Chicago Mayor Emanuel Proposes Historic Tax Hike to Pay Down City’s Looming Pension Bill

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A 2010 law requires Chicago to shell out a $550 million contribution to its underfunded police and fire pension systems in 2016.

With that payment coming due – and with the city’s budget already tight – Mayor Rahm Emanuel on Tuesday unveiled a proposal for the biggest property tax hike in modern Chicago history.

But even if the tax hike is approved, the city could still be over $200 million short of raising the money to pay the 2016 pension payment.

Details from the Chicago Tribune:

Under the mayor’s budget proposal, property taxes would be increased $543 million over the next four years — $318 million of it next year alone — to pay for police and fire pensions.

[…]

Emanuel finds himself poised to sharply raise property taxes to cover a major increase in police and fire pension contributions following a December 2010 measure approved by lawmakers and then-Gov. Pat Quinn.

The mayor has known the pension hit was coming since before he took office. This year, Emanuel got the Democrat-controlled House and Senate to approve a bill that reset the pension payment schedule to give him more breathing room. The city would still have to come up with hundreds of millions of dollars, just not quite as much as quickly as the 2010 law required.

That bill, however, has yet to be sent to Gov. Bruce Rauner, who could sign it, veto it or allow it to become law without acting.

If the bill does not become law, Emanuel’s record property tax increase for next year would still be $219 million short of what’s needed to make the required pension payments. Asked if he had a Plan B, Emanuel said, “First of all, if I had a Plan B, the worst thing to tell the legislature is that you have a Plan B.”

Emanuel said that the historic tax hike was necessary to avoid service cuts.

The city projects it will pay $1.1 billion in pension contributions in 2016, roughly half of which will go to the police and fire funds.

 

Photo by bitsorf via Flickr CC License

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  1. […] Chicago Mayor Emanuel Proposes Historic Tax Hike to Pay Down City’s Looming Pension Bill […]

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