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EDITORIAL: Proposed Chicago tax hike a horrible solution to public pension problem

On Tuesday, Chicago Mayor Rahm Emanuel told the city’s 50 aldermen that if they didn’t pass the largest property tax increase in Chicago’s recent history, the city “would become unlivable.” Mr. Emanuel wants to increase property taxes by a record $588 million over the next four years to bolster police and fire pensions. He’s also seeking other new fees and tax increases to offset Chicago’s annual budget deficit. Those increases include a new garbage-hauling fee, new taxes on electronic cigarettes and ride sharing, and increases on building permit and taxi fees.

Mr. Emanuel says that if he were forced to cut the budget and not raise taxes, 20 percent of the city’s police officers would be out of job and half of Chicago’s fire stations would be closed. There would be no money to fix the city’s potholes. Trash pickup would be limited to twice a month, and the city’s rats would overrun the alleys because there would be no money to control them.

Of course, nowhere in Mayor Emanuel’s proposed record tax increases is any mention of improved services for the city’s residents. No, what he’s proposing is the coward’s way out of a problem Chicago’s politicians and employee unions have created and brazenly worsened over several decades.

Mr. Emanuel is telling residents that they must make all-new sacrifices in their households so public employees don’t have to. He’s telling city residents that they have to pay higher taxes to support government retirement benefits that they don’t have for themselves. History shows that if the city’s aldermen vote for the tax increase, Chicago residents can simply expect to be hit with more tax increases. (Remember when Chicago imposed the nation’s first bottled water tax just a few years ago? That was a fun one.)

A 1970 provision in Illinois’ state constitution makes union pensions untouchable and open to all kinds of nefarious, court-backed padding on the part of the unions. The property tax increase isn’t enough to cover the city’s pension burdens (which, it must be noted, are on top of the state’s huge pension shortfall). Although Chicago and Illinois have alarmingly insolvent pensions, what’s happening there is a warning to call to Nevada and every other state about what can happen if steps aren’t taken to reform overly generous government compensation.

A courageous solution would be to lay off huge numbers of government employees and tell them to try to make a living in the private sector; outsource as many city positions and services as possible; and start the process of amending the state’s constitution so that cities and the state can enact a pension fix that doesn’t bankrupt every government and household in Illinois. Then, perhaps, Chicago could become “livable” once again.

 

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