121 Report – CRMA – June 2015

Issue 4             

In This Issue

COOK COUNTY SALES TAX
CITY COUNCIL COMMITTEE
COUNCIL ACTION

CHICAGO TAKES INITIAL STEPS TO ADDRESS

UNCERTAIN FINANCIAL FUTURE

The new City Council has been in office for one month and as they settle in to set up their offices, hire staff and meet with constituents, they are also keenly aware that a tough budget season looms overhead.  In order to balance the budget and fund the various pension systems, the Aldermen will be asked to take some hard votes.  This month, the Council approved a measure by the Mayor to restructure some of its debt by issuing over $1 billion in bonds.  The city argued that it was necessary to restructure the debt so that it could move from a variable interest rate, which it cannot control, to a more favorable, fixed interest rate.

The city has found itself under the critical and watchful eye of Moody’s in recent months.  Last month, the credit rating firm reduced Chicago’s rating to junk status.  This move was punishment for not having a sufficient fix for the pension crisis in place, and it gave lenders an edge by allowing them to call up payments on existing lines of credit.  Instead of following through with an immediate demand for payment, the banks agreed to keep the status quo if the city took reasonable steps to reduce its risk.  Therefore, the Mayor sought permission from the Aldermen to restructure the debt.  The city is confident that it will find buyers interested in its debt as interest in other recent bond deals has been heavy.

While this move was criticized by some members of the Progressive Caucus because it restructures debt without providing for new revenue, the measure passed overwhelmingly in committee and on the Council floor.

The city is under pressure to make a nearly $550 million balloon payment to its police and fire pensions required by state law.  To date, it does not have a viable way to make the payment outright and is counting on the General Assembly to help it restructure the payment into something more manageable.  One thing it won’t be able to do is reduce benefits in order to increase funding to the pensions.  The Illinois Supreme Court has ruled that such measures are unconstitutional.  As the General Assembly continues to debate how it will address its own underfunded pensions, the city looks on with some angst.

In the meantime, members should note that an ordinance to increase property taxes is not only possible, it’s probable.  And a property tax increase would come on top of the 30%-40% average increases in property tax assessments that commercial property owners are already experiencing in Cook County.  Other ideas to raise revenue such as a gas tax and city income tax have been floated as well.

While the official kick-off to the budget season usually starts in October, given the city’s uncertain financial future and the gridlock in discussion in Springfield, Mayor Emanuel announced that the city will move up its budget discussions to September.  The Mayor will publish his ideas of how to fill the $1 billion budget gap at that time.   The Mayor also plans to have a budget passed a month early as well.  Passage will likely occur prior to November 1, 2015.

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DÉJÀ VU:  

COOK COUNTY BOARD PRESIDENT TALKS OF

INCREASING THE SALES TAX

After running on a platform to reform government ethics, restructure the health and hospital system and repeal the 1% increase in the sales tax, Cook County Board President Toni Preckwinkle handily won her election in 2010.  Since then, she made good on her promise to repeal the increase and did so over a period of 3 years, with the tax returning to its current rate of 0.75% in 2013.  She also made cuts in staff over the years to reduce her overall budget.  In the interim, she raised the cigarette tax by $1.00, instituted a tax on other tobacco products (OTP), increased the liquor tax and imposed a non-titled personal property use tax (which was subsequently defeated in court) to help replace the revenue from rolling back the sales tax increase.

Now, as President Preckwinkle faces her own significant budget issues related to under-funded pensions, a crowded county jail and the health and hospital system, it is being widely reported that she will seek to increase the sales tax by 1% just two years after she repealed the tax increase.  If such a measure were to be introduced and passed, Chicago would have the highest sales tax in the country at 10.25%.  While the President’s office will not confirm whether these reports are true, Republican Commissioners have stated that she has met with them separately to discuss the idea and Democratic Commissioners have warned that additional sources of revenue were on the table for 2016.  Early reports indicate praise for President Preckwinkle’s cost cutting measures to eliminate waste at the County and concern about a property tax hike which could make a sales tax increase a more viable option.

CRMA has been very clear.  An increase in the sales tax is wrong for the County, especially around its borders.  Shoppers are mobile and have shown that if prices and taxes are lower elsewhere, then they will drive in search of ways to save money.  Cook County’s commercial districts, especially in South Suburban Cook, are struggling with high vacancy rates and increased property tax assessments.  At a time when many of the local mayors are looking for more investment, a sales tax increase discourages development inside the border.  Furthermore, there has been some discussion of saving residents and businesses from a property tax hike by agreeing to an increase in the sales tax.  But this is likely a false premise as the city of Chicago will very likely attempt a property tax hike at the same time that the County Board will introduce the sales tax increase.  If you live in Chicago, that’s a double whammy.  CRMA will remind Commissioners and the President’s office of these facts, if a proposal actually surfaces.

We are hearing that a proposal could come as early as July 1 and be approved by the end of that month.  This measure would most likely run separate and apart from the budget in an effort to encourage Springfield to act on the County’s pension relief bill.  On behalf of members who have made the decision to invest inside the Cook County border, we would oppose any measure that drives our customers over the border.

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SHIFTING COMMITTEE ASSIGNMENTS

The City Council has announced the Committee Chairmen and members for this new term. CRMA generally interfaces with three committees, although we occasionally will have agenda items that affect the industry sent to other committees.  To that end, you should know which Council Members sit on the Committees on Finance, Health and Environmental Protection and License and Consumer Protection.  They are listed below:

Committee on Finance (35 members)

Chair:  Ed Burke (14)

Vice Chair:  Patrick O’Connor (40)

John Arena (45)

Carrie Austin (34)

Anthony Beale (9)

Howard Brookins, Jr. (21)

Walter Burnett, Jr. (27)

Will Burns (4)

George Cardenas (12)

Willie Cochran (20)

Pat Dowell (3)

Jason Ervin (28)

Toni Foulkes (16)

Leslie Hairston (5)

Michelle Harris (8)

Margaret Laurino (39)

Roberto Maldonado (26)

Gregory Mitchell (7)

Emma Mitts (37)

Joe Moore (49)

Proco “Joe” Moreno (1)

Ricardo Munoz (22)

Matt O’Shea (19)

Harry Osterman (48)

Marty Quinn (13)

Ariel Reboyras (30)

Brendan Reilly (42)

Roderick Sawyer (6)

Debra Silverstein (50)

Daniel Solis (25)

Nicholas Sposato (38)

Patrick Thompson (11)

Tom Tunney (44)

Scott Waguespack (32)

Michael Zalewski (23)

Committee on Health

Chair:  George Cardenas (12)

Vice Chair:  Harry Osterman (48)

Carrie Austin (34)

Walter Burnett, Jr. (27)

James Cappleman (46)

Willie Cochran (20)

Toni Foulkes (16)

Leslie Hairston (5)

Brian Hopkins (2)

Deborah Mell (33)

Gregory Mitchell (7)

Emma Mitts (37)

Joe Moore (49)

Proco “Joe” Moreno (1)

Carlos Ramirez-Rosa (35)

Ariel Reboyras (30)

Tom Tunney (44)

Gilbert Villegas (36)

Michael Zalewski (23)

Committee on License and Consumer Protection

Chair:  Emma Mitts (37)

Vice Chair:  Debra Silverstein (50)

John Arena (45)

James Cappleman (46)

Willie Cochran (20)

Michelle Harris (8)

Roberto Maldonado (26)

Gregory Mitchell (7)

David Moore (17)

Matt O’Shea (19)

Marty Quinn (13)

Ariel Reboyras (30)

Roderick Sawyer (6)

Michael Scott, Jr. (24)

Michele Smith (43)

Chris Taliaferro (29)

Tom Tunney (44)

Scott Waguespack (32)

The City also has 2 new Commissioners of departments that interface often with the membership:

Commissioner Ginger Evans

Department of Aviation

Commissioner Judy Frydland

Department of Buildings

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CITY COUNCIL ORDINANCES AND RESOLUTIONS   INTRODUCTIONS

Ordinance to Issue Permits for Litter Baskets on the Public Way

Sponsor:  Alderman Joe Moreno (1st Ward)

Committee on Finance

This proposal would require privately-owned litter baskets that are placed on the public way to be permitted.  Designs for the baskets must be approved by the city.  Standard refuse containers and other commercial refuse containers are exempt from the proposal.  The owner is responsible for removal of trash from the basket.  Violators will be subject to a fine. 

Ordinance to Ban the Sale of Food Products Derived from an Animal that was Administered Antibiotics

Sponsor:  Alderman Edward M. Burke (14)

Committee on Finance

This proposal is a re-introduction of the Chairman’s proposal from last term.  It proposes to ban the sale of any food product derived from an animal that was administered a medically important antimicrobial for a non-therapeutic use.  If animals were administered the drug for the purpose of treating an active disease or infection, then the proposal would not apply.  But if the antimicrobials are used generally to promote growth or generally prevent diseases that are not active in the animal or necessary to control diseases, then any food products made from such animals will not be allowed for sale in Chicago.  The proposal would allow the Board of Health to promulgate rules for enforcement purposes. Sidewalk Cafe EnforcementSponsor:  Alderman Brendan Reilly (42)Committee on License and Consumer ProtectionThis proposal would allow for a sidewalk café to be temporarily shut down by the city if they have been issued notices of violation on three different days regarding breaches of public safety.  Such citations, if sustained, can result in the denial of a renewed permit or a renewed permit with conditions. Outdoor Patio Hours of OperationSponsor:  Alderman Brendan Reilly (42)Committee on License and Consumer ProtectionThis proposal would temporarily allow for the sale or service of alcohol until midnight from Sunday through Thursday for permitted outdoor patios in the Central Business District.  Currently, sales and service must stop at 11pm during those days.  Friday and Saturday sales and service will remain unchanged.  These extended hours would expire on December 1, 2015.

 

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Contact Information

TanyaTriche

Tanya Triche

Vice President & General Counsel

312/726-4600