Aldermen Back Mayor’s Plan To Hike Phone Tax To Fund Pensions
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CHICAGO (CBS) – Mayor Rahm Emanuel said he has lined up enough City Council support to increase the monthly surcharge added to phone bills in Chicago, as part of the effort to address the city’s pension crisis.
WBBM Newsradio’s Craig Dellimore reports the mayor’s office said 38 aldermen have sponsored a plan for a 56 percent hike in the monthly 911 surcharge on bills for cell phones and landlines in Chicago. If approved, starting Sept. 1, that tax would increase from $2.50 per month to $3.90 per month.
The move would free up $50 million in the city budget to help fund a pension reform plan approved by state lawmakers earlier this month, and avoid the need for a $50 million property tax hike before the city elections next year.
Ald. Jason Ervin (28th) hasn’t signed on to the mayor’s plan yet.
“People inherently don’t like property taxes. The challenge that I face is … what is a better deal for my constituents in the 28th Ward,” he said.
Ald. Scott Waguespack (32nd) also expressed concerns about using the phone tax to shore up pensions.
“The phone tax is basically there to help increase the viability of the 911 system. It wasn’t set up to defray pensions,” he said.
However, the mayor said increasing the emergency services surcharge on phone bills would allow the city to fully fund its 911 Center and defray the cost of employee pensions.
“Sixty-one thousand workers now know they’ll have a retirement check they can rely on, and it’s secure; and our taxpayers know we can do it without raising property taxes,” Emanuel said.
However, the mayor has only agreed to take property taxes off the table for one year as part of his pension reform plan. Originally, he had proposed raising property taxes by $50 million a year for five years starting in 2016, but Gov. Pat Quinn balked at that plan.
Instead, the mayor agreed to substitute the phone tax for the first year of the property tax hike, though he has yet to say whether he’ll go forward with the remaining four years of his plan.
Emanuel has said the phone tax plan will allow him to search for alternatives to a property tax hike beyond next year.
The pension reform plan approved by lawmakers covers only the Municipal Employees and Laborers funds. Emanuel’s office has yet to finalize a reform plan for the pension funds for police officers, firefighters, and teachers. The city is facing a state-mandated $600 million payment to the police and fire pension funds next year.