Rahm’s 2018 budget: More fee hikes on the way

Mayor Rahm Emanuel looks to increase costs for Chicagoans to fill budget shortfalls and failing pensions.

With the city budget shortfall now pegged at nearly $288 million, Mayor Rahm Emanuel is looking for ways to shift the cost back on residents and is expected to include new taxes and fees in his 2018 Budget Address.

Two pain points Chicagoans can expect to worsen: rideshare fees and wireless bills.

Rideshare fee hike

One idea Emanuel may choose to adopt comes from Alderman Anthony Beale, 9th Ward, to tack on an additional 48 cents per ride and to increase the $5 per-pickup fee for rides originating at McCormick Place, Navy Pier and O’Hare and Midway airports. Instead, Emanuel opted to increase the fee 15 cents per ride in 2018 and an additional 5 cents in 2019.

Beale has been pushing strict regulations while selling the narrative that it’s about being fair to the taxi industry. But it’s hard to believe Beale is concerned about fairness alone. Beale has received thousands of dollars in campaign donations from pro-taxi groups such as the Illinois Transportation Trade Association Political Action Committee, including a $5,000 contribution in 2017. Regardless, this adds up to more costs for taxpayers.

911 surcharge

Chicagoans are also likely to see their highest-in-the-nation wireless tax burden become even heavier under Emanuel’s plan.

A typical Chicago household with four wireless phones paying $100 per month for wireless voice service pays nearly $435 each year in taxes and fees, according to the Tax Foundation. This amounts to a 36 percent tax burden on Chicagoans’ wireless bills. Under some payment plans, a Chicagoan can pay more in taxes on an additional line than on the line itself.

House Bill 1811, which passed the Illinois General Assembly in July, increased 911 fees for the state to $1.50 from $0.87, and would also allow Chicago to increase its 911 fees. Chicago’s already highest-in-the-nation 911 surcharge went up to $5 from $3.90. Chicago far outpaces the rest of the country with the nearest surcharge of $3 occurring in Michigan and West Virginia. As part of Rahm’s 2018 Budget, the City Council would need to pass a tax increase to act on this new authority.

A city spokeswoman said that the city needs this tax increase for “needed modernizations and operations at our 911 center,” according to the Chicago Tribune. But the city completed an overhaul of the 911 center as recently as 2013. Additionally, the city raised the 911 surcharge in 2014 to help pay for rising pension costs.

When the 2014 increase was announced, Budget Director Alexandra Holt said it would allow the city to free up $50 million in general revenue dedicated to the 911 system. The telephone tax was viewed as the favorable alternative to hiking property taxes (which ultimately happened anyway, after Emanuel and city aldermen faced re-election in the 2015). It was sold as a modest increase to upgrade the city’s 911 center and free up general funds to make increased payments to the city’s municipal workers’ and laborers’ pension funds, as the pension reform plan requires.

In all, this is simply another city shell game and taxpayers are expected to shoulder more to make up for the city’s inability to properly budget.

Fixing the problem

The city should rebuff any attempts to increase an already exorbitant and ever growing burden of taxes and fees. From the nation’s highest wireless taxes, to taxes on streaming services such as Netflix and Spotify, to a new garbage collection fee – not to mention a record-breaking property tax increase and the highest sales taxes of any major city in the nation – residents are tapped out and have begun to express their anger. In order to quell some of this outrage, Emanuel is proposing increasing the homeowner’s exemption on property taxes to provide some relief.

Chicago and Cook County are experiencing the largest population loss in the country and the City Council should not be looking to increase an already exorbitant tax burden. Instead of nickel and diming Chicagoans, the city should be looking at reforms such as introducing a 401(k)-style alternative to failing city pension funds, addressing city spending, and eliminating tax increment financing districts. Until true reforms are enacted, the city will continue to see its residents flee for greener pastures.