Mayor Rahm Emanuel revealed his 2016 budget proposal Tuesday, officially calling for the largest property tax increase in modern Chicago history.
Emanuel proposed a $543 million property tax hike, among other things, during the address as part of a plan to raise money for a pension payment for police and firefighters next year.
"Unfortunately, the city’s structural deficit, while serious, is not the only challenge we are facing," Emanuel said in his address. "It is not even the biggest. Our greatest financial challenge today is the exploding cost of our unpaid pensions. It is a big dark cloud that hangs over the rest of our city’s finances."
The tax hike would be implemented year by year through 2018, going up by $318 million in 2015, $109 million in 2016, $53 million in 2017 and $63 million in 2018, according to the mayor's office.
Any residents whose homes are valued at $250,000 or less would not pay any property tax increase.
Emanuel said "we cannot cut our way out of this crisis," noting that attempting to do so would mean laying off 2,000 firefighters and cutting 2,500 police officers from the force.
"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. That is why this budget contains a city property tax increase phased in over the next four years. Every dollar of that increase is specifically committed to keeping our promise to Chicago’s police and firefighters."
In addition to the property tax hike for penion payments, Emanuel has also proposed a "School Modernization Property Tax Lev" to modernize CPS schools, addressing issues of overcrowding, air conditioning and other repairs. That would amount to an additional $45 million, bringing the total property tax increase to $588 million.
Critics said the tax will have "unintended consequences."
"More than half of Chicagoans rent their homes, and if the mayor’s plan to increase the homestead exemption becomes law, renters with low and moderate incomes will be asked to bear far more than their fair share of this property tax increase," Michael Mini, Chicagoland Apartment Association, said in a statement. "This is not a fair and progressive way to solve the City’s budget problems.”
In addition to the property tax hike, the budget proposal also included a garbage collection tax of $9.50 per month per household and new fees for e-cigarettes that are meant to generate $1 million in revenue in 2016, according to the mayor's office.
"I understand this is new," Emanuel said of the garbage collection tax. "But it is necessary to provide the level of services that Chicagoans depend on."
New rideshare and taxi fees are also included and are expected to create $60 million next year. Emanuel also suggested healthcare reforms, putting street sweeping on a grid, closing Central Business District TIFs and other TIF reforms, and greening city building infrastructure and energy hedging contracts.
On Sunday, the mayor's office revealed the budget would also include a plan to reassign 319 police officers with desk jobs to the streets. The vacated desk jobs would be filled with civilians.
The Tuesday meeting will be followed by two weeks of budget hearings and several town hall meetings hosted by city aldermen. A vote is expected at City Council on Oct. 28.
"I know this budget is tough and therefore carries political risk," Emanuel said. "But there is a choice to be made: either we muster the political courage to deal with this mounting challenge or we repeat the same practices and allow the financial challenges to grow."
A preliminary budget released last month showed a gaping budget shortfall for 2016 that could grow to $754 million and beyond, which some said was enough to force Emanuel to raise property taxes.
“Instead of delivering the ‘progressive’ budget we were promised, Mayor Emanuel unveiled more of the same with a budget proposal that continues to nickel and dime regular Chicagoans via a garbage fee, a massive property tax hike, and rideshare surcharges that amount to a giveaway to his brother - Uber investor Ari Emanuel," 35th Ward Ald. Carlos Ramirez-Rosa said in a statement. "Mayor Emanuel’s 2016 budget proposal shows that he will continue to govern in the interest of the rich and big corporations, and not in the interest of Chicago’s working families and our neighborhoods."
In the weeks leading up to the budget proposal, Emanuel heard ideas from aldermen and city residents about how to bring in more money. These ideas ranged from a proposed tax on sugary beverages to extending the cigarette tax to smokeless tobacco.
In late August and early September, Emanuel hosted three town hall meetings with residents to hear their budget ideas as well, but the mayor faced largely unfriendly crowds and even some protesters.
Read the complete budget address here.