CHICAGO Coming off a taxing spree to rescue Chicago’s ailing pension funds, Mayor Rahm Emanuel on Tuesday unveiled a fiscal 2017 budget that he said reflects the city’s success at stabilizing its finances.
The $9.8 billion all-funds spending plan, which includes $3.7 billion for operations, relies on $82.3 million in revenue growth, savings from efficiencies, and a few one-time measures – but no big tax hike.
“It is a budget free of an immediate pension crisis, free of the black cloud of insolvency threatening the retirements of city employees and the financial future of Chicago,” Emanuel said in his budget address to the city council.
The mayor last year pushed through a $543 million phased-in property tax increase for police and firefighter retirement systems. The city enacted a new tax on water and sewer usage last month to rescue its largest pension fund for municipal workers from insolvency. The council previously increased a telephone surcharge for laborers’ pensions.
Credit ratings for the nation’s third-largest city have been deteriorating due largely to an unfunded pension liability that stood at $33.8 billion at the end of fiscal 2015 for Chicago’s four retirement systems.
A Chicago-based government finance watchdog group welcomed the mayor’s blueprint. “Generally, our initial reaction to the mayor’s plan is this is a good-news budget for the city of Chicago,” said Laurence Msall, president of the Civic Federation.
But he warned Chicago still faces pension funding challenges, particularly if the city’s assumptions are not realized.
Emanuel’s budget address came just hours after the city averted a strike by public school teachers with a tentative contract that relies on a bigger injection of surplus revenue from the city’s development districts into the school budget.
The city budget accommodates the initial phase of the mayor’s two-year plan to add 970 police positions to address the city’s sharp spike in violence.
Alderman Carrie Austin, who heads the city council’s budget committee, credited the mayor’s budget staff with performing “abracadabra” on the revenue side of the budget. She said the money should be there to fund the higher police numbers in subsequent budgets.
“(The mayor) hates one-time fixes, so yes, it has to be ongoing,” Austin told reporters.
Some other aldermen said the budget for the fiscal year that begins Jan. 1 will be scrutinized line by line.
“We can put anything on paper but how are we going to fund it?” said Alderman Susan Sadlowski Garza.
(Editing by Matthew Lewis)