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#ChiBudget 2014: The Calm Before the Pension Storm

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Last Wednesday, Mayor Emanuel delivered his 2014 budget address (his third) to the council. A video of the speech can be seen here.

This budget is not particularly remarkable. A few items are generating discussion and controversy. The administration is proposing a hike in cigarette tax (75 cents a pack), cable TV tax, increasing permit fees and various increases to parking and traffic violations.

Yes, smoking is bad. Constantly raising tax on cigarettes, however largely hurts poorer people, who don't go to other places (Indiana) to purchase this addictive product. I don't disagree with this piece of the budget proposal, but eventually we are going to have to figure out another way to balance budgets. The cable TV tax increase will also, by definition, have the greatest impact on people with less means.

Some of the increases for parking tickets seem a little arbitrary, especially the $50 increase on a truck parking ticket. From my experience, the majority of people only discover they need a truck parking permit (which is free) after they receive a ticket. If the fine for this "offense" is going to be tripled overnight more needs to be done to notify people who own vehicles which are classified as trucks.

Increasing the permit fee for large construction projects is fine by me. Budgeting is a balancing act and the pain should be shared up and down the class spectrum of our diverse city. The cigarette, cable TV and parking ticket increases will have the largest impact on our working and middle class. The increase in permit fees will hit developers who are, of course, a vital part of our growth but are better able to take a little more of the pain.

Instead of the cable TV tax increase my friend, Alderman Pat Dowell, mentioned proposing an annual bicycle license, which swiftly stimulated a surge of passion on both sides of the issue. While I don't favor taxing positive behaviors, her idea has stimulated a necessary discussion. I do not believe this proposal will go far, but it will be interesting to watch the coming debate on the topic.

On Monday two full weeks of budget hearings begin. This is probably the most important fortnight for the aldermen. We have an opportunity to question the leadership of every single city department. As I have done since I joined the council in 2010, I'll be live-tweeting what I think and what I find interesting using the hashtag #ChiBudget.

Overall, the administration deserves credit for the way they have responded to the $339 million budget hole in this cycle and for the way they have streamlined and reformed city government during the last three budget cycles. Property and sales tax increases are definitely politically toxic, but they are also impractical to even consider at this time.

This budget seems a little like the calm before the pension storm. Unless the state acts, and acts soon, the "pension bomb" explodes next year. Starting in 2015, we (the mayor and council) will have to come up with another $600 million in contributions to our police and fire pensions. Chicago's pension obligations have a $19.5 billion shortfall overall.

I know its Halloween. If you think I'm trying to scare you, you're right. I agree with what the Tribune Editorial Board wrote earlier this week: "You can avoid most of the pain in this year's budget if you obey the parking signs, keep your foot off the gas in those school zones and for God's sake, stop smoking. There's not much you can do to protect yourself from what's coming in 2015."