By: Mark Glennon*
A 56% increase in Chicago’s telephone tax might substitute for a huge property tax to solve Chicago’s pension crisis, right? That’s what the Associated Press would have you believe. Nonsense. The telephone tax wouldn’t come remotely close to replacing the property tax increase being considered to help fund Chicago pensions.
An A.P. story starts this way: “Gov. Pat Quinn has signed legislation authorizing Chicago to increase its telephone tax by 56 percent — and possibly avert a huge property tax hike to solve a pension crisis.” The new telephone tax would raise about $50 million per year, and the article goes on to discuss that as an alternative to property tax hikes proposed in a pending pension plan for Chicago.
But $50 million of property tax increases are only for the first year, as proposed in the pension bill. It would increase property taxes by $250 million by year five, and it would only be about then that the bill would “hit the arc” — actuarial talk for getting better instead of worsening. The small, first year increase therefore means little.
The A.P. credited the Sun-Times for initially getting news of Quinn’s signature, but it couldn’t even read the Sun-Times article correctly. The A.P. said the bill “could spare [Quinn] and Chicago Mayor Rahm Emanuel the sticky position brought by a pre-election property tax increase of $50 million a year for five years.” No, the Sun-Times story was by Fran Spielman who had it right, as usual. She was clear and detailed about the full extent of the property tax proposal.
The A.P. story, like most they publish, was syndicated and reprinted by others. No wonder so many Illinoisans don’t understand the pension mess.
Oh, by the way: They might have mentioned that the pending Chicago pension bill addresses only about half Chicago’s workers. Pensions for cops, firefighters, teachers, park and transit workers aren’t in there. “There’s the potential for another $600 million property tax increase coming in December to fix police and fire pensions. And then maybe another $696 million needed next year for Chicago Public School pensions,” as reported.
So, even talking about $50 million per year when you’re also talking about “solving Chicago’s pension crisis” is questionable, unless your express purpose is to educate readers about how little $50 million would do.
It certainly would, however, be a big deal for working class and poor families to see a 50% increase in their telephone tax.
Mark Glennon* is founder of WirePoints