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Tax Dollars And Sense
Mayor Rahm Emanuel introduced his budget with a pledge to end the smoke and mirrors, and as it passed unanimously, aldermen celebrated a 'new day' for the City. But despite some improvement to end past gimmicks, the budget still includes misleading accounting tricks that hide a tax increase from public scrutiny.
The City budget that passed unanimously through the City Council on Wednesday, includes a 70% water and sewer rate hike over the next 4 years. Despite claims the increase is needed to cover water and sewer infrastructure needs, a closer look at the budget finds as much as 26% or $220 million of water fees next year will be used to cover other city expenses.
This water hike is an all-too-familiar accounting trick that hides the true cost of the budget to Chicago taxpayers.
An overwhelming majority – 91 percent – of Americans believe government officials have a responsibility to provide financial information to the public in a way that is understandable to average citizens. The city budget fails to meet this call because the water rate hike amounts to a hidden ‘tax’ to cover government services.
Government will make better decisions on how to spend our tax money if there is an opportunity for the public to adequately scrutinize the budget.
By 2015 residents will be paying nearly 2.5 times what they were paying in 2007. To raise water rates under the guise of one purpose, only to shift it to another, amounts to a tax and underscores the need for meaningful budget reform. The aldermen should demand, and Chicago taxpayers deserve, a more transparent budget in the future.
From Mayor Emanuel’s budget address, as prepared:
“Residents of Chicago currently pay the lowest price for water of any big city in America. Today, we are asking for an increase in the fee for our water system. In return, we will greatly accelerate its repair. Even with this proposed plan, Chicago rates will remain among the cheapest in the Great Lakes Region.
Now, this additional water and sewer fee is technically not part of the corporate budget. It has nothing to do with our deficit, but everything to do with Chicago’s future.”
The Chicago Reader figured out that with the increased rate, residents will pay about $823 million in water and sewer fees next year. $220 million of the water and sewer fee will cover other city expenses. While some of these other city services may benefit water and sewer service, it’s unclear in the budget.
Here’s how that money will be allocated, according to the proposed budget:
• $260 million: Fund annual operations in the water department
• $250 million: Water infrastructure
• $93 million: Set aside funds to cover unanticipated capital cost overruns
• $220 million: Other city expenses, including:
o $150 million: Employee health and pension benefits and other unspecified “municipal services”
o $41 million: Department of Fleet Management and Facilities Management
o $2 million: Inspector General’s office
o $8 million: Department of Finance to pay for “professional and technical services,”
postage, and the rental and maintenance of computer equipment
o $5 million: Department of Innovation and Technology for “contractual services”
Aldermen and the Mayor need to put away the party hats and not celebrate a 'new day' in Chicago until they are truly honest with the public about how our tax dollars are spent.
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