Emanuel says property tax hike needed to avoid CPS ‘train wreck’

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Mayor Rahm Emanuel said Thursday he signed off on yet another massive property tax increase for teacher pensions to avoid a “train wreck” at the Chicago Public Schools after years of pension neglect.

Hours before Gov. Bruce Rauner signs a hard-fought school funding compromise that will provide a $450 million windfall for CPS, Emanuel refused to say how large a hole remains or how the city plans to fill it.

Instead, Emanuel laid the political groundwork for a $125 million property tax increase for teacher pensions — on top of the $250 million increase imposed last year.

He did that by pointing the finger in three directions: the state; Chicago teachers; and his predecessor and political mentor, former Mayor Richard M. Daley — without ever saying Daley’s name.

Emanuel noted that, from 1995 through 2004, CPS made no payment at all to the Chicago Teacher pension fund and made reduced payments from 2009 until he took office.

That postponed the day of reckoning — until now.

“Nobody takes lightly the property tax increase of $83-a-year [on a home valued at $200,000]. On the other hand, the cause of it is the state of Illinois has never contributed to teachers pensions. There was a hiatus for about a decade where the city never participated. And since 1983, teachers basically took a hiatus. That’s what created the crisis,” Emanuel said.

“Now all parties are part of actually averting that train wreck and doing what’s necessary.”

The budget framework approved this week by the mayor’s hand-picked school board counts on $269 million in help from the city.

That gap has likely been been cut in half, now that the Illinois General Assembly has authorized CPS to blow past a property tax cap and impose a 45 percent increase for teacher pensions.

But, Emanuel refused to put a number on the hole that remains. Nor would he say how a city grappling with its own sizeable budget shortfall would find the money to help put the Chicago Public Schools on solid financial footing.

Other sources said the need to tax downtown businesses, high net-worth individuals or a combination of the two has now been eliminated.

“Now that the uncertainty at CPS has been eliminated and removed, we can now start our planning process at the city. Until that happened, you couldn’t have done that,” the mayor said. “We can start our planning. That’s what we’re gonna do and when we have something to say, we’ll say it.”

Last year, Emanuel used $87.5 million in surplus tax-increment-financing funds to stave off another teachers strike.

The four-year contract included a two-year pay freeze, increased health care contributions and benefit changes and an 11th-hour concession that sealed the agreement.

It called for the mayor to drop his longstanding demand to eliminate the 7 percent “pension pick-up” granted to teachers years ago in lieu of a pay raise.

Instead, veteran teachers will continue to contribute just 2 percent to their pensions. Newly-hired teachers will contribute the full 9 percent, but they will get a commensurate pay raise to offset the cost.

Beleaguered Chicago homeowners and businesses have already endured an $838 million property tax increase for police, fire and teacher pensions and school construction. Under Emanuel, the city’s property tax levy has doubled.

If, as expected, the school board approves the $120 million increase, the hit will approach the $1 billion mark.

That has Chicago aldermen who face re-election in less than two years bracing for the political fallout — and running for cover.

Earlier this week, a 38-13 vote by the Illinois Senate sealed the school funding compromise.

The vote was the culmination of months of negotiations, finger-pointing and uncertainty for school districts across Illinois — many of which, after missing two general state aid payments, have borrowed or cut their budgets to pay for classes that are already underway.

Schools could see their money within days of the bill becoming law, according to the state comptroller.

The inclusion of a tax-credit program for private schools ate up most of the debate on the 550-page bill aimed at prioritizing new education money for Illinois’ poorest and neediest districts.

Illinois contributes the least money of all 50 states to educate its poor students and also has the largest gap between poor and rich districts.

That’s the “inequity” Emanuel talks about that will now be eliminated.

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