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Civic Federation Backs Emanuel Property Tax Hike, But Has Concerns

CHICAGO (CBS) -- A respected financial watchdog group has thrown its support behind Mayor Rahm Emanuel's budget plan, but it comes with a warning.

The Civic Federation called the mayor's proposed $543 million property tax hike long overdue to address severely underfunded public safety pension funds, but said the mayor's property tax plan will not solve the city's financial woes.

"There's going to have to be a continued effort to address the growing disparity between revenue and expenditures, and the bad past practices of borrowing for operating expenses," Civic Federation president Laurence Msall said. "Reckless borrowing that pushes our principal out without any benefit to the taxpayers has to be stopped."

Msall acknowledged homeowners would take a big hit from the property tax hike, but he said it would be worth the cost.

"It will be far cheaper in the long run for them if we pay our government expenses, rather than pushing the can down the road, ignoring our liabilities, and potentially watching the financial decay and collapse of the city of Chicago," he said.


The nonpartisan budget watchdog group also said it remains concerned about potential landmines in the mayor's plans: what happens to costs if courts strike down the city's plan to phase out its retiree health subsidy, what if Gov. Bruce Rauner rejects legislation that would save the city even more money on police and fire pension obligations for the next few years, and what if reforms to two other pension funds are overturned by the Illinois Supreme Court? If any of those questions ends up going against the city, it would leave a gaping hole in the budget.

The analysis of the mayor's budget also noted his proposal to increase the homeowner's property tax exemption has not been presented to the Illinois General Assembly, and might unfairly shift the tax burden onto renters and other taxpayers.

As an alternative, the Civic Federation suggested setting up a property tax "circuit breaker" program, which would offer income tax rebates to homeowners when their property tax bill exceeds a certain percentage of their income.

The Civic Federation also has backed the mayor's plan for a new garbage collection fee, but suggested exploring a variable rate fee, rather than a flat $9.50-a-month per household fee. It also supported a plan to explore privatization of the 311 city services call center.

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