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 But the spending plan for the fiscal year that begins on Jan. 1
still faces uncertainties in the Illinois Legislature and supreme
court that could impair the mayor's plan to address the city's $20
billion unfunded pension liability.
Emanuel last month proposed a $543 million property tax hike phased
in over four years, as well as fee increases and spending cuts in an
attempt to fix the city's financial crisis linked largely to
pensions.
"The city council today took a big step forward in providing more
stability and more certainty and a strong financial footing for the
city going forward," Emanuel told reporters after the 35-15 vote.
Some aldermen said there were no other viable options.
"This is the equivalent of a municipal illness," said Alderman
Patrick O'Connor. "We don't have the option of saying no. We have
the option of picking our choices for staying alive."
 Alderman Carrie Austin, who heads the council's budget committee,
said there was no place left to scour for savings or revenue.
"If there was a dollar to be found, we would've found it," she said.
Ahead of the vote, Emanuel offered a stark choice - either slash
vital public safety and other services or enact Chicago's
biggest-ever property tax increase.
If Chicago cannot get its finances under control, the third- largest
U.S. city faces further downgrades by credit rating agencies, making
it more expensive to raise funds through bond sales. The city's
rating was already dropped to "junk" by Moody's Investors Service
earlier this year.
Both Moody's and Fitch Ratings said the use of higher property taxes
to pay pensions is a positive step for the city. But the credit
rating agencies noted parts of the mayor's pension strategy are
dependent on actions by the Illinois Legislature and the state
supreme court, which will take up the constitutionality of a 2014
city pension reform law next month.
"Should these decisions not match the city’s assumptions, new
operating pressures could materialize in the immediate- and
longer-term," Moody's said in a statement.
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Standard & Poor's said Chicago's financial problems remain
"substantial," and that given the pension uncertainties, it expects
the city to have contingency plans.
"In our view, the extent of the city's structural imbalance, when
factoring in required pension contributions, will take multiple
years to rectify," S&P said in a statement.
Property taxes will be boosted between now and 2018 to cover
state-mandated contribution increases to police and firefighter
pensions. But the tax increase will fall short if Illinois' governor
does not enact a state law that would spread out annual
contributions. The mayor is also pushing the state legislature for a
bill to shield residential properties valued at $250,000 or less
from the tax hike, although the city could consider a rebate program
if that measure is not enacted.
The spending plan, which includes a $3.63 billion operating budget
for fiscal 2016, creates Chicago's first-ever garbage collection fee
and generates new revenue from taxis and ride-sharing businesses. It
also reduces the city's dependence on so-called scoop and toss bond
restructurings to $125 million from $225 million this fiscal year.
The budget includes an additional $45 million property tax increase
to pay for Chicago Public Schools' capital projects.
(Editing by Matthew Lewis)
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