In response to Mayor Rahm Emanuel’s proposed $600M property tax increase, Ald. Joe Moreno (1) and the Progressive Caucus are each introducing property tax rebate plans at today’s Council meeting. Both plans would create a new city bureaucracy to manage them, and as rebates, they would require sending money back to taxpayers, unlike an exemption, which would not require taxpayers to pay the tax in the first place.

Moreno’s rebate plan is intended for households earning less than $100,000 a year. Homeowners would apply for the program with the Department of Finance, and the City’s Chief Financial Officer, Carole Brown, would establish and administer it. The CFO could call on the Office of Compliance to conduct eligibility audits. Ald. Pat Dowell (3), Ald. Roderick Sawyer (6), Ald. Michael Scott (24), Ald. Danny Solis (25), Ald. Ariel Reboyras (30), and Ald. Joe Moore (49) are co-sponsors.

The dollar amount homeowners would get back is multiplied by the difference in the City’s real estate tax assessment rate from last year to this year, then multiplied by the equalized assessed value of the home. Read the formula with an example here.

According to the formula provided by Ald. Moreno’s Legislative Director Evelyn Rodriguez, a home with $50,000 a year in income worth $250,000 could be eligible for a rebate just over $208, delivered by check. The Chicago Tribune estimates that if Emanuel’s proposed increases were in effect this year, the total bill on a $250,000 home would go up by $342, to $4,504. Rodriguez tells Aldertrack about 270,000 Chicago households would be eligible to apply for the program.

“The ordinance has received a warm reception from the Mayor’s office and it continues to garner support from my colleagues,” Moreno said, also drawing attention to a similar Progressive Caucus proposal released earlier this week, “I am also encouraged that other aldermen have released proposals and ideas with the spirit of the RELIEF ordinance. I will continue to work with my colleagues to ensure a tax rebate program such as the one I'm proposing receives widespread support.”

The Progressive Caucus rebate is also tied to income, but it would only help those living 400% below the federal poverty line. The ordinance’s formula would provide for a $400 rebate for a single median income homeowner of a property valued at $250,000. It makes use of fund set aside from the City's 2010 Property Tax Rebate program, started under Mayor Daley, but under-marketed, according to aldermen. In 2010 the City allocated $35M for a rebate, but just over $2M was distributed.

Ald. Brian Hopkins (2) is also introducing his an ordinance proposing the City switch from private internet services to a faster, more reliable fiber optic network. He estimates the city could “easily” save $100M in the first two or three years after making the switch. His ordinance calls on Innovation and Technology Commissioner Brenna Berman to develop a plan to connect all 50 aldermanic offices and City Department facilities to the existing fiber optic network the City already uses for OEMC within 90 days.

Former 33rd Ward aldermanic candidate Tim Meegan and a dozen members of his new independent political organization, 33rd Ward Working Families, showed up Tuesday night at Ald. Deb Mell’s (33) new ward office open house on Irving Park Road. According to Nick Burt, a member of Meegan’s new organization, the group wanted to talk to Ald. Mell about some local policy issues like affordable housing, a charter school moratorium, and the city budget, but were instead welcomed by four police officers. Mell strongly denied that the police officers were called, and were instead already at the event.

Burt alerted Aldertrack about the meeting after we mentioned in Tuesday’s newsletter that we spotted Meegan in one of the open house pictures Mell posted to her Facebook page.

It was the first time the 33rd Ward Working Families reached out to Ald. Mell, since they created the group after losing the election, says Burt. Asked if Mell’s staff recognized Meegan, Burt said “probably,” but noted none of their members had any identifying markers.

But Ald. Mell says she didn’t call the cops when the group showed up. She says the police, all of whom she knew from the ward’s CAPS meetings, were already at the event, and had walked into the office to say goodbye to the Alderman around the same time as Meegan and his group showed up. “There is no way I would ever call the police on a constituent,” Mell told Aldertrack.

Ald. George Cardenas (12) told Aldertrack yesterday that he won't put his controversial penny-per-ounce tax on sugary drinks up for a vote in the City Council and will instead look to Springfield to pass the tax. 

Cardenas says he and the Mayor have agreed it would be better to get Springfield to pass the tax than push it through the City Council, which could expose the City to a costly lawsuit from the beverage industry. “Can we go forward with [the tax plan]? Yeah. Can it be challenged in Court? Yeah,” he said.

A similar proposal to add a penny-per-ounce tax on sugary drinks has already been introduced in Springfield. But Cardenas said the sweetened beverage plan will be part be a "whole laundry list" of tax proposals that would need state approval, such as a congestion pricing tax and a profession services tax, according to Cardenas.

“Chicago is thriving, but the fiscal challenges before us are significant,” Mayor Rahm Emanuel told a packed City Council Chamber as he began his fifth budget address that includes a $544 million property tax increase to be phased in over four years.

[Full Speech – Full Budget Document]

The proposed $7.84 billion budget will “finally begin to reflect the true annual cost of operating the City,” the Mayor assured aldermen, as most of them focused on printed copies of his speech instead of looking at Emanuel as he made his remarks.

A press release from the Mayor Monday laid out much of what to expect yesterday, but there were still a few surprises, including a plan to privatize the City’s 311 call system, adding $1 million in savings. However, the expected items mentioned in the speech were:

• $170 million in savings and reforms, like putting street sweeping on a grid system saving $3 million, reducing non-personnel costs by $21 million and healthcare savings totaling $40 million.

• $60 million from a $9.50 monthly garbage collection fee.

• $60 million from rideshare and taxi fees.

• $1 million from a tax on e-cigarettes.

Posing the almost unimaginable scenario of police and fire cuts, and reducing garbage collection from once a week to twice a month, Emanuel socked Council with his property tax increase.

The Mayor’s budget calls for a phased-in property tax increase starting with an additional $318 million this year, $109 million in 2016, $53 million in 2017, and $63 million in 2018. All of the additional revenue will fund the City’s police and fire pension obligations.

The Mayor’s budget anticipates the FY2016 property tax levy will bring in a total of $1.26 billion, with the largest share of that money, 36%, earmarked for the Policemen's Annuity and Benefit Fund (PABF). 15% of the levy will go toward the Firemen’s Annuity and Benefit Fund (FABF).  

The 2016 proposed budget recommends a total $978.3 million contribution to the city's four pension funds, more than doubling last year’s contribution of $421.1 million. The pension payment will be funded with $786 million in revenue from property tax bills and $192.3 million from other sources.

The pension payments are based on an amended timeline that has yet to be approved by Springfield. Under current state law (Public Act 96-1495) the City’s Police and Fire pension plans must achieve a 90% funded ratio by the end of 2040. The Police Pension is only 26% funded with a $11.73 billion unfunded pension liability, and the Firemen’s Pension is only 23% funded with a $4.513 billion unfunded liability, according to the City’s 2015 Annual Financial Analysis.

The Mayor’s proposed legislation in Springfield, SB777, would stretch pension payments through 2020, in addition to pushing the 90% funding requirement to 2055. Although it has passed the Illinois House and Senate, it has not been sent to the Governor for consideration, as Rauner has not indicated if he will sign it or not. If enacted, the proposed pension payments in the Mayor’s budget would remain the same. If it fails, the city would be forced to make a bigger payment next year and even bigger ones in the future.  

The Mayor is pushing to expand the property tax exemption for homeowners whose properties are valued at $250,000 or less. The plan needs approval from Springfield, and Mayor Emanuel noted in his budget address that Illinois Speaker Mike Madiganand Senate President John Cullerton both agreed to move the legislation forward with hearings on the plan scheduled for later this week.

Finally, on debt, the city is doing a bit less than previous years. While next year’s proposed budget appropriates $593.5 million to pay down general obligation debt, last year, the city spent $623.9 million to pay down general obligation debt.

The City Council will hold hearings on the Mayor’s budget plan through October before a scheduled vote on October 28th.

We asked several Chicago influencers their reaction to the Mayor’s budget. Here are their comments:

Jesus “Chuy” Garcia
Cook County Commissioner, former mayoral candidate

“Though the mayor tried to downplay a property tax increase during the campaign; striving to make it more progressive is the way to go. The real measure of whether the budget turns the corner in addressing the long-term budget issues is the level of structural change in how we deliver essential services. We need to see changes that result in savings between the various "governments" within the city and between the city and the county. We won't know what changes have been proposed until we see more details. Then we will see if this is just a major stopgap or a real solution.”

Ralph Martire
Center for Tax and Budget Accountability

"It’s probably the most responsible budget we have in the entire state of Illinois between city of Chicago, Chicago Public Schools and the state... At least Rahm Emanuel stepped up to the plate and said if you have recurring services, you need recurring revenue." The bigger picture, Martire says, "For decades, taxpayers in Illinois have consumed public services and have not had to pay the full cost of those services in taxes. The reason for that is the significant borrowing against public employee pensions. We still have to pay it back. The only way to pay it back is to raise revenue to pay service delivery and debt. The longer we wait to do that, the higher the cost for taxpayers becomes. Maybe people thought it was a great deal to live in low-tax Illinois, but the free lunch always had to end. You have to repay your debts."   

Julie Dworkin
Chicago Coalition for the Homeless

“I think our overall reaction is that unlike the governor, [Mayor Emanuel] has made the unpopular decision to do a significant tax increase in order to generate revenue that’s needed so that we don’t have to cut important human services in the city, or cut back on pension benefits. I think it’s a positive step in the right direction. We feel like the governor and the legislature should be doing the same thing in taking the courageous move to [do the same]...The $250,000 homeowner exemption is an attempt to make it progressive, but in reality that’s going to need approval from Springfield and it might not help people who are in a fixed income but in a rapidly gentrifying neighborhood.”

Anders Lindall
AFSCME Council 31

On the outsourcing of 311: “We heard the one sentence in the mayor’s speech just like everyone else today. 311 is in effect the front doorstep for millions of Chicagoans. It’s where people call for basic city services, for information to resolve problems, or even to report crimes, and the men and women who answer those calls need to be trained, skilled, and experienced. It’s especially disturbing that the mayor would push privatization with no oversight at the same time that the privatization ordinance we worked with the administration to develop has not yet been heard, passed, or implemented. So we have all those concerns about the potential to privatize 311, we’re going to be working with aldermen and reaching out to the public to make sure this doesn’t happen.”

David Hatch
The Reclaim Campaign, formerly Reclaim Chicago

“The city needs to raise revenue by taxing those who can afford to pay–the wealthy and corporations–rather than by nickle and diming average Chicagoans with red light cameras, garbage fees and the like. The Reclaim Campaign supports tax increases to the wealthy and corporations to fund pensions, schools and other investments in the common good. It appears that the property tax increase the mayor is proposing could be progressive, only so long as there are protections for working people via an exemption approved by state legislature and signed by the governor or via the rebate program proposed by the Progressive Caucus. We also urge Mayor Emanuel, all City Council members and every state legislator with constituents in Chicago to work with all urgency to pass the LaSalle Street financial transaction tax in Springfield."

Ald. Carlos Ramirez-Rosa (35)
From Press Release

“Instead of delivering the ‘progressive’ budget we were promised, Mayor Emanuel unveiled more of the same with a budget proposal that continues to nickel and dime regular Chicagoans via a garbage fee, a massive property tax hike, and rideshare surcharges that amount to a giveaway to his brother–Uber investor Ari Emanuel. Mayor Emanuel’s 2016 budget proposal shows that he will continue to govern in the interest of the rich and big corporations, and not in the interest of Chicago’s working families and our neighborhoods. Emanuel's budget shows us he lacks the political courage to ask his rich campaign contributors to pay their fair share."

Dave Kreisman
Cab Drivers United/AFSCME Local 2500

On allowing Uber and Lyft to make pickups at O’Hare and Midway airports: “The Mayor’s proposal is a sweetheart deal for Uber, a $50 billion enterprise that doesn’t need another giveaway, but a job-killer for hard-working Chicago cab drivers. When corporations like Uber provide the same service as licensed cabs but don’t play by the same rules, they undercut public safety and jobs. Last week, our union released a plan to raise $65 million a year by requiring Uber to follow all the same rules as hard-working cab drivers.”

City Council Progressive Caucus
From Press release

“The nearly $600 million property tax increase will have a disproportionate impact on low-income homeowners and seniors. That is why we support the administration’s efforts to expand the Homestead Exemption in Springfield. But with no end in sight to the gridlock in Springfield, passage of the expanded exemption is not assured. That is why we are offering a meaningful rebate program for working families who own their homes. Our ordinance will be introduced at Thursday’s City Council meeting.”

Ald. Harry Osterman (48)
From Newsletter

“I'm very concerned about the magnitude of the proposed property tax and the effect it would have on renters, homeowners and small businesses in our community. My City Council colleagues and I will be spending the next month going through the budget process, and we will be working together to look for alternative ways to increase revenue to fund city government and provide important city services. I welcome your ideas and feedback.”

Ald. Scott Waguespack (32)
Sun Times Op-Ed

"Yes, the city’s fiscal crisis is real. Unfortunately, the solutions the mayor proposes–including a new garbage collection fee and a huge projected property tax increase–rely on taxes that will most heavily burden the working poor and middle class as well as small businesses. The mayor has taken some steps for which the City Council Progressive Caucus has long advocated, such as ending the risky and costly practice of “scoop and toss” bonding. But the mayor’s plan offers little to correct the imbalance which allows the ultra-wealthy and the giant corporate interests to reap huge rewards from doing business in our city, without paying their fair share. The onus for generating new revenue remains on the backs of the people who can least afford it."

Rep. Will Guzzardi
Twitter: @willguzzardi

“Here's my worry with the prop tax increase, even with exemptions: renters. Landlords could just pass increase on to tenants #chibudget2016”

We’ve confirmed that the Latino Caucus, Black Caucus, and Paul Douglas Alliance are each huddling Thursday to discuss their respective budget responses. We’ll report back with their comments in Friday’s newsletter.

Coming out of yesterday’s Council meeting, aldermen and their staff expressed concern about three things: The property tax hike is a fiscal necessity, but how will they justify it to voters? An exemption or rebate is politically necessary, but how will it be enacted? And finally, almost nobody likes the proposed garbage fee.

There’s another issue, surprisingly not on most people’s minds, which is that SB777, Springfield’s bill to extend police and fire pension payments, and the Mayor’s proposed property tax exemptions require either Gov. Bruce Rauner’s signature or a veto override by the state legislature; two things that have not been forthcoming lately.

While SB777 has passed both the State House and Senate, it has not been transmitted to Gov. Rauner, since he has not expressed whether or not he will sign or veto it. While the state legislature has until the end of session in December 2016 to pass the bill, the next police and fire pension payments are likely due long before that, a date the Mayor’s press office was unable to confirm before publication. That drop dead date is likely to be something we’ll be discussing this fall.

Quite a few aldermen we spoke to when pressed on an exemption off the record said they would have a “hard time” voting for a property tax increase without an exemption extension or property tax rebate on the books. However, since the Mayor has committed to pushing an exemption through the legislature and has enlisted Speaker Mike Madigan and Senate President John Cullerton to get it done, many aldermen believe it is within the realm of possibility that the exemption could be passed before the October 28 city budget vote.

Summing up many aldermen’s thoughts, “The worst part of this budget, is that it relies on a lot of Springfield heavy lifting,” said one prominent Council staffer.

The garbage fee, which will be listed as a separate item on homeowners’ city water bills, according to the Mayor’s Budget Office, could still be modified since the Council isn’t scheduled to vote on it for a full month, and between now and then we’ll be treated to a multitude of hearings.

Also according to the Mayor’s Budget Office, non-payment of the garbage fee would not impact pick up. Garbage collectors will pick up garbage in every alley, under any circumstance. Instead, non-payment of a the garbage fee would be treated like a delinquent water bill, leading to city offers of payment plans and ultimately water service turn-off, a concern numerous aldermen from poorer wards talked about yesterday.

Despite all those big, unresolved political issues, for those who watch Council for a living, there was no question that Emanuel will pass the property tax increase.

“Just coming out of that room right now, you know he’s got thirty votes,” said one regular Council watcher. Many aldermen Aldertrack spoke to yesterday off the record said they will vote for the property tax simply because they know it fiscally needs to happen. Council staffers and aldermen we talked to expect a smaller group, of a dozen or so aldermen, who will need “special deals” from the Mayor to help make up with voters over the next three years.

The political divide on property taxes is already splitting on unfamiliar political lines. Generally, a consensus is building that the toughest votes this fall will come for Aldermen in the Northwest and Southwest Side bungalow belts, as well as Lakefront aldermen whose wards have the highest commercial property values.

While the next municipal election isn’t until 2019, nobody's quite sure how long voter memories will last and worse yet, if this will be the last property tax hike they’ll have to approve before then.

Chicago homeowners living below 400% of the federal poverty level would be eligible for a property tax rebate under a proposal unveiled by the Council Progressive Caucus Monday afternoon at City Hall. The third property tax exemption or rebate program proposed this year, it joins plans offered by Mayor Rahm Emanuel and Ald. Joe Moreno (1) earlier this month.

In order to qualify for the rebate, a family of four would have to have a gross annual salary of $97,000, a family of two would have to report an annual salary of $63,000, and a single homeowner would have to have an annual salary of $47,000.

Ald. Carlos Ramirez-Rosa (35), the lead sponsor of the tax relief plan, says the rebate would provide relief for homeowners living in communities whose property values have significantly increased over the past few years.

“You would be protected, regardless of the value of your home,” said Rosa using the example of an elderly homeowner living off a monthly Social Security check. Seniors in a rapidly gentrifying neighborhoods shouldn’t have to pay more in property taxes, he said.

Under the proposal authored by Ramirez-Rosa, Ald. Scott Waguespack (32) and Ald. John Arena (45), the City’s Chief Financial Officer would develop an application and process for homeowners to apply for the rebate. The homeowner would apply for an application to participate in the program with the Tax Assistance Center within the City’s Budget Office. The ordinance includes a two-year sunset clause, so the city can amend the program based on participation.

The Progressive Caucus’s plan is based on an earlier property tax rebate program Mayor Richard M. Daley implemented in 2010. When challenged by reporters at yesterday's presser that the Daley plan had a low participation rate, Waguespack said Daley’s plan was “hardly publicized” and the rebate came in the form of a cash card. It would be up to local aldermen to make sure homeowners are aware of the rebate, he said.

In addition to announcing the rebate program, Ald. Arena said the City should do more to crack down on what he said was “hundreds of thousands of dollars” in lost property tax revenue from the City’s central business districts. Accusing businesses of hiring expensive lawyers to fight property tax bills, and thus forcing homeowners to pick up the tab, Ald. Arena suggested the City’s Law Department increase the number of lawyers it has on hand to address property tax rebates submitted by city businesses.

The Progressive Caucus’ plan, as well as Ald. Joe Moreno’s (1) rebate plan for household incomes below $100,000, will be introduced at Thursday’s full City Council meeting. In a press release yesterday afternoon, the Mayor said he plans to seek an increase of existing property tax exemptions through legislation in Springfield.

It was a quick budget meeting with Vice Chairman Jason Ervin (28) taking over the reins from Budget Chairman Carrie Austin, who has reportedly been sick for some time. The committee approved two intergovernmental agreements with the CHA: one for additional police services, and another for conducting federally mandated environmental reviews.

Aldermen in attendance (committee members in bold): Vice Chairman Jason Ervin (28), Roderick Sawyer (6), Michelle Harris (8), Anthony Beale (9), Raymond Lopez (15), David Moore (17), Willie Cochran (20), Michael Zalewski(23), Michael Scott Jr. (24), Roberto Maldonado (26), Walter Burnett Jr. (27), Ariel Reboyras (30), Milly Santiago (31), Scott Waguespack (32), Emma Mitts (37), Brendan Reilly (42)

Ryan Elligan, attorney for the Chicago Police Department, provided a brief overview of the proposed intergovernmental agreement between the Chicago Housing Authority and the City’s Police Department. This agreement has been going on since 1999, the year CHA disbanded its police department, according to Elligan.

But Ald. David Moore (17), a former CHA employee, said he didn’t think it was appropriate for the committee to approve the agreement without being given a breakdown of cost.

“There are no figures here or anything like that,” Ald. Moore explained. “I am trying to see the cost for the past ten years, and if that amount has gone down. We tore buildings down, so the cost of policing should have gone down.”

“This is an expense neutral type of agreement that has been in place for an extended period of time,” Vice Chairman Jason Ervin responded. “Ultimately, this is essentially CHA paying the City of Chicago for services it is rendering on the city’s behalf.”

Ervin said delaying approval of the agreement wouldn’t be in the “best interest of public safety” and Ald. Moore could get the numbers from the police department through the Committee later that week.

This prompted Ald. Brendan Reilly (42) to defend Ald. Moore’s request, asking that the committee get the information through the chair by the end of the day. Ervin said they wouldn’t be getting those numbers until Thursday, the earliest, when the agreement must be approved by the full City Council.

Elligan was however able to provide some details, noting that CHA’s agreement with the police department is capped at $8 million this year, up from the average annual cost of $6 million, which has been the standard benchmark payment for the past decade. According to Elligan, CPD has diverted policing from the old high rise public housing buildings to the low and midrise buildings still in existence. The $2 million increase is not a result of more police officers at CHA buildings, as that number has actually declined, according to Elligan. It’s the gradual increase of police salaries that are contributing to the added costs.  

Kimberly Worthington, Deputy Commissioner for the Department of Fleet and Facility Management (FFM), testified on behalf of the second intergovernmental agreement the Budget Committee approved. Worthington said City Council approval was needed, so the city could conduct federally-required environmental reviews of CHA projects funded by federal grants to ensure they are compliant with soil, contamination, noise and historic preservation guidelines. Under the agreement, CHA will provide a $75,000 upfront payment to the City. The agreement expires in 5 years, but can be renewed upon mutual agreement.

Late yesterday afternoon, Mayor Rahm Emanuel’s press office released the outlinefor today’s FY2016 budget address, featuring a property tax increase with a four-year phase-in period. The basics of his plan, to be officially announced in a 10:00 a.m. speech today, include annually:

• $544 million of property taxes, phased-in over four years, starting with $318M as a supplemental levy in FY2015, reports Greg Hinz. All added revenue would be committed to police and fire pension payments.

• $170 million in city government management savings, through programs like closing CBD TIFs and healthcare reforms.

• $60 million from a $9.50/month fee per household for garbage pickup.

• $60 million from new rideshare (Uber and Lyft) and taxi fees.

• $13 million from streamlining building permitting.

• $1 million from new e-cigarette taxes.

The city property tax increase is on top of a $45 million additional Chicago Public Schools levy the mayor will ask the Council to approve to pay for school capital improvements.

The Mayor’s Office’s 2015 financial analysis released August 2 pegged the city’s budget deficit at $754M. But that’s assuming Springfield passes SB777, which allows the city to stretch out police and fire pension payments over a longer period. If SB777 is not passed and signed by Gov. Bruce Rauner–and he has not yet indicated that he will sign it–then the city’s FY2016 budget hole grows to $975M, according to the analysis. (See our August 3 report for more detail.)

Thus, the Mayor’s plan, which we add up to $848 million in additional annual revenue by FY2018, will need an additional tax levies or cuts if SB777 is not enacted this year.

Also in the mix is the political necessity of a property tax exemption or rebate increase. The Mayor’s Office estimates the property tax increase would equate to $600 more a year for someone with a $250,000 house, a meaningful number for those on a fixed income. Again, the the Mayor’s Office press release says Emanuel is working in concert with Speaker Mike Madigan and Senate President John Cullerton for an exemption increase, but Gov. Bruce Rauner last week said he would not support any exemption changes without passage of his Turnaround Agenda package.

Council members have privately told Aldertrack they are examining ways the city could create an ordinance through a rebate program (for example, the Progressive Caucus program discussed below) if Springfield does not act, but such programs would require new bureaucracy and would not work as smoothly as extending existing exemption programs.

Aldermen spent well over an hour grilling Managing Deputy Commissioner of the Department of Planning and Development, Aarti Kotak, on Mayor Emanuel’s ordinance regarding TIF surplus funds. Pushback and questioning led Chairman Ed Burke to hold the ordinance in committee.

Aldermen in attendance (committee members in bold): Chairman Ed Burke(14), Joe Moreno (1), Brian Hopkins (2), Pat Dowell (3), Leslie Hairston (5) Roderick Sawyer (6), Gregory Mitchell (7), Michelle Harris (8), Anthony Beale(9), Patrick Daley Thompson (11), George Cardenas (12), Marty Quinn (13), Raymond Lopez (15), Toni Foulkes (16), David Moore (17), Willie Cochran (20), Ricardo Munoz (22), Michael Zalewski (23), Danny Solis (25) Jason Ervin (29), Ariel Reboyras (30), Gilbert Villegas (36), Nick Sposato (38), Tom Tunney (44), John Arena (45), Harry Osterman (48), Joe Moore (49), Deb Silverstein (50)

Start Time: 11:26

Kotak explained the ordinance is a codification of a November 2013 executive orderfrom Mayor Emanuel that formalized the practice of annually identifying a portion of TIF funds designated for anticipated future use, removing that portion from that designation, and declaring that portion a surplus.

“This was done in recognition of the balance needed among all interests within the city. It created an increase in property tax revenue available to fund non-TIF related city needs, as well as our schools, parks, and other public institutions,” Kotak said, reminding aldermen that this is how the city has been operating for nearly two years.

In order to be eligible, a TIF fund must be 3 years or older  and have a balance of at least $1M. The TIF can’t have been created for a single redevelopment project, the equalized assessed value of the property in the TIF area must be greater than it was when the TIF was designated, and it hasn’t transferred and is not scheduled to transfer funds to one or more contiguous TIF areas to pay debt service on the City's Modern Schools Across Chicago bonds.

Under the ordinance, the City’s budget director would conduct an annual review of eligible TIFs,  identify at least 25% of the TIF’s cash balance anticipated for future use, and declare that percentage a surplus. Some aldermen were concerned they wouldn’t have available TIF financing for future projects in their ward, and peeved they were expected to vote on the issue before they could speak to City budget officials.

The Finance meeting began at roughly 11:30 a.m., and aldermen were scheduled for a budget briefing at 1:00 p.m. “You’re coming before us and want to talk about it after we vote on something?” Ald. Anthony Beale (9) asked Kotak. ”I have projects that I could be looking down the road that you might not be familiar with that might need some TIF funding.”

“There is no interest or expectation of cutting projects off at the knees,” Kotak later told Ald. Harry Osterman (48). “There is, though, a recognition that we need to balance anticipated future uses with current uses. That’s the goal.”

When asked the size of the surplus, she said the mayor has allocated more than $400M to local government bodies for this year’s budget, and the expectation for 2016 is $113M surplus, but Ald. Burke pointed out that the City only gets $22M of that $113M. Roughly $60M will go towards Chicago Public Schools, and additional resources will go to other taxing bodies like Chicago Parks.

Other aldermen, particularly whose wards encompass TIFs in struggling community areas, spoke out as well. Ald. Jason Ervin (29) questioned whether this surplus definition battles with the state’s (the Law Department says no). Ald. Walter Burnett Jr. (27), Ald. Leslie Hairston (5), Ald. Willie Cochran (20), and Ald. Maldonado(26) sounded skeptical about the new ordinance or the effectiveness of the TIF program overall. Ald. Osterman asked for a hearing on the effectiveness of TIFs during the coming weeks of budget briefings.

Ald. John Arena (45) was the lone councillor who applauded the move out loud. Given an expected hike in property taxes, he said he supported TIF reform to lessen the blow, “What would be the downside to doing 50%?”

At the end of questioning, Ald. Burke decided to hold the issue in committee, “It seems to me that there’s unease in the committee with regard to taking action on this matter. There seems to be a good number of questions unanswered.”

Aldermen also spoke at length about a series of bond deals worth a total of $2.6B: City of Chicago General Obligation Bonds, Series 2015, totaling $500M; Chicago O’Hare International Airport General Airport Senior Lien Revenue Bonds, Series 2015A and 2015B, totaling $2B; and City of Chicago Wastewater Transmission Revenue Bonds, Project and Refunding Series 2015, totaling $125M to terminate associated swaps. A substitute ordinance to the Wastewater bonds includes $332M of conversion bonds, and requests approval for $100M in Illinois Environmental Protection Agency loans, and $350M of inducement authority.

Deputy Comptroller Jeremy Fine stood in for the City’s CFO, Carole Brown, as she met with other aldermen for a budget briefing.

Ald. John Arena was also vocal about the timing for this vote just before the Mayor’s budget release, and asked to delay the vote until the City saw positive movement from ratings agencies. “This seems like the absolute worst time. Until we have certainty in our budget, to be putting these things out…in October we’re not going to have a budget passed.” Ald. Waguespack also pressed Fine for more information about how ratings agencies weight bond changes.

But Fine said it’s an opportune time for the City to make a switch from a variable rate to a fixed rate, saying it’s proven out well for Chicago. “Once you go into a fixed rate mode, you shift the risks associated with any rating action to the investors, as opposed to the City.”

Ald. David Moore (17) chastised Fine for the late change to the Wastewater bonds, saying he didn’t have proper time to review and ask questions on such a large issuance. Several aldermen, including Ald. Cochran and Ald. Dowell, spoke out against a lack of African American representation in brokerage firms listed in the deals.

Ald. Willie Cochran, Ald. Pat Dowell, Ald. Scott Waguespack, Ald. John Arena, and Ald. Gregory Mitchell all voted no on the O’Hare and Chicago General Obligation bonds.

The committee also passed:

• 9 items from the Department of Planning and Development, including several school redevelopment intergovernmental agreements, and issuances of Multi-Family Housing Revenue Bonds as part of the Lawn Terrace Preservation Project and the Paul G. Stewart Apartments Phase III Tower Project.

• A resolution authorizing a Finance Subcommittee to create memorials to two late Mayors: Martin H. Kennelly and Eugene “Gene” Sawyer.

• 14 appointments and reappointments to Special Service Areas.

Noticeably missing from Monday’s agenda was an ordinance on municipal depositories, backed by Mayor Emanuel, City Treasurer Kurt Summers, and several aldermen who held a press conference last week demanding that the ordinance be brought before committee. Summers testified separately to the committee about the City's Investment Policy. Ald. Waguespack insinuated last week that pressure from banks was keeping Chairman Burke from calling the ordinance up for a vote.