In case you missed it: Chicago’s city council recently tightened its fiscal belt by passing a budget with a huge property tax hike and other fees. These are stop-gap measures meant to keep its financial woes just this side of overwhelming. The AP:
Mayor Rahm Emanuel proposed an incremental $543 million property tax increase for police and fire pensions, along with a separate $45 million property tax hike for school construction, a $9.50 monthly household garbage pickup charge and other fees. The former White House chief of staff said the measures were necessary to restore the financial health. […]
Chicago has the worst-funded pension system of any major American city, along with a school system drowning in debt that credit rating agencies have rated at “junk” status. The problems have worsened over the years the city didn’t contribute enough to pension funds and continued questionable borrowing tactics, some of which continued into Emanuel’s tenure.
Rahm is looking for state approval for a measure that would soften the blow for the city’s poorer residents:
[Emmanuel] tried to make the property tax increase, which takes effect over four years, more palatable by pitching a relief plan targeted toward those whose homes are worth $250,000 or less. He said most of the burden of the increase would fall on the city’s downtown business core.
Emanuel has pushed to double a homeowners’ exemption from $7,000 to $14,000, or the amount cut from the home’s assessed value before taxes are calculated. The idea is to ease or erase the tax hike’s impact.
As we put it before about the financial sinkhole by the Great Lakes, “Fixing America’s cities so they can be sustainably prosperous is one of the biggest and most urgent jobs on our national to-do list.” The nation’s slow-moving pension crisis will require creative thinking and, most likely, Federal oversight, in some kind of “reform for relief” scheme. Chicago may be first in line for this fix-up. We need policymakers at the local and national levels to figure out how to do it right, and soon.