March 31, 2009

Proposed State Budget Must Better Address Chicago's Needs

Mayor's Press Office    312.744.3334

Mayor Richard M. Daley today said the state budget proposed by Governor Pat Quinn needs to be revised to better address Chicago’s needs and said there is still time for Springfield to respond to the City’s concerns.

“I take his proposal for what it is -- a starting point for conversation and debate. His budget proposal reflected the difficult economic times our state is experiencing,” Daley said in a news conference held at Sherman School, 1000 W. 52nd St.

“As Mayor, my job is to be an advocate for the people of Chicago. I'm offering my comments in the spirit of working together with the Governor and members of the legislature,” he said.

Daley expressed concern about several key budget issues:

Capital spending

The Mayor thanked Quinn for his proposal to invest in capital and infrastructure spending across the state – the first such plan in five years.
But he pointed out that there is little detail in the proposal at this time, making it impossible to determine how much Chicago would receive overall or by category.

“Clearly, in Chicago we have important infrastructure needs that range from improving and constructing schools to upgrading public transportation to paving and repairing our streets and roads,” Daley said.

“Because it's unclear how much capital funding the CTA will receive, it's too soon to know the extent to which operating dollars that have been used for capital improvements in the past will now be freed up. The more capital dollars the CTA receives, the less the pressure there will be on the CTA to turn to higher fares or service cuts,” he said.

Education funding

Daley said he is disappointed that the proposed budget limits new funding year for Chicago's public schools to $54 million and that Springfield needs to “step up and accept its responsibility" to provide substantially greater funding for public education year by year.

“Chicago's schools need $200 million more in funding this year compared to last year. Without it, they'll be forced to consider classroom cuts and higher property taxes this year, something we had hoped to avoid.

“To their credit, our new school leaders have already announced their plans to

cut administrative and non-classroom spending by another $60 million this

year,” he said.

Pension relief

The Mayor pointed out that the Governor's proposed budget does not embrace the pension relief that the Board of Education needs this year to relieve its budget pressures.

“The increasing cost of personnel is a growing problem for every city, state and business in our nation. We must get those costs under control,” he said.

Benefits from proposed state income tax increase

Daley said it appears that although the Governor proposes an increase in the state income tax, he does not allow local governments to benefit from its growth.

Ordinarily, an increase in the income tax would automatically increase the local share of the income tax.

“Without it, he's increasing the pressure on local governments across the state to increase local taxes and fees, something we must all work to avoid this year. This concern is shared by other cities around the state,” he said.

Property tax relief

Because there is no support for property tax relief in the Governor’s proposed budget, Daley proposed an expansion of the state’s “Circuit Breaker” program to provide relief statewide.

He pointed out that starting in the 1990s and continuing until the early part of 2008, many Chicago residential neighborhoods experienced rapidly rising real estate values that resulted in higher assessments.

In the 2003 reassessment of the City of Chicago, the average residential assessment increased more than 32%. The 2003 increase was compounded by a subsequent increase of 41% in 2006.

“Had it not been for the 7% cap, for which I lead the fight, these higher assessments would have translated into significantly higher property taxes -- with possible increases in the thousands of dollars -- for most long-term, low-income, and senior households,” Daley said.
However, the 7% cap is scheduled to decrease this year and is eliminated altogether next year. As a direct result, over 160,000 homeowners in Chicago will see a tax increase of more than $300 in this fall’s property tax bills. In 2010, the remaining homeowner exemption will provide only $300 in relief, in contrast to the $2,100 in relief provided in 2006.

Under Daley’s proposal, which follows the recommendation of his Property Tax Advisory Council that the circuit breaker program be expanded, the State would offer a tax credit or grant to homeowners earning less than $150,000 but who pay more than 5% of their adjusted gross income to local property taxes.

The credit ranges from $250 for those earning less than $30,000 to $100 for those earning up to $150,000, on a sliding scale. To offset the cost of the program, the current 5% property tax credit will be capped. Currently, that credit is unlimited and, as a consequence, owners of very expensive homes can receive very large credits.

“The existing state circuit breaker program provides some relief to seniors and persons with disabilities, but it is limited in scope, covering only 32,000 homeowners in Cook County,” Daley said. “Our proposal will make almost one million households statewide eligible for property tax relief.”

Daley went on to say that the bottom line was that "unless the cities, towns and communities get some of the relief I've talked about today from the Governor's budget, the pressure will only increase on local governments to increase local property taxes and fees this year."

"With the economy only getting worse, it's difficult to predict just how much further our revenues will continue to fall. That's why we need a statewide infrastructure plan, greater education funding, ongoing support from the state income tax as well as pension and property tax relief," Daley said.

“It's important to remember that we're at the start of the budget process in Springfield. There is plenty of time for our concerns to be addressed,” he said.