Chicagoans drowned in new tax proposal

Proposed water and sewer tax hikes hit struggling city residents the hardest.

Mayor Rahm Emanuel has unveiled a new plan to bail out the city’s largest pension fund: tax hikes on water and sewer bills.

Emanuel’s proposal calls for a 29.5 percent increase on Chicagoans’ water and sewer rates that would be implemented over the next four years. Starting in 2017, a 59 cent additional tax will be placed on every 1,000 gallons of water used. In 2018, the tax will be raised to $1.28, by 2019 the tax will be $2.01 and finally in 2020, the tax will come to a stop at $2.51 per 1,000 gallons of water.

This means the typical homeowner will see her annual bill rise by more than $225 come 2020.

Among the most vocal opponents of the measure has been Paul Hansen of the Illinois Coin Laundry Association. Hansen called the tax increase “immoral” and said that laundromats had “tried to absorb most” of the last tax hike on water, which was billed as a way to fix Chicago’s run-down sewer system, according to the Chicago Sun-Times. Hansen also indicated that the costs will likely be passed on to consumers who already had to swallow a 100 percent water and sewer tax hike that was enacted over the last three years; bad news for Chicagoans who already pay the highest sales taxes in the nation.

This water and sewer tax proposal is also another blow to Chicago’s struggling small-business community, which has had to contend with a barrage of costly city measures, including this year’s property-tax hike, mandated sick leave for employees, a partial ban on plastic bags and scheduled raises to the city minimum wage.

These changes are adding up. “As many as 25 laundromats have closed,” Hansen told the Sun-Times.

While businesses and homeowners will face increased expenses, those most likely to bear the brunt of the burden will be lower-income Chicago residents. Renters will face increased prices at coin-operated laundry machines as well as heftier utility bills, not to mention a larger share of their income will be eaten up by the rate hikes. Simply put, this tax would hit the poorest Chicagoans the hardest.

Emanuel’s latest regressive cash-grab is not the first of its kind. And it certainly won’t be the last. While this tax hike may give the Municipal Employees’ Annuity and Benefit Fund a stay of execution, it will not save it from insolvency. With more than $7 billion in unfunded liabilities, Emanuel’s proposal is not a long-term solution and does not offer any major reforms to reduce costs.

The worst part is Chicago’s retirement funds have not changed course despite the increased cost to taxpayers; in the last four years the number of city pensioners receiving six-figure payments has tripled. The combined debt of Chicago’s four pension funds is $34 billion, not including Chicago Public Schools. Without fundamental reforms to collective bargaining and a transition to 401(k)-style retirement plans for new employees, pension debt will only grow.

Chicagoans cannot afford to substitute real solutions for tax increases on its most vulnerable residents. With laundromats closing and lower-income residents being asked to pay more, city leaders face an inconvenient question: How much longer will Chicago taxpayers be forced to prop up a failed system?