Bloomberg News

Chicago Hotel Tax Rises, Police Stations Cut in Emanuel Plan

October 12, 2011

(Updates with Emanuel quotes starting in third paragraph.)

Oct. 12 (Bloomberg) -- Chicago visitors would pay an extra $1.78 a night on their hotel bills and rush-hour parking downtown would cost more under the budget Mayor Rahm Emanuel proposed today.

The fiscal 2012 plan, Emanuel’s first as mayor of the third-largest U.S. city, also would close three police stations and end Chicago’s tradition of ward-based garbage collection to help plug the $635.7 million deficit left by his predecessor, Richard M. Daley.

“We can’t kick the can down the road because we ran out of road,” Emanuel said as he presented his plan, which calls for 517 layoffs effective Jan. 1 and the elimination of more than 2,000 vacant positions. “No matter how tough times get, Chicagoans are tougher.”

Emanuel, 51, said his budget would save taxpayers $417 million while avoiding increases in property or sales taxes. It would boost average water and sewer bills by $120 a year to replace 900 miles of century-old water pipes and other aging infrastructure. The work would create more than 18,000 jobs in the next 10 years, the administration said.

The mayor defended the percentage-point increase in the city’s hotel tax by saying it would align Chicago’s levy with Los Angeles and New York.

Tourism Impact

“It will help increase revenue that supports tourism, not deters it,” according to a statement from the mayor’s office. The city is predicting an increase of as much as 7 percent in hotel occupancies from a NATO summit and other events planned for next year, so the administration said it doesn’t anticipate a drop in tourism revenue.

The $3.09 billion budget would save additional money by reducing library hours, merging police and fire department headquarters and shutting some stations. The total is a 5.4 percent reduction in the $3.26 billion approved last year under Daley, who retired in May.

“Closing police districts has always been the third rail of Chicago politics, but that should not stop us from doing what’s right,” Emanuel said. “The North Side district we are closing is the one that serves my neighborhood and my community. If I didn’t think this would improve public safety, I would not do it.”

The proposal drew praise and caution from some aldermen.

“This is a very creative approach,” Alderman Deborah Graham said after the presentation. “However, the closing of police stations may be a sticking point for some.”

‘Congestion Premium’

Emanuel’s plan would generate $28 million by imposing a $2 “congestion premium” on all drivers parking in downtown garages and lots on weekdays.

“On a typical workday, our central business district is jammed with vehicles which make it harder to do business,” Emanuel said. The administration said it would use revenue from the fee to rebuild two of the downtown area’s busiest elevated train stations.

The budget, which must be approved by the City Council by Dec. 31, would end the city’s tradition of having each of its 50 wards responsible for its own garbage collection. He proposes doing so by a grid system that city officials said would save at least $20 million.

The budget must make up for an estimated $23 million a year the city will lose from Emanuel’s plan to reduce a head tax on businesses with 50 or more employees.

Emanuel in the past has criticized Daley’s leasing of some city operations, saying that reserve funds from the Chicago Skyway and a 75-year deal on 36,000 city parking meters shouldn’t have been used to balance budgets.

The new mayor doesn’t have the parking-meter money that Daley repeatedly used to fill deficits, leading Standard & Poor’s to cut Chicago’s credit rating on Nov. 5 by one level to A+, the fifth-highest grade.

--Editors: Flynn McRoberts, Brenda Batten

To contact the reporters on this story: James Lawson in Chicago at JLConcept@aol.com; Andrea Riquier in New York at ariquier@bloomberg.net.

To contact the editor responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net


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