at 48? OR at 50? OR even 58 is literally IMPOSSIBLE for us . You see WE pay YOUR salaries. WE pay YOUR time off, personal days, superior health care etc...LOOK at the stats. You are living high off the hog. You have newer, better, bigger cars, homes, belongings than MOST of the citizens who are paying your freight. It cannot continue. If a huge liberal like RAhm wont (or most likely can't) pay your bloated benefits packages neither can we. So stop complaining. I want to vomit whenever I hear your types start their pity party. Cry me a river. While you are puttering around Home Depot at 11:30 AM or planning your next fishing trip, the rest of us are hard at work paying your ridiculous retirement package, and wondering if we will EVER be able to retire. The system is rigged in your favor and yet you still complain.
ReplyDeleteHuber @CTPF needs to weigh in on this along with the trustees. Capping pensions at say 70k a good start.
ReplyDeleteMany of these inflated pensions pure scams. I can live with a slight property tax increase. Moreover, union leaders keept heir jobs by talking tough. Pay not attention to CTU leadership and c'mon can you really take a guy by the name of Sharkey serious.
no wonder.Emanuel on his moms side is related to Julius and Ethel Rosenberg,does this ring a bell with anyone out there????
ReplyDeleteNot to worry all of the 19th warders will be sheep as they have for the last 40 years and vote fro the Dems
ReplyDeleteFIREMEN DESERVE THE MOST MONEY.
ReplyDeleteActually, Firemen deserve the biggest cut. Should be paid for working hours only. No right to sleep on the Clock. Firemen have been scamming, stealing, and kicking back to Chicago and Crook County Democrat Politicians for Decades.
DeleteScam. Raise the Contribution Rate for new hirees, and raise the Minimum Age to begin to collect, to about 57 inbstead of 50. Shore up the rest by charging more for Admission to all Chicago Venues. navy Pier, Beaches, Museums, etc. No Chicago Drivers License, you pay higher Admission fees.
ReplyDeleteEstablish Code Enforcement Officers like the Burbs have, and you get fined for not maintaining your property, illegal dumping, failure to keep sidewalks clear of garbage and snow, failure to keep your dog from barking excessively, etc. etc. etc. Democrats are just to Lazy to institute anything, instead they take the easy way out, they STEAL YOUR Money.