Google+
Close
Rahm’s Budget
The tough guy takes on a tough deficit.


Text  


Daniel Foster

 

When Rahm Emanuel swept into the mayoralty of the Second City in February, taking a clean majority in the unwieldy nonpartisan-ballot free-for-all and thus avoiding an April runoff, the editors had this to say in NRODT’s “The Week”:

We knew the former ballerino could dance the White Swan that is campaigning, but governing Chicago will call for sterner stuff. The city is facing a 15 percent, $500 million budget hole that is growing even as Emanuel plans his transition. Fixing it will require taking on the city’s bloated public sector, following the lead of Democrats like Gov. Andrew Cuomo in Albany. Is Mayor Rahm up to it? We know he has a reputation for toughness, but the Chicago machine ain’t run by the Girl Scouts, either.

 

Indeed, that 15 percent, $500 million budget hole did grow, all the way up to $636 million, with no signs of slowing down. So how has Mr. Dead Fish, the champion campaigner and Washington power broker, responded to the fiscal challenges of a post-Daley, Great Recession Chicago? Among the handful of Democrats elected to executive positions after 2008, is he closer to the pragmatic, budget-cutting Cuomo, or (anti-) business-as-usual Jerry Brown of California?

Advertisement
Well, look at the top lines. Rahm has a $636 million budget hole to fill, and he’s proposed $417 million in cuts and $238 million in new revenue increases to fill it. Not bad for a Democrat. And a look at the details makes it seem less bad still.

The budget avoids raising property and sales taxes, and leaves a new city income tax (like the one in New York) off the table. It even reduces — and Emanuel has promised to eventually eliminate — the city’s “head” tax on businesses, which is really nothing more than an unmediated tax on job creation. So where is the new revenue coming from? A $1.78 increase in the city’s hotel tax, coupled with increases in parking and vehicle-sticker fees. While the increases could impact tourists and commuters in Chicago, they are also focused on what Laurence Msall of Illinois’s Civic Federation, a non-partisan tax-policy think tank, calls “avoidable expenses.”

“Focusing on user fees is far preferable to general tax increases, especially as the city struggles to deal with ongoing economic distress,” says Msall. “The positive of the fees is that they are for the most part tied to either avoidable expenses — in the form of parking downtown — or they’re tied to providing enhanced benefits to the city.” (Emanuel’s proposed water and sewage fee increases are directly tied to improving the city’s aged piping and other infrastructure.)

Nor does the mayor’s revenue forecast appear to be overly sunny. Projected revenue growth is 1.2 percent — a number Msall calls “reasonable and conservative.” The budget also builds in an extra $20 million for the city’s rainy-day fund — a surplus that gives Emanuel a small cushion should revenue fail to meet expectations.



Text