After three hours of grilling Budget Director Alex Holt on the timeliness and necessity of Mayor Rahm Emanuel’s proposed $544 million property tax increase, the Committee on Finance approved the plan in a divided 17-10 roll call vote.
Citing a need for “further modifications”, Chairman Ed Burke held the 2016 Revenue Ordinance, a laundry lists of new taxes and fees, like the Mayor’s proposed $9.50 a month garbage fee, changes to the cloud tax, building permit fees, and rideshare and taxi fees. Burke scheduled an early morning meeting at 9:15 a.m. today, so the committee can take action on those items in time for the 10am full City Council meeting. [Our review of revenue ordinance here.]
The mayor’s phased-in property tax increase, which the committee approved as a package vote, starts a $318 million supplemental levy increase for 2015, with an additional $109 million in 2016, $53 million in 2017, and $63 million in 2018. The additional revenue will be committed to the city’s police and ire pension payments, with the annual fee structure based on the assumption that Gov. Bruce Rauner will approve SB 777, the Mayor’s legislation to reduce the annual payments by adding another 15 years to the payment schedule.
Yes Votes: Alderman Pat Dowell (3), Gregory Mitchell (7), Michelle Harris (8), Anthony Beale (9), Danny Solis (25), Patrick Daley Thompson (11), George Cardenas (12), Marty Quinn (13), Matt O’Shea (19), Rick Munoz (22), Ariel Reboyras (30), Carrie Austin (34), Marge Laurino (39), Pat O’Connor (40), Joe Moore (49).
[Freshman Ald. Gilbert Villegas (36), David Moore (17), Carlos Ramirez Rosa (35), and Michael Scott, Jr. (24) were present, but since they aren’t members of the committee, they couldn’t vote].
Some of those “nay” votes were foreseeable. Progressive Caucus aldermen, who tend to be openly critical of the mayor, Scott Waguespack (32), Leslie Hairston (5), John Arena (45), and Nick Sposato (38) voted against the property tax increase. They were joined by Brendan Reilly (42), whose downtown ward would bear the brunt of the property tax increase; Tom Tunney (44), who lamented that high property taxes in his lakefront ward are already contributing to vacant storefronts; Jason Ervin (28), who said voting on a property tax hike before Springfield passed an exemption was “akin to jumping in a pool and not knowing if it is a 9 foot pool or 29 foot pool.” Ald. Harry Osterman (48), Ald. Deb Silverstein (50), and Ald. Roberto Maldonado (26), whose wards all contain heavily residential, middle-class families, also voted against the tax hike.
But despite the divided roll call vote on the most controversial piece of the Mayor’s budget plan, Chairman Burke and the Mayor’s unofficial floor leader, Ald. Pat O’Connor (40), said they’re still confident they have the votes to get the property tax hike and the rest of the Mayor’s nearly $8 billion dollar spending plan through the full City Council.
When asked after the meeting if he was surprised by the divided vote, Chairman Burke replied, “No, I think what you’ve seen is an expression of reluctance on the part of the aldermen that represent the Gold Coast, the lakefront areas where this is going to have the biggest impact.”
Ald. O’Connor attributed the number of no votes to the “committee’s makeup”. “Some people are being responsible in addressing the issues that are out there. And others feel that they want to duck it…These are tough times, and people expect that it’s going to be different than the days when you can pitch shutouts when everything is going swimmingly.”
Dependence On Springfield Action
But over the course of the three hour Finance Committee meeting, it became clear aldermen have little faith in Springfield, and even less faith in how CPS handles its money.
“Springfield hasn’t figured anything out, and so to try and push this [property tax increase], when they can’t even do their jobs, to rely on them, doesn’t make sense,” Ald. Hairston told Holt, after grilling her about the status of the Mayor’s homestead exemption plan.
That property tax relief plan, which passed out of a Illnois House Committee in Springfield around the same time as the Finance Meeting, would double the general homestead property tax exemption, currently $7,000 for Cook County and $6,000 for the downstate counties. If approved, any county would have the option to increase the exemption up to $14,000, the amount Mayor Emanuel needs to fulfill the promise he made during his budget address that homeowners whose’ homes are valued at $250,000 and under won’t see any increases to their property tax bills mailed out in August.
Hairston was especially concerned the Mayor would come back to the Council in a couple years to ask for even more tax increases to fix the city’s budget problems. “There is something else that’s going to come up. That does not help us put trust in our government. If you come to us now, please don’t come again,” Ald. Hairston said, suggesting the Mayor do one lump sum property tax increase the first year and get it over with.
Additional CPS Tax Levy
But the property tax increase wasn’t the only item before the Committee that raised a lot of red flags for aldermen. The second most contentious item was a $45 million dollar property tax levy request from the Chicago Board of Education (page 43 of the revenue ordinance).
The “capital improvement tax levy” is part of CPS’ overall $2.4 billion dollar property tax levy request for this current school year, and while it has already been approved by the Board of Education, state law requires Council approval within 60 days of notification from the Board. Aldermen called it a blank check.
“We have a big problem with CPS and how they spend their money,” Ald. John Arena (45) said at the meeting. “My concern is that we are authorizing $45 million a year, potentially, going into a black hole.”
“The only thing [CPS has] improved is their offices. I don’t think we should give them a blank check,” Ald. Hairston told reporters after the meeting. “There should be some type of explanation as to how CPS rolls out the capital improvement plans, so that we know what we’re voting on. I would not want to vote on a capital improvement plan that builds charter schools in other neighborhoods.”
“Is there any restrictions on where this money can’t be spent? ” Ald. Tom Tunney(44) asked. Like Ald. Hairston, he voiced concerns about capital project oversight. The 44th is one of the few wards without a TIF fund. And it is common for TIF money to be redirected to local school improvement projects.
Ald. Reilly and Ald. Gilbert Villegas (36) asked if CPS would use that money to pay down debt or additional bonding for capital projects.
The money from the levy, Holt said, would address overcrowding and capital improvements at public schools across the city. She also said that if the City Council authorizes the levy, it would be an annual “permanent increase.” But she wasn’t sure if the levy could be rescinded at a later date. As the concerns piled up, Chairman Burke suggested some “language” be added to the ordinance to address concerns from aldermen.
Another contentious item on the agenda had to do with new fees and rules for taxis and rideshare apps.
The city plans to get rid of the medallion transfer tax because it isn’t bringing in the revenue it once was. According to Business Affairs and Consumer Protection Commissioner Maria Lapacek, there are currently 6,900 active medallions in the City. Each medallion owner pays $1,000 for a two-year license, with cabs that aren’t wheelchair accessible paying an additional $100. That is compared to about 27,000 ride share drivers. Most of them, around 20,000, work for Uber. Uber’s holding company pays the city $10,000 to license their entire fleet, as well as a 20-cent per-trip Ground Transportation Tax and 10-cents per trip for the wheelchair accessibility fund.
Chairman Burke, who had inquired about those numbers, said, “At first blush that simply doesn’t seem fair. Why do we not assess a $500 dollar fee for each of those 20,000 units, like we do for the medallions?”
When Lapacek said that there was a difference between medallion cabs and rideshare drivers who use their own personal cars to pick up passengers. Burke clarified that he’d rather have Uber pay the fee, not the drivers.
The Mayor also included a provision that would let taxicabs implement “surge pricing” for rides acquired through digital apps. But several aldermen raised doubts about the real world application of those changes.
Ald. Beale, one of the biggest critics of rideshare companies, said no one in the cab industry is interested in surge pricing because they don’t have the technology to do that. When Holt corrected him to say that they had sought approval from Springfield to do that a few years back, Ald. Beale said that was beside the point.
“I know you guys like to work on hypotheticals, like in Springfield…So, If it’s raining, if it’s snowing, and I have an app, why am I [as a driver] going to pick somebody on the corner, when I can get surge pricing waiting for an app?”
“Well that’s a hypothetical, you don’t know if your app is ever going to…” Lapacek responded, but was cut off by Beale. “Well, you guys are saying hypothetically Springfield is going to pass a reform for us. So is it not okay for me to ask for a hypothetical, and okay for you all to operate on a hypothetical?”
“If I can get three times my salary [with the surge pricing] I’m gonna wait.”