CTU proposes concrete revenue plan
Thursday, May 5, 2016 - Posted by Rich Miller
* The Chicago Teachers Union has released a $502 million wish list of revenue that the city can tap without state action…
Reinstate and increase the Corporate Employer Expense Tax (“Head Tax”) – Reinstate and increase the Employers Expense Tax at four times the previous level. Annual Revenue Potential: $94 million
Personal Property Lease Tax (Mun. Code Ref. 3-32) - Increase the Personal Property Lease Tax rate from 9.0% to 11.0%. This most impacts people visiting from outside of Chicago when they rent vehicles. Annual Revenue Potential: $35 million
Rideshare Tax - Impose a tax on ride-sharing services like Uber and Lyft. Annual Revenue Potential: $15 million
TIF Surplus – Make funds in the city’s 150-plus TIF accounts that are not already tied to debt service or an active project available for use to address the funding needs at the Chicago Public Schools. Declare surplus funds and distribute those funds immediately. Increase reporting requirements for improved transparency on TIF accounts. Annual Revenue Potential: $100 million
Chicago Hotel Accommodations Tax (Mun. Code Ref. 3-24) – Increase the City’s Hotel Accommodations Tax from 4.5% to 6.0%. Annual Revenue Potential: $30 million
Commercial Property Tax assessment - Upon the sale of a building, the assessed valuation is automatically set at 25% of sale price. Annual Revenue Potential: $100 million
Chicago Vehicle Fuel Tax (Mun. Code Ref. 3-52) – The City’s current rate of 5 cents/gallon generates an estimated $48.9 million per year (FY 2015). Due to falling gas prices over the past few years, an additional 10 cents may be imposed without consumers feeling as much pain as other tax increases. Annual Revenue Potential: $98 million
Special Service Area (SSA) Tax Levy (35 ILCS 200/27-5) – Under Illinois law, the City of Chicago has the authority to establish special service areas within the City of Chicago and levy taxes (on the properties within the SSA boundaries) to fund debt service and/or annual operations associated with the special municipal services and related capital improvements. Conceptually, the City could create special service areas to pay for certain educational programs, which are only offered in certain geographic areas of the City or CPS capital improvements, which only benefit a well-defined geography. Annual Revenue Potential: $100 million
Redirect $1.2 billion Lucas Museum Bond to Chicago Public Schools – It looks like a museum on the lakefront for a billionaire’s private collection is not viable. Now we have an opportunity to redirect those critical resources to 400,000 students in CPS. Revenue Potential : $30 million
The CTU also said it would sunset all the revenue ideas in 2019, “at the conclusion of what CTU expects to be Governor Bruce Rauner’s first and only term in office and when the first session of the Illinois General Assembly without his interference ends.” OK, but what if he’s reelected?
Also, the school system has a $1.1 billion structural deficit, so the union’s plan only gets it to the halfway point.
* Greg Hinz has some thoughts and react…
Let’s just say that anyone who buys gasoline, owns commercial property, rides on Uber or Lyft, stays in a hotel or operates a business that employs people will not be happy. […]
Heading the list is $94 million a year from reinstating—at a quadrupled rate—the city’s former head tax, which Mayor Rahm Emanuel finally finished repealing. CTU did not give a monthly number per employee, and failed to immediately return phone calls seeking details. Emanuel said at the time that tax was driving employers out of town. […]
[The hotel tax hike] would “easily” would give Chicago the highest combined hotel tax in the county—it’s now 17.4 percent if all city, county and other levies are added together, said Marc Gordon, president and CEO of the Illinois Hotel & Lodging Association. “We just had a terrible first quarter, and this will hurt us more,” Gordon said. “A lot of people will be laid off, and tax revenue hurt” as Chicago becomes uncompetitive. […]
Uber and the Chicagoland Chamber of Commerce had no immediate comment on the proposal. But Kelley Quinn, Mayor Emanuel’s director of communications, responded with an emailed statement: “Of all organizations, the Chicago Teachers Union should understand how students and taxpayers are being shortchanged by the current funding system in Springfield. In addition to the inequity that exists for students living in poverty, Chicago taxpayers are already paying twice for teacher pensions. Once for Chicago teachers as well as for suburban and downstate teachers. Before asking Chicago taxpayers to pony up more money, we need to fix this inequity in Springfield. #FixSpringfieldFirst.”
* But lots of state money for pensions isn’t likely…
[Sen. Andy Manar] has since amended the [school funding reform] legislation and is likely to push the revised measure for a full vote Thursday. The changes include extending the hold harmless provision to alternative schools and calling for the state to pick up less of Chicago’s teacher pension costs.
Under the previous version of the bill, Manar said the state would have taken on $200 million in pension costs and given the city $275 million in credit to cover a portion of the retirement system’s unfunded liability. Now, the state would only pay for the “normal” pension costs.
It’s that pension pickup that has raised concerns about the measure’s future in the House, where Speaker Michael Madigan has said the state should be focused on cutting pension costs, not taking on more.
- Madame Defarge - Thursday, May 5, 16 @ 9:27 am:
Video Gaming would bring in $40-50 million for the City if allowed in Chicago
- so... - Thursday, May 5, 16 @ 9:27 am:
Reinstate the hate head tax, and then quadruple it for good measure. Yeah, that’ll go over well.
- 47th Ward - Thursday, May 5, 16 @ 9:28 am:
I was wondering if we were ever going to see Chuy Garcia’s plan for CPS. I guess this is why he didn’t want to talk specifics.
Not that whatever Rahm comes up with will be a much better plan, but what CTU is proposing is a non-starter.
- A guy - Thursday, May 5, 16 @ 9:32 am:
Too clever by much more than half. You’ve got to be kidding. Does anyone there talk to anyone besides themselves?
- wordslinger - Thursday, May 5, 16 @ 9:44 am:
–Redirect $1.2 billion Lucas Museum Bond to Chicago Public Schools –
Please. That bond issue pitch was structured with Lucas’ $600 million-plus cash contribution for the museum to cover most of the nut. I don’t think he’s going to hand that over without his monument being built.
No futures/options transaction tax? That’s been a pipe dream of CTU’s forever.
It’s funny, though, to hear Marc Gordon crying poor mouth for the hotels.
Crain’s, with 2015 numbers:
–The strong tourism numbers translated into a record year for downtown Chicago hotels.
Despite adding 2,200 new hotel rooms—a 5.6 percent jump from the year before—Chicago’s central business district posted an average daily room rate of $206.30, a 5.3 percent increase year-over-year and the highest on record, according to hotel research firm STR.
Revenue per available room, a key measure of hotel room demand, also increased by 5.7 percent to $156.54.
The result: the city of Chicago pulled in $124.1 million in hotel tax revenue.–
- weltschmerz - Thursday, May 5, 16 @ 9:46 am:
CPS enrollment down. Rahm closes schools. Raise taxes; yeah that’s the ticket.
- NorthsideNoMore - Thursday, May 5, 16 @ 9:47 am:
So the CTU is saying the City did this not us. Lets not talk about low grad rates and high salaries or the various contract demands over
the years. We need this its for the kids ya know. No worries businesses won’t dare leave. Conventions won’t dare go someplace else. Lets punish the people who by gas here too, some of them must be from out of town. Show how any of this helps ONE student get a better education Please !
- Dee Lay - Thursday, May 5, 16 @ 9:50 am:
Hotel Accommodations Tax - Non-starter because of state laws that dictate how it is handled.
Chicago Vehicle Fuel Tax - Used to repair crumbling infrastructure
The big brains at CTU rival the big brains in the guv’s office.
- BIG R. Ph. - Thursday, May 5, 16 @ 9:52 am:
I didn’t see any expense reduction proposals.
Therefore, one must assume that the CTU has everything running at 100% efficiency.
- Carhartt Representative - Thursday, May 5, 16 @ 10:00 am:
I agree that it is probably not a great idea to use this hotel money to pay for the schools. Then again, I also wonder about the wisdom of using school money to build hotels through the TIF program.
- cgo75 - Thursday, May 5, 16 @ 10:02 am:
My first reaction was that these are ludicrous solutions but as I further pondered this, I’m left with at least it’s a proposal on the table that people can dissect and hopefully come up with some viable options. It’s better than no proposal at all
- RNUG - Thursday, May 5, 16 @ 10:14 am:
At least somebody is willing to suggest new revenue …
- Jim Nossian - Thursday, May 5, 16 @ 10:14 am:
@carhartt:
I agree with your point about TIF’s. I believe that a certain private Catholic university can also build an arena with their own money. The same should have been done for a professional football team as well. No need to subsidize with Free Government Entitlements.
- Ahoy! - Thursday, May 5, 16 @ 10:20 am:
–OK, but what if he’s reelected?–
Unions in Illinois don’t think about financial ramifications for the future, they only care about getting what they want today. The younger generation (my generation) is not thought of by them.
- Commander Norton - Thursday, May 5, 16 @ 10:22 am:
I really don’t trust any shop that emails a statement ending in a hashtag…
- D.P.Gumby - Thursday, May 5, 16 @ 10:26 am:
CTU has done more than Brucie or T-Rump have ever done…put actual, real numbers on the table. No one may like them, but they are real and not fantasy.
- Gooner - Thursday, May 5, 16 @ 10:27 am:
I’m not sure why they would include the head tax.
It is a terrible idea and a non-starter.
It doesn’t even count as a bargaining chip. Nobody is going to take it seriously.
- OneMan - Thursday, May 5, 16 @ 10:31 am:
I think most folks would agree the TIF thing is overused in Chicago at this point.
Also the Rauner isn’t going to be governor anymore thought is not only some nice projection, but also begs the fact that a new Democratic Governor would increase revenue in such as way that CPS would see a fair amount of it.
It’s that kind of wishful thinking that got us into some of these issues.
- Beaner - Thursday, May 5, 16 @ 10:54 am:
Okay, back to my grindstone. They missed one: Chicago taxes bottled water at 3X the rate of beer. They passed it by calling a “Yuppie” tax if I recall. Just say’n, if you have a nickel tax on a plastic bottle or water, why can’t one do the same thing to beer?
- plutocrat03 - Thursday, May 5, 16 @ 11:06 am:
There is always another tax that can be raised no matter how high the current taxes are. There is always an ‘other’ group who is obviously not paying their fair share or even better a group that participates is some sort of ’sinful’ activity like smoking , gambling, consuming alcohol.
It is only a revenue problem preventing them from getting more.
And more is never enough.
- jack28 - Thursday, May 5, 16 @ 11:15 am:
If CTU wants to drive all business out of the city, fine with me, but then don’t go crying to state taxpayers.
- Cathartt Representative - Thursday, May 5, 16 @ 11:27 am:
@Jim
Consider the school’s supposed emphasis on service, it did strike me as highly hypocritical
- Morgan County - Thursday, May 5, 16 @ 11:29 am:
To me those sunset clauses in this bill and the AFSCME bill are slap in the face to the Governor and Republicans in general. Great way to drum up support.
- Earnest - Thursday, May 5, 16 @ 11:38 am:
>at least it’s a proposal on the table that people can dissect and hopefully come up with some viable options. It’s better than no proposal at all
Agree. Also, for both state and city, there need to be separate discussions, one about raising revenue to pay back the money we owe and one about an ongoing budget that accomplishes the business of the state (or school) with a balance of revenue and expense. There are great discussions to be had there.
- cgo75 - Thursday, May 5, 16 @ 11:58 am:
I wonder if a congestion charge into the loop could be considered. London charges the equivalent of $16 USD to enter Central London during peak hours. This could be a huge revenue boost that would target suburbanites.
- 47th Ward - Thursday, May 5, 16 @ 12:05 pm:
CTU is asking the City to raise these taxes and send the money to CPS. We could do that, I suppose.
Or maybe we could put the question to the voters and ask that they raise the CPS property tax levy. Then CTU and CPS could work together and outline a vision for what taxpayers could expect in exchange for new revenue.
I’d rather have that debate. Frankly, hiking the CPS property tax levy is the simplest and fairest way to finance public education in Chicago. I further believe that the only way the voters would go along with it is if there were solid guarantees of real, meaningful reform. No way should we spend billions more if we aren’t going to change some things and focus on outcomes.
- Chicagonk - Thursday, May 5, 16 @ 12:10 pm:
I’m glad the CTU put a proposal out there that was specific. Specifics should always be encouraged.
- Cringeworthy - Thursday, May 5, 16 @ 12:34 pm:
if CTU wants to get into the revenue idea business, I guess it’s fair to talk about the expense reduction side. There is a huge pay disparity between CPS and surrounding districts. It’s time to end the residency requirements for CPS and align their pay with surrounding districts or at least some form of reality.
District 65 Evanston/Skokie. Track 1
1st year. 41390
10th year. 55463
http://www.district65.net/cms/lib8/IL01906289/Centricity/Domain/91/DEC%20CONTRACT%201-28-13.pdf
District 35. Wilmette track 1
1st year. 47535
10th year. 56436
http://www.wilmette39.org/index.php?option=com_docman&task=doc_download&gid=5899&Itemid=1098
Chicago Public Schools - Track 1
1st year 50653
10th year. 73947
http://contract.ctunet.com/article:740
- Zonker - Thursday, May 5, 16 @ 12:45 pm:
@EGO75
I visited London a couple of years ago. A car’s a luxury there (as are public bathrooms without having to pay an attendant in the “tubes”), so it doesn’t affect many. Those grossly overpriced black specialty cabs are everywhere. They really have no commuter expressways there as in the US. They just have crummy two lane per side roads in poor repair. They invested in trains instead of roads, planes and autos in Europe. The London to Paris Chunnel Train rides at 150 mph are nice, but I missed quicker and cheaper plane flights in the US.
- northernwatersports - Thursday, May 5, 16 @ 12:46 pm:
Ahhhh….alas we’re still debating the question of the ‘ways’ and the ‘means’ that no one wants…to govern…to pick winners and losers. That’s really what CTU’s proposal is. At least they’re somewhat logical and can give hard numbers to ideas that can be considered.
However…that said, ALL the city pols and Rham had better have that moment of clarity, that epiphany…and realize that there is NO money coming from Springfield. The State’s problems are of truly epic proportions, and the City had best forget about relief. Relief is an illusion, a temporary day-dream.
When two ships are sinking (and there aren’t any lifeboats on this voyage) you better learn to swim on your own.
- Tone - Thursday, May 5, 16 @ 12:51 pm:
cgo75 - Thursday, May 5, 16 @ 11:58 am:
I wonder if a congestion charge into the loop could be considered. London charges the equivalent of $16 USD to enter Central London during peak hours. This could be a huge revenue boost that would target suburbanites
Yep, and encourage business to leave the CBD. Chicago is not London.
- BK Bro - Thursday, May 5, 16 @ 12:52 pm:
Lol at the title. Bulk of their proposal seems to be aimed at taxing visitors and people that don’t live in Chicago. Classic move to propose tax increases that don’t directly impact the people that you need for votes/favorable public opinion.
- Chicago Taxpayer - Thursday, May 5, 16 @ 12:59 pm:
FIrst, Chicago taxpayers are already double taxed for teacher pensions–through their property taxes for Chicago and income taxes for suburban and downstate teachers. Only taxpayers in the State who are double taxed.
So CTU wants to make the burden even greater, while letting Rauner and the GA get away with shortchanging the kids they teach. Wow. Whose side are they really on?
That’s a great slogan for CTU: Wait until 2019!
- Anony - Thursday, May 5, 16 @ 2:19 pm:
If we’re going to propose tax hikes to bail out CPS and CTU, I think the tax should be at least somewhat related to the expenditure. Why should people from outside the state pay for your kids’ education?
- Woodstock - Thursday, May 5, 16 @ 2:22 pm:
Would it really be that bad for all of us to pay a n extra 300 or 400 hundred dollars more a year in taxes to make sure our teachers had a decent wages.
- Angry Chicagoan - Thursday, May 5, 16 @ 2:24 pm:
Maybe a 50-50 split, 50 percent new revenue, 50 percent CTU concessions?
- Rasselas - Thursday, May 5, 16 @ 2:39 pm:
Cringeworthy - are you sure you’re not comparing apples and oranges? In particular, aren’t Evanston and Wilmette K-8 districts while CPS is a unit K-12 district? In the suburbs, at least, the salaries at elementary schools are lower than those at the high schools. I’d imagine CPS’s average is a blend.
- RNUG - Thursday, May 5, 16 @ 3:10 pm:
== FIrst, Chicago taxpayers are already double taxed for teacher pensions–through their property taxes for Chicago and income taxes for suburban and downstate teachers. Only taxpayers in the State who are double taxed. ==
More accurately, the only taxpayers in the state that ASKED to be double taxed because they wanted complete control of CPS and got a (relatively speaking) generous school funding formula that takes it into account.
- broketaxpaper - Thursday, May 5, 16 @ 4:27 pm:
Here is a revenue idea…. Have the teachers pay their 7% pension contribution and redirect those dollars to pay non-salary budget costs.