Chicago Mayor Rahm Emanuel presented his 2013 budget to the city council today, profusely emphasizing that the budget contains no new taxes.
“This is a budget that allows us to make critical investments by reforming government instead of raising taxes,” Emanuel said in a statement. “As I pledged, we will not raise sales taxes; we will not raise the fuel tax; we will not raise the amusement tax.”
So are no new taxes a good thing?
No new taxes or fees sounds like a popular idea, but it also means a lack of revenue for policies that have a lot of backing. For example, some aldermen indicate that they want to hire 1,000 police officers this year to combat growing street violence and replace retired cops. But the Emanuel budget calls for just 500 more hires.
Aldermen so far, though, have not come forward with their own revenue ideas.
A problem is that there is little a city government can do between drastic measures, like raising property taxes or introducing a municipal income tax, and more seemingly insignificant moves, like the fine and fee collection ideas Emanuel put in last year’s budget.
Many progressives would like to see a reallocation of existing revenue in the Emanuel administration’s continuation of the Tax Increment Finance, or TIF, economic development program that greatly expanded under former Mayor Richard Daley. In 2011, the TIF program diverted $454 million in property tax dollars from the city’s general revenue fund to designated TIF districts.
Several such districts are located in the affluent downtown area and neighborhoods south of the Loop. Amisha Patel, executive director of Grassroots Collaborative, says that millions of dollars would be saved from shutting these districts down.
As for generating new revenue, the city of Chicago inspector general released a report two weeks ago with a number of suggestions.
These include generating approximately $118 million by closing exemptions in the city amusement tax, an idea that Emanuel’s office initially floated in their budget talks.
The IG also estimated that by broadening the Illinois sales tax to include transactions like medical and legal services, the city could generate $500 million more each year. However, this would involve action by Springfield, not City Hall.
One controversial revenue-generating item would be a “congestion fee” on cars belonging to non-residents that enter the city’s downtown area. The IG projects that $625 million a year could be gained from the proposal if the city charged cars $5 for each time they crossed boundaries set up sixteen blocks from the city center. But the report acknowledges that such a fee is regressive – all drivers would be charged the same regardless of income – and that the enforcement mechanism would be costly to set up.
Arguably the problem with Emanuel’s budget is that none of these revenue-generating ideas are even discussed. For example, the mayor ended the public budget meetings that Daley conducted, which he himself held during his first year in office. “No neighborhood budget hearings leaves a ton of ideas off the table,” Patel contends.