When Mayor Rahm Emanuel proposed a roll of the dice on a new water and sewer tax to provide needed support for a city pension fund and help alleviate Chicago’s financial woes, it should have been clear if it wasn’t already.
That’s right. Rahm’s working his way around the Monopoly board.
Houses? The city property taxes have been jacked up. The tax on hotels? It’s been expanded to vacation rentals and other accommodations. Free parking? Since Daley, um, no.
He’s playing the classic rainy-day game to bail out a city that clearly didn’t save for a rainy day.
It beats playing Jenga, trying to take budget pieces away a little bit at a time, knowing at some point everything will come crashing down. It beats playing Sorry.
But you know Monopoly. Inevitably it drags on long enough to sap most everyone’s enthusiasm, and, win or lose, it’s not unusual to simply want to move on. Or in the case of Chicago businesses and residents, they may start wanting just to move.
Quality of life is measured in many ways. Things that aren’t going great aren’t likely to get better when funding is pared. But even people who recognize there aren’t many alternatives to bail Chicago out of its obligations have to be growing weary and wary of taxes piled upon taxes.
This time Emanuel hit waterworks, proposing a new tax that will increase water and sewer bills by a whopping 30 percent hike over four years. Arguably, it’s a necessary move. It’s almost certainly not the last. There are a lot more possibilities still on the board and in the cards.
Look at the bright side. It beats Kick the Can, long the popular game at City Hall but merely a diversion and not winnable.
The good news is that not even Moody’s Investors Service, which last year pushed Chicago’s debt rating into junk territory, believes the city is “on the brink of defaulting on its debt payments” or that its finances are “on the verge of collapse,” according to a report it issued after a top analyst spoke at the City Club of Chicago last month.
“Chicago has a very different credit profile than governments that have defaulted on their debt,” such as Detroit’s, Moody’s said. “Chicago’s economy is healthy and growing, unlike other cities that have defaulted where the economies went through a long, steep decline, and where finances were in much worse shape than Chicago’s.”
But Moody’s concern has been rooted in the fact that where the average U.S. city’s debt load and unfunded pension obligation add up to 2.4 times its operating revenue, Chicago’s is 9.4 times.
There are other factors at play, including concern over how Chicago Public Schools will resolve its own financial problems and what effect that might have on Chicago, but the need to address the pension problem looms large.
It’s hoped the water and sewer tax proposal, once it’s completely phased in, can produce $239 million a year. That money can go toward the $18.6 billion Chicago owes the municipal workers fund that represents nearly all city workers who aren’t manual laborers, firefighters or police officers.
But it’s not meant to simply address the city’s balance sheet woes. It’s meant to address critics, such as Moody’s, that believe Chicago hasn’t been dealing with its issues with enough urgency.
Something less regressive would have been preferable, and Emanuel might have had more options if he were able to play ball with Springfield, but the state has its own financial problems it’s not addressing urgently enough.
This turn Emanuel found something in the pipeline Chicago could tap, but it’s a game that can’t go on forever.
Read more at the original source: Houses, hotels, now waterworks: So this is Rahm's game plan for Chicago?
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