Public Policy Newsletter
|Thursday, September 24, 2015
Special Issue: City Budget
The Chicagoland Chamber received a briefing on the complete details of the Mayor’s 2016 budget proposal before Mayor Emanuel’s address today, September 22. The City budget features two important parts:
1) A $600 million property tax increase to pay the police and fire pension fund obligations; and
2) A series of new fees worth $174 million for the City’s operating budget.
It is important to keep in mind that a few assumptions are built into the proposed budget:
1) Passage of SB777, which reamoritizes the pension payments for City police and fire, which the Chamber strongly supports;
2) The court will find the municipal and laborer employees’ pension reform plan constitutional (Public Act 98-0641); and
3) The General Assembly will pass and the Governor will sign legislation to double the residential homeowners’ exemption from $7,000 to $14,000. The Chamber opposes this proposal and will testify against this Thursday at the House Revenue & Finance Committee hearing in Springfield.
In addition, the relief needed from Springfield to close a $500 million budget hole for Chicago Public Schools’ was not addressed in Mayor Emanuel’s address.
Property Tax Increase and Pension Contributions
The City’s police and fire pension contributions will dramatically increase over the next four years as the City’s contributions grow to the annual required contribution (ARC) based on actuarial standards. The property tax increase ensures the City meets the pension obligations.
Pension contributions for police and fire increase:
- 2015: $619 million
- 2016: $672 million
- 2017: $727 million
- 2018: $792 million
The Property tax increase will fund the pension obligations:
- 2015: additional $318 million
- 2016: additional $109 million
- 2017: additional $53 million
- 2018: additional $63 million
Other Important Highlights
Reforms, Efficiencies & Revenue Enhancements: more than $170 million for 2016.
- Elimination of 150 vacant positions: $14.1 million
- Healthcare savings: $10 million
- Sale of excess City-owned land: $4.8 million
- Grid street sweeping: $3.0 million
- Energy savings: $16.2 million
- Decreased healthcare costs: $30 million
- Improved debt collection: $23.4 million
- Sweeping aging revenue accounts and grant funds: $20.2 million
- Garbage fee: $62.7 million ($9.50 flat-fee)
- Building permit rationalization: $13.0 million (detailed below)
- TIF reform: $22 million (detailed below)
Building Permit Streamlining & Modernization
Mayor Emanuel also proposed reducing by an average if one week the issuance of building permits. This will be funded by an increase in fees and will primarily impact large construction projects that require significantly more work from the Department of Buildings.
Further building permit reforms include:
- Implementing an optional, premier in-house review service that would allow large development projects to begin sooner and get completed faster;
- Moving select issues that require special permission from the Committee on Standards and Tests to Administrative Adjustments, eliminating the need for repeat approvals;
- Upgrading the field inspections systems to further automate inspections internally and in the field; and
- Expanding the third party elevator inspection program to include a voluntary program for high-rise buildings.
TIF Surplus, Reform & Freeze
Mayor Emanuel proposed a freeze on all new spending in seven downtown TIF districts. This freeze will free up about $250 million over the next five years, including $125 million to CPS and $50 million to the City. In addition, he declared a 2016 surplus of $113 million, with $22 million going toward the City’s operating budget and an additional $60 million going to Chicago Public Schools.
Read the Chamber’s response to the Mayor’s budget here.
Read the Mayor’s press release here and his speech here.
The Chamber will be actively involved during the month-long City budget process, and will keep you up to date on how the situation evolves and ensure that the interests of the business community and our members is represented.
If you have any questions regarding the proposed budget, please contact me directly at (312) 802-1508 or email@example.com.