State Budget Solutions, along with other government watchdogs, has been sounding the alarm for years that Chicago's fiscal day of reckoning is drawing near. Unfortunately, that day is now here -- and 2015 is the year Chicago's elected officials will finally have to confront the cold, hard fiscal truth. Mayor Rahm Emanuel has often lamented the mess his predecessors left him. But over his last four years in office, the mayor has done very little to solve the problem.
During his tenure, Emmanuel has increased overall spending, without any clear focus on results. Meanwhile, the city has continued to write more IOUs for its pensions and other forms of debt. Despite winning re-election this year with boasts of holding the line on taxes, the mayor now advocates Chicago's largest-ever hike in property taxes.
One might think a partial solution would include cutting extraneous services to redirect tax dollars to pensions. Not in Chicago! The mayor is again relying heavily on more tax revenues - specifically through a massive $600 million property tax increase, coupled with numerous other revenue-enhancers. Meanwhile, the city has not thoroughly reviewed its current spending, nor has it tried outcomes-based budgeting.
In addition to his emphasis on taxes, the mayor is counting on state lawmakers to approve his request to extend timelines for repaying police and fire pensions by fifteen years. If this does not occur, Chicago will have to cough up another $500 million for those pension funds in the years 2015 and 2016. And this proposal fails to address the school district's current fiscal deficit or its $10 billion pension hole.
The biggest property tax hike in Chicago history will not even bring in the revenue the mayor assumes. Instead, more and more residents and businesses will flee the city. The saddest thing is that none of the tax increases will help fund improved public services - instead they will just go towards a still-underfunded pension system and various old debts.
Chicago got into this mess largely by shortchanging its pension funds by more than $7 billion, and using those dollars for other, short-term uses. Now Mayor Emanuel, despite a nearly $600 million property tax hike, wants to further weaken the city's pension funds by delaying payments another fifteen years.
It is time for the mayor to show real leadership and strongly advocate meaningful budget and pension reforms.
Bob Williams is president of State Budget Solutions, a national organization focused on state and local governance. Senior policy fellow Sarah Curry co-authored this article.
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