The City Council on Tuesday voted 45-5 to approve Mayor Rahm Emanuel's $7 billion budget plan, which will boost a host of taxes, fines and fees for 2014 but leaves the politically toxic property, sales and gas taxes at current levels.
It was the third year in a row Emanuel won overwhelming approval for his spending plans with only minor revisions to his initial blueprint. This time he reduced a proposed per-pack cigarette tax hike to 50 cents from 75 cents.
Nevertheless, the mood at City Hall was far from celebratory, because next year's planning for 2015 could prove far more difficult if the Illinois General Assembly doesn't make changes to city pension plans. Absent those changes, city spending on police and firefighter pension plans will soar by nearly $600 million — a figure equal to about one-fifth of the city's yearly spending on operations.
"I'll be going upstairs to meet with my staff about three hours from now on pensions," Emanuel told reporters after the budget was approved. He also noted once again that even with pension system changes, the city still would have to come up with more money.
"You cannot do this on the backs of taxpayers alone, and you cannot do it on the backs of employees alone," Emanuel said. "It's going to require revenue and reform, but they go together."
The five "no" votes was the most any of Emanuel's three budgets has received. During his first year in office, approval was unanimous. In 2012, three aldermen voted against the 2013 budget. Even with more "nays" this year, only Ald. Bob Fioretti, 2nd, spoke against it from the council floor.
Fioretti criticized Emanuel for phasing out health insurance subsides for retired city workers, relying on refinancing to put off debt payments, depending on speed cameras for revenue and rejecting efforts to grow the police force beyond 12,500 officers.
"It is clear that our current force does not have the resources, the personnel, to keep our streets as safe as they should be," Fioretti said. "The city has attempted to address this crisis with stopgap measures, spending millions of dollars on police overtime to ensure that high-crime areas are covered."
Emanuel has budgeted $72 million to pay for police overtime rather than boost hiring, saying that is less expensive than beefing up the force.
To cover those costs and others in a growing budget, the city will impose tax, fee and fine increases that total about $33 million — not including increased collections from the speed cameras that are going up near 50 schools and parks across the city by the start of 2014.
In addition to the cigarette tax, the city is increasing the cable TV amusement tax to 6 percent from 4 percent, boosting a host of fines for parking violations and charging more to file zoning applications.
Of the $7 million expected from the cigarette tax increase, about $1 million will go to expand free vision care and Medicaid enrollment for low-income Chicago Public Schools students.
The speed cameras are estimated to bring in up to $70 million, but several aldermen said they expect the take to be much higher. Emanuel said he was dedicating all of that revenue to a "children's fund," although there is no such fund in the city budget.
Emanuel is, however, expanding or holding steady an assortment of children's programs — early childhood education, after-school programs, summer jobs, violence-reduction efforts and the like — despite federal funding cuts in those areas.
The city also will collect the same overall amount of property taxes despite shutting down some special development districts that levy their own taxes. The city also plans to collect more property taxes from owners of newly developed property.
As a result of both steps, an extra $21.6 million would go directly to the city for general expenses, instead of being used mostly to help fund development within so-called tax increment finance districts.
Emanuel is also cutting some city costs, in part by starting to phase out health insurance subsidies for retirees to save $18 million next year and hundreds of millions more in years to come. But that decision faces a court challenge.
The mayor also responded to a Tribune story noting that his budget refinances $150 million in long-term debt and converts up to $121 million in short-term loans to long-term debt. Those steps will push today's financial obligations onto future generations.
Emanuel argued that he inherited the city's financial mess and that making painful changes too quickly would risk throwing the economy "into a deep recession."
"After two years of people finally moving back into the city, you'll create another exodus," Emanuel said. "So you have to do it in a responsible way that gets our long-term finances in order in a way that doesn't overburden our taxpayers or actually affect the overall growth of the economy."