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[Posted by Mike Murray]
CPS is looking for a property tax increase to partially make up a $475 million gap in this year’s budget…
* Chicago schools putting property tax hike on table
Chicago Public Schools leaders want a 1.5 percent property tax increase to balance this year’s budget — a hike they estimate would cost an extra $18 a year for the owner of a $262,000 home.
Schools CEO Ron Huberman delivered the tax news Tuesday at a news conference where he laid out a “dire” financial situation for this year and next. Huberman listed increasing employee pension costs and the state’s money woes as leading pressures on the district’s spending plans.
City school officials for months have been warning of a budget gap of $475 million or more in their $5.33 billion budget. The $475 million is the largest dollar deficit since Mayor Richard Daley took over the district in 1995. Next year, Huberman is projecting a budget hole close to $1 billion.
“This year, [students and parents] should not see any difference at the classroom level,” Huberman said. “If we don’t figure out something different for next year” they will, he said.
-And Mayor Daley has the stones to call this tax abatement, what utter hog-wash…
* Daley to taxpayers: Increase is an ‘abatement’
Concerned about a political backlash from struggling homeowners, Mayor Daley tried Tuesday to portray a $43 million property tax increase for Chicago Public Schools as an “abatement.”
That’s because his handpicked school officials wanted to raise property taxes by the maximum allowed by the property tax cap, as they have for 11 of the 14 years since Daley’s school takeover.[…]
“They’re not raising property taxes. We’re abating 50 percent of the property tax. … Instead of going up to $83 [million] or $100 million, we’re abating about fifty-some million,” Daley said.[…]
Daley refused to discuss the record $900 million deficit the Chicago Public Schools are facing in 2010, telling reporters, “One year at a time.”
- To his credit, though, Mayor Daley is calling for a solution that includes some shared sacrifice…
* Daley Hints at Concessions for Teachers Union
Mayor Richard Daley is hinting Chicago Public Schools teachers may have to forgo a scheduled pay raise to help balance the district’s budget.
Chicago teachers are due for a four percent pay bump next year, thanks to their union contract.
But Chicago Public Schools released a dismal budget estimate Tuesday, complete with a $900 million deficit for next year.
To help close the gap, Daley says “everybody has to chip in.”
-Not Surprisingly, this idea did not go over well with the teacher’s union….
* Teachers Union Not Happy About Prospect of Skipping Pay Hike
GENOVA: For us to go back to our members, and tell them that we’re now going to forgo a four-percent salary increase that they deserve is really just something we can’t accept at this time.
Genova says it was the Mayor’s office that pushed for the four percent hike in the first place.
She says it should have been able to foresee the revenue shortfall.
And she faults Chicago Public Schools for not paying into the teachers’ pension fund while the economy was strong.
- The real fiscal problem, much like at the state level, is the government’s (in this case the City of Chicago) huge unfunded pension liabilities.
* Property tax hike likely to pay for public schools
And, he warned, even worse news is ahead. The next budget deficit, in fiscal year 2011, could top $900 million — a hole so big the system would have to increase class sizes and eliminate teachers unless “cost containment on the pension and wage fronts’’ is achieved, Huberman said.
Some classroom teacher job cuts may even start this coming school year. After shaving 572 jobs outside the classroom, another 450 job cuts are planned this year — and some may be in schools, Huberman said.[…]
Their biggest obstacle was a teacher pension tab that that will balloon 70 percent — from $177.8 million to $307.5 million in the coming fiscal year — and is expected to skyrocket to $536.3 million in fiscal year 2011. By then, officials said, CPS probably won’t be able to raise property taxes because such hikes are tied to the consumer price index, which is expected to be flat.
“The Chicago Public Schools face a pension tsumani,’’ said Civic Federation President Lawrence Msall. “The next two years are going to be very difficult.’’
-And again, just like with the state pensions, the problems do not stem from the high cost of pension payments. (e.g. it is not high cost of salaries or fattened unions) I am not saying that lower salaries would not help solve the problem, but a contract is a contract and governments should be fiscally responsible and make their payments to avoid huge accumulated debts and the extraordinarily burdensome interests payments.
The cause of the pension problem comes from poor management by elected officials and government agencies. In this case it was CPS…
The CTU pension fund is out roughly $2 billion dollars because CPS diverted money it should have contributed to the pension fund to balance its budget from 1995 to 2005, Genova said.
“We’re not the federal government, and we’re not going to provide a bailout to CPS. They need to go back to the Legislature to get needed revenues,’’ Genova said.
-Mayor Daley, however, makes a very fair point in regards to pensions. It does not let CPS off the hook, but it does help explain why taxes ‘have’ to go up to fill the budget gap
* Daley: Taxpayers ‘double-taxed’ for teacher pensions
Chicago taxpayers are being “double-taxed” for teacher pensions, setting the stage for a $43 million school property tax increase, Mayor Daley charged Wednesday.
Daley said he gave Schools CEO Ron Huberman the green light to raise real estate taxes — but not by the maximum allowed by a property tax cap — because it was the only way out of the pension dilemma created by the General Assembly’s double-standard.
“We pay a double-tax. The pension is picked up by state government for all teachers outside Chicago. As a taxpayer in Chicago, you pay a tax there. Then, you pay another tax because the state excludes Chicago teachers. So, you’re paying two pension taxes: one for the state and one for the city,” Daley said.
“We’re the only, only local government doing that in the whole state. That puts a huge burden upon the school system. … You’re paying two taxes. This is really unfair and we have to do something about it immediately.”
So how does all this relate to the Olympics… I could not find the article that states the amount stockpiled TIF funds Chicago has, but I remember it is in the 100’s of millions. If someone could post it in comments that would be great, but I do not have time to find it.
Anyway, that pot of money could be used to help the city’s budget problems, including CPS. Instead the mayor is saving it away. I suspect it will be used for infrastructure improvements, improvements meant to bring Chicago the 2016 Olympics.
As possible evidence, well lets look at these…
* Park Dist. OKs 2 new lakefront harbors
It’s also designed as a short-term option for boaters displaced from Monroe Harbor should the city win the 2016 Summer Olympics.
One new harbor would go in at 31st Street, south of the proposed Olympic Village. A second, smaller “Gateway Harbor” would be created south of Navy Pier and north of the Chicago River, according to a plan approved Wednesday by the Chicago Park District Board.The price tag for the two harbors is put at $110 million.
Construction costs will be paid for by an alternative revenue bond, covered by boat owners who buy the slips over the next 20 years, said Park District Supt. Timothy J. Mitchell, who says the harbors are moneymakers.
[emphasis added]
* CTA moves to extend L lines
The Chicago Transit Authority board voted today to accept proposals to extend the Red, Yellow and Orange lines on the L system.
The CTA is hoping to be able to get federal funding for its plans to extend the Red Line to 130th Street, the Orange Line to Ford City mall and the Yellow Line / Skokie Swift to Old Orchard shopping center in Skokie.
This is the first step of many the CTA will have to take before ground is actually broken on any of these projects. The next step: preparing an environmental impact statement needed to qualify for federal money.
* CTA Approves Next Steps For Rail Extension
The Chicago Transit Authority Board has approved plans to extend three rail lines. The projects are estimated to cost nearly $2 billion.
* CTA proposes one ‘L’ of a dream
- The city does have some funds set aside for the Olympics though.
* Chicago 2016’s final fundraiser nets $5 million
Chicago’s final fundraiser for its 2016 Olympic bid drew the biggest crowd yet, but raised only about $5 million Wednesday evening, the lowest tally of three major events aimed at luring private cash.[…]
The first major fundraiser, in March 2007, raised $9.4 million, and the second, in July 2008, raised more than $12 million. This fundraiser comes at a time of deep recession and at a point when the bid has met its main targets.
Before the gathering, the bid committee had raised $66.6 million in cash and $9.5 million in pledges. These funds were raised to pay for the $9 million domestic phase of the competition and the $49.3 million international campaign, and to finance World Sport Chicago, an affiliated non-profit group that fosters amateur sports. Most proceeds from Wednesday’s event will further fund World Sport Chicago.
posted by Mike Murray
Thursday, Aug 13, 09 @ 11:05 am
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Mike, there’s allegedly about $1.4 billion collectively in Chicago TIFs. Greg Hinz at Crain’s, PI, and Ben Joravsky at the Reader each cover this topic, quite extensively in the case of the latter two.
It’s not entirely clear whether or not all or a certain portion of the TIF funds can be allocated to general operations or the CPS. Daley says no, which leads me to think the answer is yes. Either way, it’s apparent that he has rampantly abused the system and exploited loopholes at every turn. And now it’s costing us in a big way.
Comment by The Doc Thursday, Aug 13, 09 @ 11:21 am
Some ambitious young lawmaker should pick up this TIF issue and run with with. It’s way overdue.
Hey Young Chicago Republicans, here’s a way to make some noise. See the playbook of the former young reformer, Pat Quinn.
Comment by wordslinger Thursday, Aug 13, 09 @ 11:33 am
What is happening with the Chicago Public School System is totally unacceptable. If you acctually break down the numbers, CPS spends more than the state average per student and twice the state average per graduate. And yet 6 in 100 CPS freshman will go on to earn a bachelors degree? Here’s a great article to find out what is really going on with CPS.
http://www.proft2010.com/news-room/contentview.asp?c=188946
Comment by Giorgio Thursday, Aug 13, 09 @ 12:16 pm
Thank God Daley’s not a doctor….
Dr. Daley: I have some great news, sir!
Patient: What’s that, doc?
Dr. Daley: Instead of amputating your entire leg because of my medical malpractice, we only need to remove your foot! You can thank me later.
Patient: But…. that’s still horrible!
Dr. Daley: Stop being such an thankless bastard.
Comment by TJ Thursday, Aug 13, 09 @ 12:30 pm
Wordslinger, it appears that Senator Boland and Rep. Hernandez attempted to address some of the TIF loopholes:
http://www.ilga.gov/legislation/BillStatus.asp?DocNum=1867%20&GAID=9&DocTypeID=HB&LegID=&SessionID=51&SpecSess=&Session=&GA=95
http://www.ilga.gov/legislation/billstatus.asp?DocNum=1990&GAID=10&GA=96&DocTypeID=SB&LegID=44900&SessionID=76
Comment by The Doc Thursday, Aug 13, 09 @ 12:32 pm
For Genova to say that they need to go back to the legislature to fix Chicago’s problem is really asking the rest of the State of Illinois to fund the problems up there. Why are the downstaters responsible? Let the Mayor and the Teachers Union solve their own problems rather than having us pay for it.
Comment by Pot Stirrer Thursday, Aug 13, 09 @ 12:34 pm
Daley, sock puppet Huberman, and CTU flack Genova are all full of hooey on the issue of downstate vs. Chicago teacher pensions. First of all, CPS has not “diverted” a penny of funding legally due the Chicago Teacher Pension Fund. Ms. Genova is speaking of the difference between actuarially calculated contributions and what the CPS actually contributed. It’s the same “ramp” issue the downstate pensions have, which is far from a diversion.
Secondly, the Chicago teachers have a richer overall benefit package than downstate, making it more expensive to fund.
Third, the Chicago pension fund, controlled by CTU representatives, has consistently earned less on its investments than downstate TRS, causing more CPS and State funding to be required. (Exhibit A: Chicago Teachers invested $25 million with the mayor’s nephew along with 4 other Chicago funds in a real estate deal under Fed scrutiny; TRS put the package in the circular file.)
Finally, Shortshanks is giving us double talk with this double tax nonsense. A huge amount of State money flows to CPS; a mere $100 million goes to pensions, which the Mayor forgot about. Other school districts receive much less State funding, in part because they don’t have to pay for pensions.
The Chicago Board of Ed has sued the State and TRS twice on this very matter and lost twice. I guess it’s that old saying, “If you have the law, hit the law; if you have the facts, hit the facts; if you have neither, hit the table.”
Comment by Arthur Andersen Thursday, Aug 13, 09 @ 1:08 pm
Listening to the CTU representative on WTTW ChicagoTonight on Wednesday, she said the union members “deserve” their raises. That is going to be a very hard sell in this financial environment. I understand the union negotiated a raise considered fair at the time. But there is a widespread recognition that there has been significant structural change in the economy since the contract was negotiated.
To spin this around, if hyper-inflation were the current issue, unions would be asking for more money, beyond the contract.
The downstate/Chicago split of laws is of concern to me as a Chicagoan. Obviously there is concern among Chicagoans about this issue. And perhaps there is some reason for it. However, isn’t the property tax also a demonstation of good enough for everyone but Chicago? If I understand the law, it is written so that the only municipality in the state that did not have a means for tax payers to protest their property tax was the city. (Help, some of you lawyers!)
As a Chicagoan I should have equal protection under state law. Unfortunately, we get the worst of both worlds with poor government across the board.
Comment by Lou Grant Thursday, Aug 13, 09 @ 1:30 pm
Lou
Just to be fair when the city was experiancing budget surplus’s and creating a so called rainy day fund in the 04,05,06 did Daley say to the teachers police fire streets and san hey we did really well this year heres 12 extra days pay and an extra percentage raise. Whats the point of having contracts when they dont mean anything. Daley and the city council screwed up, the corruption in Chicago cost tens if not hundreds of millions a year but Daley just ignores it and then acts surprised when a friend or family member gets caught. DALEY is to blame and the voters need to wake up and realize this.
Comment by fed up Thursday, Aug 13, 09 @ 1:43 pm
Arthur Anderson has it dead on right - the $ for the pension goes directly to them in the form of cash from the state - this information can be found in the state appropriation bills - most folks in Illinois are not aware of this
Comment by both ways? Thursday, Aug 13, 09 @ 5:30 pm
Regarding CTA expansion of its train lines, I wonder if there will be some NIMBY type of opposition. In many areas, there is increased criminal activity in the vicinity of CTA train terminals. The proposed plans may take years to implement, if ever, but I would not be surprised if some people oppose the extension of certain rail lines.
Comment by Honest Abe Thursday, Aug 13, 09 @ 7:06 pm
Well, Arthur,
Your post was filled with untruths and exaggerations. Let’s take them in order.
First, the CBOE did “borrow” money from the pension fund to pay for operating expenses throughout the nineties. Then they decided not to pay it back. You may not like the word diverted but this is exactly what they did. The employees paid their portion and the Board did not. Call it what you want but that’s what happened.
Secondly, the benefit package is NOT more generous that the downstate teachers. In many ways it is not as good as downstate. Retiree health insurance, for example, is sometimes subsidised on a yearly basis by the state but not nearly to the extent that the downstate fund is.
Thirdly, the fund is NOT controlled by the union. The different constituencies elect a proportional number of board members. The union does endorse teacher candidates just like the TRS unions do. Sometimes they win, sometimes not.
By the way, why do you think that the downstate districts don’t have to pay pension funds? It is because the state does or at least is supposed to. Shouldn’t the revenue be equitably distributed to all districts? The Chicago system should receive proportionally the same funding from the state that the downstate schools receive based on the number of students served and the amount of state revenue received from residents. That is not the case now and it never has been. The truth is, all in all, that the residents of Chicago pay for their schools and also pay to subsidize the rest of the state.
Why not base school funding based on the amount of tax revenue generated by each geographical region? The answer is that there would be no public schools in the southern third of the state. There is just not that much tax revenue generated by national parks, boarded up coal mines, and Wal marts.
Comment by Bill Friday, Aug 14, 09 @ 8:58 am
[…] We live in a truly Orwellian place called Chicago. Guided by the mayor and the local Olympic boosters, we are being sold tripe about the economic benefits to the 2016 games. The mayor has defended tax increases by calling them abatements, has sold us tax increases by saying they won’t effect us, just tourists…I am a citizen of Chicago, I am upset by the mismanagement by the city of its assets. I do not believe the committee and this mayor any more. I say NO to the games. NO to taxpayers assuming the risk. NO to this mayor and this inept City Council and even worse Cook County government. Read the full column. […]
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