Late last night, a homeowners property tax exemption bill was submitted in Springfield yesterday as an amendment to SB1488, a bill on second reading in the Illinois House. Introduced by House Majority Leader Barbara Flynn Currie, the legislation is reportedly Mayor Rahm Emanuel’s. The legislation calls for a $14,000 property tax exemption in only Chicago, with no mention of Emanuel's previously proposed $250,000 property value limit. The amendment also includes a requirement for companion enacting legislation by Chicago and Cook County governments. The House Revenue & Finance Committee has scheduled a vote on the amendment at 11:00 a.m. today.

Meanwhile back in Chicago, with only a handful of the public witnesses signed up yesterday to testify against Mayor Emanuel’s proposed property tax increase at the morning’s “truth in taxation” public hearing, aldermen spent a majority of the hour and a half long Finance Committee meeting asking the mayor’s budget team what would happen to homeowners’ property tax bills if Springfield fails to pass the Mayor’s plan to double the homeowners’ exemption, and what would happen to the City if the Governor vetoed the Mayor’s pension relief plan.

Aldermen Present: Chairman Ed Burke (14) Pat Dowell (3), Gregory Mitchell (7), Patrick Daley Thompson (11), Matt O’Shea (19), Mike Zalewski (23), Jason Ervin (28), Ariel Reboyras (30), Scott Waguespack (32), Gilbert Villegas (36),  Marge Laurino (39), Anthony Napolitano (41), Michele Smith (43).

“Do we know the status of the mayor’s s- called exemption plan as of this morning?” Ald. Scott Waguespack (32) asked Budget Director Alex Holt, who was joined by the city’s Chief Financial Officer Carole Brown and the city’s attorney Steve Levin.

Holt said aldermen can expect an official bill detailing the homeowners exemption will be introduced in “the next week or so,” but it’s unlikely state lawmakers will take action on it before the City Council has to officially vote on the Mayor’s spending plan Oct. 28.

“People keep hearing about this exemption, but they don’t see any action on it... If you are relying on the aldermen to go out there to say, ‘Hey, Suck it up and take it.’ I think we need to be more forthright and tell them this is what you are going to get stuck with,” Ald. Waguespack followed up.

“The exemption doesn’t need to be in place before the end of the year,” Holt explained. “It does certainly need to be in place before the second installment [property tax] bills go out in July. Certainly for the purposes of the County, it would be preferable, given the work that they need to do, that is happen as soon as possible. But from a residents perspective, they won’t see an increase until the bill that’s due...next year.”

The budget impasse in Springfield coupled with Gov. Bruce Rauner’s pledge to only consider an exemption plan that includes “structural reforms” detailed in his Turnaround Agenda, has left aldermen with the very real possibility of voting on the Mayor’s budget before an exemption is put in place.

“What is this administration prepared to do if we don’t get that exemption?” Ald. Pat Dowell (3) asked.

Holt said historically, property tax exemptions haven’t had a hard time getting passed because they aren’t controversial. She also said the Mayor’s office is also looking into implementing a rebate plan, too. 

“I think that still has to be on the table and part of the discussion,” Holt said, before adding that an exemption is a better way to go because rebates still require payment upfront and the city would need to find another funding source, about $20 to 40 million, to pay out the rebates. There are currently two rebate proposals awaiting Council action, one from Ald. Joe Moreno (1), the other from Ald. Carlos Ramirez-Rosa (35). 

“Internally, we are working through what a rebate would have to look like, but as Alex mentioned earlier, our expectation is that they will be introducing the homeowner exemption bill sometime this week, and we’re hopeful it will pass in Springfield,” CFO Brown chimed in. 

“I am not as hopeful as you are, Mrs. Brown,” Ald. Dowell replied skeptically.

Holt and Brown are equally as “hopeful” the Governor will pass a bill, SB777, extending the city’s annual required pension payments for another 15 years, but aldermen again pressed for worst-case scenarios.

“Am I correct in stating we’re levying consistent with what the proposed, pending law in Springfield is, not the existing law? Would it not be more intelligent to levy at that [required] amount, and then abate when the governor signs it?” Chairman Ed Burke(14) asked.

Holt said the Mayor has considered that option, but ultimately rejected it because current state law, which requires the public pensions be 90% funded by 2040, would force a $700 million dollar increase to the public pensions over a two year period, versus the $438 million currently budgeted.

“We’re confident and hopeful the governor should accept the Senate Bill 777, because it is about local control...he included our proposal in his own pension proposal, and we think that all things considered, since it only impacts the city of chicago and has been consistent with his approach that is shouldn’t cause any issues,” Holt explained, echoing previous statements made by the Mayor.

“Maybe we ought to ask him, are you going to sign this or not,” Chairman Burke joked. 

Brown said if the City Council failed to approve the 2015 property tax levy and Gov. Rauner refused to extend the pension payment timeline for the Police and Fire pensions, state law has a “intercept provision” that lets the pension funds demand payment within 90 days of the bill’s due date. That means the retirement boards for the police and fire pensions may “petition the state to withhold money from us,” Brown says. 

“There is some discussion as to whether that just means grant dollars that we receive from the state, which are largely dedicated to things like road construction, as well as, social services...about $150 million dollars. Or whether that means they can take from any of the funds granted to the city: income tax, sales tax, about a billion dollars. So it would have a significant impact on our operations,” Brown explained.

The Finance Committee will vote on the 2015, 2016, 2017 and 2018 property tax levies at tomorrow’s 10:00 a.m. meeting, in addition to voting on other fines and tax increases detailed in the 2016 revenue ordinance.

[A detailed list of proposed new those fines and fees, including property tax proposals are in our Oct 15 report.]

The Finance Committee is also scheduled to discuss resolutions filed by the retirement boards that oversee four of the City’s public pension funds. Pursuant to state law, the retirement boards are required to send yearly estimates of the City’s portion to the fund. This includes the all annuities, benefits, and administrative expenses for each fund for the year 2016, payment due in 2017. Chairman Burke tabled these resolutions at the last Finance meeting because CFO Brown wasn’t on hand to testify.

With a roughly $8 billion unfunded liability, the Policemen’s Annuity and Benefit Fund is requesting $675.8 million from the 2016 property tax levy. Mayor Emanuel proposed a $464 million payment for 2016. The Firemen's Annuity and Benefit Fund is requesting $284 million, a slight increase from the Mayor’s proposed $208 million payment for 2016.

The Laborers’ and Retirement Retirement Board Employees’ Annuity and Benefit Fund is requesting $28.5 million, while the Municipal Employees’ Annuity and Benefit Fund is requesting $277.7 million. Both of those funds are about the same Mayor budgeted for 2016 due to a new plan for those funds enacted by the state legislature in 2014.