Posts Tagged Mayor Rahm Emanuel

Chicago property tax increase for pension payments (more)

Excerpts from

Mayor Rahm Emanuel told aldermen Tuesday the city must raise property taxes by $543 million to shore up police and firefighter pension funds, or face laying off thousands of firefighters and police officers.

The mayor’s budget plan includes phasing in that $543 million property tax over the next four years, with the bulk of it scheduled for this year. He also proposed a new garbage collection fee, and a bevy of other new taxes and fees, as he aims to eliminate the city’s structural budget deficit, and solve the city’s pension crisis. Emanuel also called for an additional $45 million property tax hike to fund school construction.

If approved by at least 26 aldermen, the mayor’s budget plan would amount to what analysts have called the largest property tax hike in modern Chicago history.

Emanuel called the proposed property tax hike a “last resort” to avoid massive cuts to essential services.

The mayor said, to meet police and firefighter pension obligations through spending cuts alone would mean laying off 2,500 police officers — 20 percent of the current force — and 2,000 firefighters — about 40 percent of the force. The city also would have to close 48 fire stations, reduce trash collection from once a week to twice a month, eliminate recycling services altogether, stop repairing potholes, halt rodent abatement programs, and eliminate graffiti removal.

“In short, if we were to fund our pensions with cuts alone, our city services would become unreliable. Our City would become unlivable. And that would be totally unacceptable,” he said. “We must solve our pension challenge and there are only two options: we can make the damaging cuts that I spelled out and undermine all of the hard work and progress that we made, or we can raise property taxes to meet our obligation to police and firefighters who answer our every call. The bill is due today. And that is the choice that is in front of us. I know where I stand.”

Emanuel’s plan would call for a $318 million increase in the 2015 property tax levy, payable in 2016, followed by a $109 million hike in the 2016 levy, a $53 million increase in the 2017 levy, and a $63 million increase in the 2018 levy. Additionally, the city would authorize a $45 million increase in property taxes in the 2015 levy to fund school construction.

All told, the $588 million in property tax increases would cost the owner of a $250,000 home about $588 more per year.

In addition to the property tax hike, Emanuel called for a $9.50 per month garbage collection fee to raise roughly $60 million a year in new revenue; a 50-cent-per-ride surcharge on taxis and ride-sharing services, to generate close to $50 million; a 15 percent increase in cab fares; authorizing ride-share companies to pick up customers at O’Hare and Midway airports, in exchange for a$5 fee for every dropoff and pickup at the airports and Navy Pier; new taxes on e-cigarettes to bring in $1 million; and an increase in building permit fees to generate another $13 million.

The mayor also stressed he has included $170 million in “savings and reforms,” to cut costs before turning to higher taxes.

Ralph Martire, director of the Center for Tax and Budget Accountability, said he expects some Chicago residents aren’t going to like what they hear in terms of new taxes and fees.

“Folks are certainly going to react negatively to an entire series of tax increases that seem like nickel and diming in some instances – the additional cab fee, the additional garbage fee,” he said.

However, Martire said – especially during former Mayor Richard M. Daley’s tenure – the city has used one-time revenues and borrowing to pay ongoing operating expenses, while police and fire pension debt ballooned without proper payments.

“You know, he [Emanuel] will have to make some distasteful choices. That’s the bad news, and I think the worse news is some of these choices should have been made years ago, possibly even a decade or so ago,” he said.

Martire said drastic steps by the city and the state are needed to get the city’s budget and employee pension systems on solid footing.

However, top Democratic lawmakers and Republican Gov. Bruce Rauner havent’ been able to agree on anything.

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Plan hopes to address Chicago’s police and fire pension system deficit

Excerpts from the

The Illinois House on Saturday approved Mayor Rahm Emanuel’s plan to fix Chicago’s police and fire pension systems, an approach that requires all city revenue from a Chicago casino to be paid into the funds and gives the city more time to restore the funds’ financial health.

Key to Emanuel’s plan: Instead of requiring the city to pay a whopping $549 million more for police and fire pensions next year, payments would increase by just $330 million. That would provide the mayor some breathing room as he tries to put together a 2016 budget this fall.

The catch, of course, is that Chicago does not yet have a casino. Backers of gambling expansion are trying to put together a deal that would bring one to Chicago and other cities as well as provide slot machines for horse racing tracks, but that is unlikely to be accomplished before lawmakers go home for the summer following Sunday’s scheduled adjournment.

The Chicago Tribune on Wednesday reported Emanuel’s pension approach: pay less upfront, take longer to pay off the debt and get some of the money to cover what the city owes from a Chicago casino. The firefighters’ union was the holdout but was on board with the plan that surfaced at the Capitol on Friday.

The 65-45 vote came after more than a hour of debate Saturday. The plan later cleared a Senate committee and is poised to be sent to Gov. Bruce Rauner on Sunday, the final scheduled day of the spring session.

House Republicans opposed the measure, saying putting off pension payments helped create the funding problem in the first place. They questioned the wisdom of relying on money from a Chicago casino that has yet to be approved by lawmakers and is unlikely to pass before lawmakers adjourn on Sunday.

During a Friday night hearing, Deputy Mayor Steve Koch said lawmakers helped create the problem when they voted to accelerate the payment schedule several years ago. If a casino doesn’t materialize, Koch said, the city will raise money some other way.”We’ve been working and will continue to work hard in order to see if a casino could be done for the city,” Koch said. “If it isn’t, then we will fund these plans through the same way we have been working on funding all our other obligations, through efficiency in government, cost savings and other forms of revenue we can raise.”

The city’s pension debt has hurt its credit rating, which in turn has cost taxpayers tens of millions of dollars in extra borrowing costs.

More details on Emanuel’s plan:

— The city would continue to pay more into the funds each year until 2020, when the overall increase would hit $524 million. That’s $130 million less than required that year under current state law.

— After 2020, payments likely would level off, with the requirement that the city pay enough into the two funds each year to make sure it has 90 percent of what’s needed to cover all liabilities by 2055. Under current law, the city must reach 90 percent funding by 2040.

— Even if the city got its long-coveted casino, it might not bring in enough money to cover the police and fire pension tab. Emanuel and aldermen would have to raise taxes. The mayor backs a broadening of the state sales tax to include some services, and he still might have to consider a politically unpopular property tax increase.

— The legislation also includes provisions to ensure that retiring police officers and firefighters who are at least 50 years old and served for 20 years or more get annual benefits equal to 125 percent of the amount earned by people living at the poverty level, as determined by the federal government.

— The measure clarifies that the police and fire pension funds can take the city to court if it fails to make the payments.

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Chicago hiring policy creates controversy (more)

An editorial from PoliticsEarly&Often about the current hiring initiative for Chicago Public School graduates applying for the fire department:

The City of Chicago is gearing up to enforce its Chicago Public Schools preference policy, which would give CPS graduates preferential standing among other firefighter applicants, providing an unfair advantage above students enrolled in private or religious schools. While Mayor Rahm Emanuel apparently seeks to encourage more opportunity for CPS high school graduates to serve in the Chicago Fire Department, it seems like a shortsighted approach to creating educational stability and opportunities for Chicago’s youth.

With dwindling poll numbers as it relates to his education policies, it appears the mayor yet again has not given much thought towards how to empower Chicago’s youth.

I suggest a real and meaningful incentive plan that goes beyond the mayor’s proposal.

Instead of offering CPS high school graduates special treatment, the mayor should work toward giving students the educational resources they need to become successful firefighters. CPS should turn the current Chicago Police and Firefighter Training Academy after-school program into an in-school Career and Technical Education program of study. Not only would this provide students with a foundation in fire science and all aspects of firefighting, but it will also motivate students to stay in school, as studies show that CTE programs have higher graduation rates than non-CTE programs. In fact, student retention in CPS’ CTE program in 2013 was 83 percent and the graduation rate of CTE students was an astounding 99 percent.

A citywide mentoring plan might include:

  • A course in the introduction to fire science to be taught in CPS high schools; such a curriculum is readily available from local community colleges and might include dual credit components;
  • An internship program where students could visit local firehouses, see the nature of firefighting and also develop important skills;
  • Participation in a prep course designed to assist all students, including private school students who are Chicago residents, in doing well on the exam;
  • Volunteer activities aimed at fire prevention in the community and public awareness.

It may appear at first glance that the CPS preference policy is neutral toward religion and race. But even a cursory examination reveals insidious religious and racial discrimination. A distinction is drawn between city residents who graduate from a CPS high school and those city residents attending a private school. In actual practice, the overwhelming majority of students attending private high schools in Chicago are enrolled in parochial schools, especially — but not limited to — those operated by the Archdiocese of Chicago. That large group of students is denied equal treatment under the mayor’s plan for one reason — they attend religious schools. This is a burden upon the First Amendment right to free exercise of religion.

Again, while the policy does not refer to religious discrimination, its de facto result is the clear disparate negative treatment of students choosing a religious school option. It is odd that in an area of society with perhaps the most notorious history of de facto discrimination (i.e., the education of our children), Mayor Emanuel should propose resurrection of a policy long rejected. At a time when there is particular sensitivity to efforts to impose burdens upon religious freedom, why would the City of Chicago elect to adopt such a discriminatory policy offensive to a large number of Chicagoans?

It also is likely that Emanuel’s plan results in racially disparate treatment as well. While this memorandum does not purport to have conducted a full study on the racial makeup of the private schools in Chicago, it does appear quite reasonable to suggest that those attending private schools are predominately classified as “Caucasian” for racial statistics purposes. This point merits further study to ensure that the plan does not, in addition to discriminating based on religion, also do so based on race.

The mayor’s policy should be rejected for what it really is — a meaningless stunt that does nothing whatsoever to raise CPS graduation rates and has zero impact on the quality of public safety in Chicago. It does, however, foster religious and racial divisiveness and invites significant legal challenges that could cost taxpayers millions.

thanks Dan

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A summary of information surrounding the new CFD contract

A blog post at Politics Early & Often part of the, talks about Chicago not having to borrow to cover back pay for firefighters:

Chicago firefighters and paramedics will get more than $20 million in back pay without adding to the city’s mountain of debt, under a five-year contract that forfeits union givebacks for the possibility of pension reform.

Earlier this year, Mayor Rahm Emanuel persuaded the City Council to double — from $500 million to $1 billion — a so-called “commercial paper” program used to tide the city over between major bond issues. Chief Financial Officer Lois Scott said then that the short-term borrowing program would “ensure the city has liquidity for unseen needs such as retroactive salary payments and judgments.”

But City Hall insisted Thursday that the more than $20 million needed to cover the back pay was tucked away into all-purpose “finance general” accounts in the mayor’s 2014 budget and that the tab would not be covered by borrowed money.

The contract gives firefighters and paramedics an 11 percent pay raise over five years, maintains staffing levels and bolsters ambulance service by converting all 15 basic-life-support ambulances to advanced-life-support. The decision to end a two-tier system that paramedics have called a dismal failure would give Chicago 75 ambulances capable of providing the most sophisticated level of care.

It would also free up the equivalent of 30 firefighters, since each one of the city’s BLS ambulances are staffed by a pair of firefighter-EMT’s. The city has agreed to hire more paramedics — anywhere from 50 to 200, sources said.

“It’s sort of a back door way of getting variances” from the requirement that every piece of fire apparatus be staffed by at least five employees, said a source familiar with the agreement. “Manning factors go down. There are more people available in firehouses. It’s a win-win.”

In addition, the contract calls for a six-member committee — three mayoral appointees and three designated by Chicago Firefighters Union Local 2 — to study the need for additional ambulances. “The committee is to look at potentially putting five more ambulances into service by 2016,” said Ald. Nick Sposato (36th), a former Chicago firefighter.

“The BLS ambulance program did not work. Four thousand times last year, they sent a BLS ambulance and had to upgrade to ALS. To err on the side of sending ALS is fine. You certainly don’t want to send a BLS ambulance on an ALS run. Peoples’ lives could be in jeopardy.”

A top mayoral aide added, “Five more ambulances [for a total of 80] is certainly a goal the committee will be looking at. This is something the commissioner and the union feel strong about.”

The five-year agreement would require firefighters and paramedics who retire between the ages of 55 and 59 to contribute 2 percent toward retiree health care that’s now free. Police sergeants and lieutenants have already agreed to those terms. But that’s among the only givebacks Emanuel was able to wring out of Local 2.

The mayor came up empty on his laundry list taking aim at such treasured union perks as: holiday and duty availability pay, clothing allowance, pay grades, premium pay, non-duty lay-up coverage, the physical fitness incentive and the 7 percent premium paid to cross-trained firefighter paramedics. Nor did the union agree to Emanuel’s plan to have “double houses” that include both engines and trucks to be staffed by nine firefighters instead of 10.

Instead, the mayor settled for what sources called a “vanilla” agreement with a modest pay raise, in hopes of creating a “collaborative atmosphere” that will set the stage to solve the city’s pension crisis.

Next year, Chicago is required by state law to make a $600 million contribution to stabilize police and fire pension funds that have now have assets to cover just 30.5 percent and 25 percent of their respective liabilties.

Emanuel wants the General Assembly to put off the balloon payment until 2023 to lift the sword hanging over Chicago taxpayers and give him time to negotiate pension reforms with police and fire unions.

“If we had pushed on variances, manning or tried to go after junk pay and vacation pay, it would have ended up in interest arbitration, and the arbitrator would find an offset for it. We would have had to give up something else,” said a source familiar with the agreement.

thanks Dan

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