Tuesday, October 23, 2007

I hadn't meant to post on this topic, but...

It seems Chicagoans are in the middle of a perfect storm of tax increases. I had not meant to post on this topic as the subject has been covered quite thoroughly in all our local media outlets. But a couple of items have caught my attention and I wish to bring them to yours.

Between the City of Chicago, Cook County, and the CTA, lawmakers and taxing bodies are looking for approximately $1.2-billion in new revenue.

Mayor Daley wants a $293-million in new taxes for Chicago. Of course, he can't be bothered to explain why other than to attack critics as being against Libraries.

Cook County cannot afford to maintain the new hospitals complex that it just finished building and has slashed community services in the last 18 months. County President Todd Stroger proposes $888-million in new taxes.

The Chicago Transit Authority can not function as a viable transit agency without funding from the State of Illinois. It never has. Mind you - no transit system in the world can function without subsidy. But the budget for the CTA in the State of Illinois' budget is zero. The budget deficit to make ends meet is $158-million.

Both Mayor Daley and County President Todd Stroger both proclaim that there is no more fat left in the system to be trimmed. No more waste can be eliminated. No more patronage contracts can be routed out to benefit taxpayers.


In Chicago, trash collectors still patrol the city's alleys with trucks manned by three man crews. Every single private collection firm in Chicagoland manages to collect trash with a trash truck manned by one guy. In Chicago, however, it seems that one man must drive and cannot get out of the truck, and two men are required to pick up the trash.

Also, tradesmen who work for the City have just been granted 10-year contract extensions guaranteeing a health, benefit, pension package that is the envy of anyone who works in the private sector, and the "prevailing wage" paid to counterparts in the private sector. Never mind that those employees in the private sector are not guaranteed a 40-hour work week and are not granted such generous insurance, pension and early retirement.

In Cook County, administrators discovered a loophole in the application process for Federal Funding for expansion and administration of vital resident services in the late 1990's. This loophole was exploited to fund the construction and expansion of the massive Cook County Hospital and community health services. The Federal Government took notice early in the New Millennium and closed the loophole. What had been a quarter-billion-dollar-a-year torrent of Federal cash has slowed to a trickle and is now nearly shut off.

Other than this massive boondoggle, Cook County government has actually been contracting. Over the past several years, the County has frozen hiring and retired or laid off nearly 1,200 employees.

Unfortunately, since it was clear that a tax increase would be required to maintain the new hospital and health service complex, County President Stroger figured he may as well restore all the slashed positions in the same maneuver.

It is clear that Cook County cannot afford to maintain the massive health complex. I only wish someone in the elected government would be willing to admit that the County is stretched way beyond its means and either privatize or otherwise abandon some of these enormous burdens.

Perhaps surprising to you, your guides support funding for the CTA. Any reader that has experienced the convenience of the Paris Metro, the London Tube, or even the gritty yet efficient New York Subway knows what a benefit to a city their transportation system is. In college urban planning classes, the CTA was studied as a model of an ideal transit system. The economic benefit to Chicago is so great that to ignore it could lead to a collapse of the business climate in Chicago. Politicians beware - killing the CTA by choking off funds to keep it running could cause a collapse of Chicago's economy.

Some thoughts:

A sizable chunk of Chicago's revenue comes from the City's real-estate-transfer tax. The tax is $7.50 per thousand - or $750 per $100,000 - on the sale price for each property sale in Chicago. One tax increase proposal is to double the transfer tax on real estate. Keep in mind that the transfer tax on a fairly typical $500,000 condo or townhouse would double from $3,750 to $7,500. Just in case there isn't enough of a chill on the city's housing market.

Did you know that there are still some states out there that do not have state income tax? You can give yourself a 5% to 10% pay raise by simply moving to one of these states. Like Texas. Or Washington.

Just in case your reaction to this fact is to blame tax-and-spend Democrats, Illinois' income tax was enacted by Republican Governor James Ogilvie in 1969. Republican Governor James Thompson raised the state income tax several times. Republican Jim Edgar was elected even though he favored making temporary tax raises permanent and his Democratic rival opposed it.

Elections for Cook County Board, the Mayor of Chicago and the Illinois Legislature all took place in 2006. As there are not elections for another several years, politicians are betting Illinoisans have a short memory.

They may be right: A recent study found that legislators who backed major tax hikes were returned to office 90 percent of the time. Those numbers suggest that Stroger, Daley, commissioners and aldermen can back tax measures with minimal political risk.

Is there any chance we can prove them wrong?