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 In a half-hour speech to Chicago's 50 aldermen, Emanuel said
spending cuts would mean reducing 20 percent of the police force,
closing 48 fire stations and laying off 40 percent of the city's
firefighters.
"In short, if we were to fund our pensions with cuts alone, our city
services would become unreliable. Our city would become unlivable.
And that would be totally unacceptable," he said, promising his plan
would wipe out Chicago's structural budget deficit within the next
four years.
Emanuel, who was elected to a second term in February, proposed a
$543 million increase in property taxes - between now and 2018 - to
cover police and fire pensions.
Facing a budget shortfall that could hit $745 million, Emanuel is
also proposing a per-ride surcharge on taxi and ride-sharing
services to raise $48.6 million and a new monthly garbage fee of
$9.50 per household to gain $62.7 million. Garbage pickup is
currently free for residences.
While Emanuel's proposals usually pass the city council easily, the
property tax hike may meet resistance.
"Every time there was a property tax increase of any size ... there
has been an aldermanic revolt," said Dick Simpson, political science
professor at University of Illinois at Chicago and a former alderman
in the 1970s.
 Ed Burke, chairman of the city council's finance committee, said
aldermen will have opportunities in the coming weeks to see if there
are other solutions.
"Public service requires people to display courage and take tough
votes and this is a tough vote," Burke told reporters after the
mayor's speech.
Alderman Scott Waguespack, a member of the council's small, but
vocal Progressive Caucus, said the property tax increase will be
hard for taxpayers to swallow.
"We've offered (the mayor) specifically at least two dozen revenue
streams and other options, waste and inefficiencies, that can be
fixed and we just haven't seen it in this proposal," he told
reporters.
If the third-largest U.S. city cannot get its finances under control
Chicago faces further downgrades by credit rating agencies, thus
making it more expensive to raise funds through bond sales.
Moody's Investors Service, which has already cut the city's credit
rating to junk, said on Tuesday it would withhold comment until a
budget is passed.
The mayor's overall budget for the fiscal year beginning Jan. 1
totals $9.32 billion, which includes $3.63 billion of spending on
operations.
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Emanuel said the lion's share of the higher property-tax burden
would be on owners of more-costly homes and commercial buildings.
But that depends on whether Illinois lawmakers approve an expanded
property tax exemption for owners of homes valued at $250,000 or
less. A House hearing on the idea is scheduled for Thursday.
Alderman Brendan Reilly, who represents the downtown central
business district, said piling more taxes onto businesses risks
pushing the city's economy to a tipping point.
In addition to the expanded exemption, Emanuel is counting on the
state to enact a law to lower the city's contributions to its police
and fire pension funds, which are due to spike starting this year.
(http://link.reuters.com/cyt65w) However, the city's requests have
become entangled in the Illinois budget standoff between the
Republican governor and Democrats who control the legislature.
Governor Bruce Rauner wants to temporarily freeze local property
taxes, while giving local governments ways to save money, including
curbing collective bargaining with their workers -- a move strongly
opposed by Democrats.
Meanwhile, the city council could as soon as Thursday approve bond
sales for Chicago, including a restructuring and refunding of $500
million of general obligation bonds and $2 billion of new and
refunding revenue bonds for O'Hare Airport.
In the wake of credit downgrades, the city has had to pay a stiff
penalty to sell its bonds.
“Nothing about this particular budget proposal is going to change
our view on the (city),” said Andrew Clinton, president of Clinton
Investment Management.
(Additional reporting by Karl Plume and Dave McKinney in Chicago and
Jessica DiNapoli in New York; Writing by Fiona Ortiz; Editing by
Matthew Lewis and Diane Craft)
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