OCTOBER 19, 2016



Beware of the politician or office holder who plaintively moans that he or she just made an unavoidably "tough" decision, like the groaning emanating from Chicago's mayor and aldermen.
To them, tough is not a noun meaning a person of fortitude and courage who accepts consequences, displaying moral firmness. Instead, tough is an adjective meaning a very difficult predicament, as in a tough 2019 re-election contest, the result of voting for budget, tax and fee hikes. To taxpayers, tough also is an adjective, meaning brutal or rough, as in, "That's just tough, you'll have to pay a lot more" to fix all prior "easy" decisions.

Mayor Rahm Emanuel roused the crowd at a fund-raiser for Alderman Marge Laurino (39th) in October of 2014, and I wrote a column about the mayor's "master plan" for curing Chicago's fiscal woes: Chicago for Chicagoans. "Tax the suburbanites, tax the visitors," he thundered, to thunderous applause. "Make them pay more" to work, drive, commute, play, party and park in Chicago, he said.

By using non-Chicagoans' money, Emanuel mendaciously promised at that event and during his 2015 re-election campaign that Chicagoans would have better schools, better parks, lower crime, better services, more police, no potholes and budget economies. Every Emanuel promise was false and patently unachievable unless Emanuel actually made the "tough" decision to tax suburbanites, which could be done four ways.

First, every suburbanite who works in Chicago would be assessed an annual $400 to $500 annual "head tax," to be borne by either the corporation or the individual, if self-employed, and to be enforced by a "head tax return" issued by the city. By cross referencing the Illinois Department of Revenue taxpayer database with the Illinois Secretary of State's Office driver database, it would not be difficult to ascertain who works in but doesn't live in Chicago. Alderman John Arena (45th) advocates a 1 percent income tax on all Chicagoans who earn more than $250,000, regardless of where they work. Arena said that it would pay the $70 million needed for the 970 new police officers Emanuel wants to hire, but he's missing the point, which is that the big bucks are in the suburbs.

Second, charge a citywide professional "service tax." Every lawyer, accountant, physician and architect, as well as innumerable "consultants," collect a gross fee from their clients or patients and pay a federal and state tax on their "net" revenue. Chicago gets nothing, even though much more than two-thirds of the professionals are suburbanites.

Third, impose a "user tax" on any vehicle that is not registered to a Chicago address using a city parking garage. A scanner could be installed at every parking site, and the tax could be included in the parking fee. "They come into our city, use our infrastructure, expressways and streets, at no charge," Emanuel said of suburbanites at the 2014 fund-raiser.

Fourth, impose a "transaction tax" on all sales at city-based stock brokerage houses and commodities exchanges. Even a nickel or dime would generate major revenue.

However, none of the above will reach fruition. There would be widespread pushback. The lawyers, doctors and stockbrokers, who contribute so lavishly to the Democrats, and the attorney bar and medical associations, would be apoplectic. The big businesses don't want another tax, as they think they're doing the city a favor by not moving out. In addition, commercial property owners can hire connected attorneys to get their property taxes reduced, and the Chicago Board of Trade would threaten to move out of the city. Those with no pushback, the residential property owners and renters, who must absorb their landlords' tax and water hikes, would get socked.

The Democrats' mantra is that Republicans always try to "balance the budget on the backs of" (fill in the blank) "the poor" or "working families." Yet that is precisely what Emanuel and his Democrats are doing in Chicago and Cook County. The wealthy and connected stay wealthy. Democratic liberals advocate "progressive" taxation, but in Chicago taxes are regressive, with the less wealthy paying a disproportionate share.

Chicago's budget for 2012, which was passed before Rich Daley left office, was $5.3 billion. For 2017 it is $8.3 billion, a 36 percent increase, averaging $600 million a year on Emanuel's watch. Replicating Daley's tactics, Emanuel is looting $175 million of the $1.3 billion "surplus" held in the city's 150 TIF districts and taking the $461 million in 2016 revenue, which was supposed to be used for economic development, and using it to pay for operating expenses. That's what Daley did with the parking meter and Skyway leases.

Once upon a time, "quality of life" was the priority of any municipality. Now in Chicago, it's tax everything. Revenue generated by the sales, gasoline, real estate transfer, phone, utility, water, amusement and property taxes are insufficient. "Revenue-generating ideas" are the order of the day, and "revenue enhancements" is the new euphemism for fee and tax hikes, which are called "investments." Emanuel and his tax finders are eyeing a "storm water stress test" which would tax rainwater outflow and a ticket resale tax, currently 9 percent of the face price, making it 3.5 percent on the end transaction price. There is a 9 percent amusement tax on every ticket sold for any entertainment event in the city.

To be sure, the bulk of increases have been pension-related. According to figures used by the Cook County Treasurer's Office to calculate the 2016 property tax bills, the total unfunded pension debt of the eight taxing bodies is $36,334,945, of which $33,159,026 is specifically assessable against Chicago. The pension debt of Chicago is $20.8 billion, and the Board of Education's debt is $11.4 billion.

On a typical city tax bill, Chicago and the Board of Education absorb more than 74 percent of the tax dollars; in the suburbs it's around 46 percent. Chicago property taxes are up an average of 12 percent on the 2016 second installment tax bills, many as high as 30 to 40 percent, although property values are still flat.

Property taxes. Chicago has four pension funds, all of which are underfunded -- police, firefighters, laborers and municipal employees. In 2015 the City Council passed a $588 million property tax hike in order to make a Illinois General Assembly-mandated contribution to the police and fire pension fund, which was underfunded $11.7 billion, with $30 million for school construction, but the state legislature came to Emanuel's rescue, kicked the proverbial can down the road, and passed a 2016 bill to extend from 2040 to 2055 the 90 percent police and fire "full funding" deadline, saving the city $220 million a year in contributions and allowing the city to borrow $843 million from those pension funds at 7.75 percent interest. Taxpayers are on the hook for $18.6 billion through 2055.

The Chicago Public Schools, with a $1.1 billion deficit, pensions funded at 44 percent, and a $676 million pension payment due July 1, got the legislature to authorize the Board of Education to levy $250 million in property taxes, thereby saving the aldermen from another "tough" vote. Per-pupil spending is $4,087, down 14 percent from 2014, but the recent Chicago Teachers Union contract "settlement" is expected to cost $8.9 billion over 4 years. The school system will be broke again, very soon, and back to Springfield they will go.

Utility/telecommunications taxes. The 2014 56 percent hike in the city's phone tax was designed to bail out the laborers pension, funded at 52.9 percent. The mayor and the council then approved in 2016 a utility tax, tacked on to gas and electric bills, which generates $441 million annually. There is no pushback: no pay, no service.

Water taxes and fees. In order to bail out the municipal employees pension, which was underfunded by $18.6 billion, at 32.9 percent, Emanuel and crew increased water and sewer charges by a third. The average residential water bill is $686, and it will rise by at least $225 this year. Charges to businesses, condos and apartment buildings will similarly explode. The goal is to generate $1 billion by 2023, so water bills will increase by 7 percent each year through 2019. A new garbage collection fee of $9.50 a month also was added to water bills. Again, no pushback: no pay, no water.

Chicago's homicide rate is up 49 percent over 2015, murders are on track to crack 700 this year, overtime because of manpower shortages is at $116 million annually, and Emanuel promised to hire 1,000 new police officers. It will cost $133.8 million over 2 years to hire 970 new cops, but 975 veterans are opting to retire by July of 2017, making the new hires a wash. The new Citizens Office of Police Accountability, replacing the Independent Police Review Authority, has a $7.2 million budget, 45 percent higher than the previous office. Police morale is at an all-time low, veterans are bailing out, and Chicagoans are no longer tolerant of two murders a day.

On the county side, the latest "revenue enhancer" is a tax of 1 cent per ounce on soft drinks, including sports, energy and fruit drinks, that contain either sugar or an artificial sweetener. The county's budget is $4.4 billion, the deficit is $174.3 million, and Toni Preckwinkle warns that 1,000 county employees may be laid off over 3 years. So what?

In 2018 and 2019, voters will have an "easy" decision: get rid of everybody who made any "tough" decision.

Send e-mail to russ@russstewart. com or visit his Web site at www. russstewart.com.