CHICAGO (CBS) — The City Council Finance Committee was set to vote Thursday on Mayor Rahm Emanuel’s proposal to raise water and sewer fees to help shore up the city’s woefully underfunded employee pension systems, but some aldermen have questioned the mayor’s math on the plan.
Aldermen agree something must be done about the massive debt owed to the Municipal Employees Pension Fund, but some question whether the mayor’s proposed tax increase is the proper solution. They kicked off Thursday’s Finance Committee meeting with questions about the Emanuel administration’s math.
The mayor has said the tax would add about $230 million a year in new revenue for employee pensions when fully implemented. The mayor’s plan would raise the water and sewer tax for the average homeowner to $53 a year in 2017. The tax would jump to $115 in 2018, $180 by 2019, and $225 by 2020.
Emanuel defended those numbers when he floated the tax plan last month. He also rejected other possible tax increases, including a graduated state income tax or a new commuter tax on suburban residents who work in Chicago; both of which would require approval of the Illinois General Assembly. He also shot down suggestions of another property tax hike or a sales tax increase.
“We have the highest sales tax in the United States of America. I don’t think raising the sales tax higher than it is is the right way,” he said. “In the end of the day, I went through taking property taxes off the table, taking neighborhood basic services off the table, not allowing Springfield to be the determiner.”
The mayor said the water and sewer tax would be the fairest way to shore up the Municipal Employees Pension Fund.
Budget Director Alex Holt said the goal is to shore up the municipal employees’ fund.
“The approach that we’ve really been focused on is to try to get these all four funds on a path to solvency, and what that means is a couple things. One, it means identifying additional sustainable revenues that are primarily focused on getting us through a five-year ramp-up period to get us to ARC [annual required contribution] funding,” Holt told aldermen.
Critics have said the mayor’s plan would have a significant ripple effect, particularly for businesses like laundromats that rely heavily on water.
Paul Hansen, president of the Illinois Coin Laundry Association, has said the laundromat owners his organization represents anticipate raising prices for each load. That will impact people who don’t have washers at home.
With talks of the water and sewer tax hike coming just a year after the mayor and aldermen approved a record $588 million property tax hike to help fund police and fire pensions, many Chicago homeowners are feeling fed up.
“I had nothing to do with the pension plan and their deficit. So I don’t feel responsible for it,” Brainerd neighborhood resident Debra Roberts said.
“I mean, when does it stop? I mean, every year it’s something, and it keep going up and up,” Ashburn neighborhood resident Trent Hicks said.
The Finance Committee meeting on the tax hike is expected to last a while, but the mayor’s chief of staff said they believe they have enough votes to pass the plan.