Will Preckwinkle reconsider sales tax hike? Only if pension reform passes
Cook County Board President Toni Preckwinkle said Tuesday she'll re-evaluate a proposed penny-on-the-dollar sales tax increase if lawmakers in Springfield act on county pension reform.
But since she's unsure whether the legislation will pass, she plans to forge ahead with plans to hike the sales tax to pay for pensions, debt service and infrastructure.
"We worked hard for two years on this in Springfield and we didn't get the cooperation we hoped for and expected," Preckwinkle said during a meeting with the Daily Herald Editorial Board. "Our pension reform doesn't cost the state one penny. It just gives us the ability to handle our own problems - to make our own tough decisions."
Preckwinkle's plan to hike the county portion of the sales tax by 1 percentage point is primarily aimed at shoring up a pension funding shortfall estimated at $6.5 billion and growing by $30 million a month, county officials say.
She plans to formally introduce her sales tax proposal to county commissioners Wednesday. They are scheduled to take a vote by the end of the month.
If the pension bill is approved, Preckwinkle said she and commissioners would evaluate whether the increased sales tax is needed. They would have until Oct. 1 to make that decision, when the county must report its sales tax levy to the state.
"There's no one in Cook County who's more hesitant to raise the sales tax than me, and I'm proposing it because we need the resources," Preckwinkle said.
She said she spoke last Saturday with Gov. Bruce Rauner, who pledged his support for the legislation - in exchange for her support of his Turnaround Agenda. She declined.
The pension legislation calls for reducing cost of living increases, raising the retirement age, and asking workers to pay more into the pension fund, while also increasing the county's contributions.
Unlike the pension reform law struck down by the state Supreme Court for state pensions, Preckwinkle believes the legislation for county pensions would survive a legal challenge.
The sales tax increase, if approved, would generate $308 million in 2016 - still not enough to make up a projected $479 million deficit. Preckwinkle said cuts would make up the rest, which could include demolishing buildings at the jail, consolidating office space and the vehicle fleet, and eliminating vacancies.
In 2017, the sales tax is estimated to generate $474 million.
Without an increase, Preckwinkle warns deep cuts to services like public health and safety would be needed.
Nine out of 17 votes of the board of commissioners are required to pass the tax increase. Preckwinkle said she's working to galvanize support.
What's clear, she said, is that there's no support for an increase in the county's share of property taxes.
Three of the four suburban county commissioners have said they're open to the sales tax hike, while Tim Schneider of Bartlett has said he would vote against it.
The sales tax is now 8 percent in unincorporated Cook County. The county's portion is 0.75 percent, the Regional Transportation Authority gets 1 percent, and the state receives 6.25 percent. In incorporated towns, their own sales taxes are added if any.
Under Preckwinkle's plan, the county portion would go to 1.75 percent.
Preckwinkle won election as county board president in 2010, campaigning on a pledge to repeal then-board President Todd Stroger's sales tax increase approved in 2008. By 2013, the last portion of that increase was repealed.
Preckwinkle argues her proposed tax increase today is different because she's reduced expenditures and made efficiencies in county government since taking office, such as cutting the size of the workforce, reducing taxpayers' contributions to the county hospitals, and consolidating and leasing county office space.
"Frankly my view is if the sales tax had been kept in place, we wouldn't have been able to address the bloat and inefficiencies in county government. Repealing the sales tax forced us to do that and put us in a good position now going forward," Preckwinkle said. "As it is, we're going back to the sales tax, because that's where we think we can get nine votes."
What the sales tax increase would pay for
<b>2016</b>$270 million - Pensions
$10 million - Highway infrastructure
$25 million - Debt service payments
<b>2017</b>$340 million - Pensions
$65 million - Highway infrastructure
$55 million - Debt service payments
$14 million - Capital funding
Source: Cook County board president's office