ayor Rahm Emanuel's administration projects a $114.2 million budget shortfall for 2018, but a mayor who's already raised a slew of taxes and fees was mum Monday on whether he'll ask taxpayers to cover the difference.
While City Hall was trumpeting the lowest shortfall since 2007, Emanuel aides acknowledged their bottom-line figure left out a bunch of costs the mayor has committed to for next year. Chief among them is $70 million to hire new police officers, and there's also tens of millions more dollars in potential additional costs for police reform efforts and back pay for city workers if new contracts that expired at the end of June are approved.
With those added in, the mayor and City Council may have to find ways to close a gap that's more in the neighborhood of $200 million. How that will be done remains to be seen, with Emanuel financial spokeswoman Molly Poppe giving an answer that's a mantra at this point in the city budget process each year: "We're looking at everything, but our focus is on savings, reforms and efficiencies."
Poppe said additional new costs were not added on because the city deemed them "not structural" — even though costs for new officers will reoccur in future years and increase over time.
Using the city's financial logic, Emanuel on Monday cited the "smallest structural deficit in a decade," crediting that to cost-reduction efforts he'd made over the years. But the mayor also has increased taxes and fees for city operations since first being elected in 2011, when the shortfall was $636 million.
Emanuel did not respond Monday when asked whether he would consider another tax increase to fill next year's budget hole — one that could grow even further considering his pledge to open Chicago Public Schools on time and keep them open despite continued uncertainty over state funding for the cash-strapped school district that the city has contemplated helping out.
Instead, Emanuel pivoted to familiar talking points about steps he has taken to stabilize the city's finances and how state inaction is to blame for forcing him to borrow hundreds of millions of dollars for school operating funds at high interest rates documented in a Monday Chicago Tribune story.
"I would prefer nothing better than not to have to pay high interest rates, but that's for the state that's more than 9 months to a year behind in paying its bills, which is the turnaround that Gov. (Bruce) Rauner said he was going to take care of," Emanuel said.
If he chooses to include a tax increase when he proposes his budget later this year, Emanuel is likely to face some public pushback, given recent tax hikes by City Hall, Cook County and state government that will drain hundreds of dollars from the pocketbooks of Chicagoans. But it also may be the mayor's last chance to increase taxes before 2019 — an election year for city officials, who are loathe to ask taxpayers for more money just before voters go to the polls.
The mayor's failure to include future yearly costs in the city's budget shortfall was reminiscent of last year, when he did not factor in the money he knew would be needed to contribute hundreds of millions of additional dollars to pension funds for city municipal workers and laborers.
Emanuel ended up pushing a new tax on water and sewer service through the City Council last year. That's expected to raise $239 million a year by 2020 to boost contributions to the municipal workers' pension fund.
A year earlier, the council approved a record $543 million tax hike that won't be fully phased in until 2019 to boost contributions to pension funds for police officers and firefighters. And in 2014, aldermen approved a $1.40 a month increase in the city's 911 fee on land-based and cellular phones that was expected to raise about $40 million a year for the city laborers' fund.
That 911 fee revenue has come in lower than expected and could diminish further in future years as more people abandon their landlines and rely solely on cellphones.
However, the General Assembly this year cast aside Rauner's objections and gave City Hall authority to increase 911 phone fees by another $1.10 a month. City officials have said the extra money — about $27 million a year — could be used to help update the city's 911 system, which could free up money to be used elsewhere.
Other potential options to bring in more money in 2018 include further expansion of surge parking meter pricing around major arenas on event days, as the city did this year near Wrigley Field to raise about $1.5 million. The city had discussed surge pricing around Soldier Field but has yet to put that in place.
The city also could expand a trial program of charging commercial vehicles to use loading zones that was expected to bring in between $13 million and $18 million this year after it was launched downtown and in two nearby wards. Poppe said the two programs are still being rolled out and "there's no plans for expansion at this point."
Whatever Emanuel and aldermen do, taxpayers will continue to bear an increasing burden because of previous decisions. Property taxes and the new tax on sewer and water service are both going up next year — with a property tax increase of about $43 for the owner of a $250,000 home and an annual water tax increase of about $37 for a typical homeowner with metered service and $76 for a homeowner without metered service.
In addition to the pension-driven tax hikes, Emanuel and the council also have raised taxes to close gaps in the city's day-to-day operating budgets and rebuild the city's aging water pipe system. With Chicago Public Schools property tax hikes added in, the increased tab for the typical homeowner under Emanuel — who first took office in 2011 — will be about $1,700 a year once all the taxes are fully phased in, according to a Tribune analysis.
As debt service costs and pension contributions continue to rise into the next decade, the city will again need a combination of additional revenue and cuts — totaling as much as $1.3 billion, according to an analysis released last week by Kroll Bond Rating Agency. Indeed, the budget forecast projects the budget hole increasing to $330 million by 2020.
To date, Emanuel has increased taxes and fees by nearly $1.4 billion, both to start restoring financial health to city worker pension funds and eliminate the use of one-time revenue that became common practice during the later years of former Mayor Richard M. Daley's 22-year tenure.