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Emanuel Proposes Balanced Budget With No New Taxes

Mayor Rahm Emanuel discusses his plan for the 2013 city budget at City Hall. (Credit: CBS)

Mayor Rahm Emanuel discusses his plan for the 2013 city budget at City Hall. (Credit: CBS)

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UPDATED: 10/10/2012 – 5:14 p.m.

CHICAGO (CBS) – Mayor Emanuel presented a $8.3 billion budget on Wednesday that holds the line on taxes and fees and eliminates a nearly $300 million deficit.

Emanuel is also proposing to eliminate the employee head tax by the end of next year. The head tax applies to companies with more than 50 employees who are taxed at a rate of $2 per employee a month. It had been as high as $4 a month.

“We will not raise property taxes; we will not raise sales taxes; we will not raise the fuel tax; we will not raise the amusement tax,” he told City Council on Wednesday. “We will, however, cut the employee head tax.”

LISTEN: WBBM Political Editor Craig Dellimore Reports

The mayor said the city can balance its budget for 2013 by cutting $67 million in spending, outsourcing city contracts, layoffs and hiring freezes, improving debt collections, recognizing health care savings, and refinancing debt—among other savings.

To avoid tax hikes, the mayor’s budget plan banks on a rebounding economy resulting in $42 million more in revenue next year.

Ald. Anthony Beale (9th) said, “If the economy doesn’t grow, we’ll be in a bad situation.”

Emanuel’s budget also calls for spending cuts, including $70 million in health care cost savings.

Ald. Joe Moore (49th) said, “I think these are realistic estimates.”

Andy Shaw, executive director of the Better Government Association watchdog group, said “historically, when mayors soak the taxpayers, as Rahm Emanuel did last year with high tax and fee increases, they back off the next year for political purposes. This is a ‘feel good’ budget.”

During his budget address, the mayor was interrupted nine times by applause from alderman, who liked the proposed increases in after-school and summer job programs, more aid to the homeless and victims of domestic violence, and especially 457 new police officers.

Ald. Willie Cochran (20th) said the city needs more police officers, but said, “Can the budget handle it at this point? I don’t think so.” He also said he doesn’t think city taxpayers are willing to cough up more money to pay for extra police.

Aldermen welcomed the “no new taxes” approach and the increase in police officers, but are concerned it’s only enough to make up for attrition and not actually increase the number on the force.

Ald. Bob Fioretti (2nd) described the gnawing concern for most aldermen when it comes to police manpower.

“To me, the budget line that is critical is what are the number of police officers we need on the street, how we get them there on the street, how we find the resources to fund those police officers,” Fioretti said.

The mayor’s budget plan calls for hiring just enough new police officers to keep the ranks of the Police Department stable.

Ald. Ray Suarez (31st) said the city needs to hire even more police officers to increase manpower.

“As crime … seems to grow in certain areas, I get the excuse that there were not enough police officers, so we gotta go back to strength, to have I think it’s 13,000 officers. So I think we have to look at this thing a little deeper,” Suarez said.

The city will also increase efforts to eradicate rodents and trim trees. The city’s recycling program will also be expanded city-wide next year.

“If we can realize all of the goals set forth in this budget, we can make Chicago the best city in the country to start a business, find a job and raise a family,” Emanuel said.

Though next year’s city budget avoids painful tax hikes, CBS 2 Chief Correspondent Jay Levine reports there is still a storm brewing, as the city’s pension mess is spinning out of control, with no solution in sight.

The mayor warned that the city must deal with its exploding pension payment obligations, which will reach $1.2 billion in four years. That money could build 10 new high schools and 12 neighborhood libraries each year and resurface 32,000 blocks of city streets, he said.

“In less than four years, payments to meet our pension obligations will comprise 22 percent of the city’s budget,” he said.

Ald. Carrie Austin (34th), who chairs the City Council Budget Committee, said aldermen don’t have the authority to change pension rules for city employees. Only the Illinois General Assembly and the governor can reform public employee pension systems in Illinois.

“It’s up to our legislators, so I know that if we lean on them, if we as a body lean on them to do the right thing, I think that it will come to pass,” Austin said.

The mayor also will be lobbying Springfield for help with city pension costs.

City budget hearings begin next Tuesday.