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updated: 10/23/2013 4:22 PM

Emanuel's budget comes with a warning

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  • Chicago Mayor Rahm Emanuel

    Chicago Mayor Rahm Emanuel
    Associated Press

Associated Press

Chicago Mayor Rahm Emanuel outlined his proposed $6.97 billion budget Wednesday but warned that if state lawmakers don't enact pension reform before the city's own obligations surpass more than $1 billion next fiscal year, Chicago would be such an expensive place to live and work that residents and companies may flee.

"Should Springfield fail to pass pension reform for Chicago, we will be right back here in Council early next year to start work on the city's 2015 budget -- a budget that will either double city property taxes or eliminate the vital services that people rely on," the mayor told the City Council.

Both choices, he said, would be disastrous.

"We will not preside over a city in which skyrocketing property taxes drive thousands of senior citizens and middle-class families out of their homes -- and out of Chicago," he said. "We will not scale back our investments in our kids and neighborhoods, or put the safety of our communities at greater risk."

Emanuel said Illinois lawmakers must do something before the city, as required by state law, ups its contribution to pension funds by about $600 million.

"We cannot allow the future to become a stark choice between a pension payment or police, a pension payment or parks, pension payment or a school principal," he said. Emanuel focused on the topic for about 10 minutes of his 40-minute address.

Many aldermen said much the same: Raising property taxes or cutting city services would trigger a stampede out of town.

"They would take flight, they would leave," said Carrie Austin, an alderman on the city's South Side.

Of his 2014 fiscal year budget proposal, Emanuel said it'll balance the budget without raising property, sales or gas taxes. Instead, he's proposing increased parking fines, adding another 75 cents to cigarette taxes and upping the amusement tax on cable television.

If the cigarette taxes go up, Chicago would have the highest combined state and local tax rate on them in the United States. Some aldermen worry that the city would lose tax revenue as many people would go outside of the city to buy cigarettes, and that more black-market sales would be triggered as well.

The rest of the budget gap would be filled by a variety of initiatives, Emanuel said, including reducing telecommunication costs by switching cellular phone carriers, renegotiating contracts and eliminating unused landlines. Other ways to cut costs would be to leave some jobs unfilled, phase out city funding for health care costs for some retired city employees and switch from a ward-by-ward garbage collection system to a cheaper grid system.

Also, the city expects new speed cameras to generate another $60 million, though some aldermen have said that based on the more than 200,000 warnings lead-footed drivers received in the first 45 days, more money could have been made since the warnings have stopped and the fines have begun.

One concern voiced by Alderman Scott Waguespack of the city's North Side after he and other members of the council were briefed was that Emanuel's proposal to increase some parking fines and the price of storing impounded vehicles -- a move the mayor's office expects will raise about $10 million -- might discourage people from driving into Chicago.

But a number of aldermen didn't seem worried.

"It's only going to hurt you if you break the law," said Alderman Ariel Reboyras, who represents the city's northwest side.

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