Budget Crunch Taxing Chicago

As the city wrestles with a projected $220-million budget deficit, Mayor Richard M. Daley on Tuesday proposed increasing Chicago’s sales tax to 9% -- a move that would put it among the highest in the nation -- and asked the City Council to cut hundreds of municipal jobs.

The changes would coincide with his ongoing effort to curb costs by privatizing some city jobs and assets, moves that have exasperated many in this union-dominated town.

“This continues to be the most challenging financial time we’ve faced since I’ve been mayor,” Daley said.

The City Council has until the end of the year to approve the mayor’s balanced budget proposal. If it does, the sales tax would rise from 8.75% as of July 1; Chicago’s tax already is higher than New York’s 8.625% and Los Angeles’ 8.25%.

The mayor’s plan also calls for boosting city fees levied on tickets to concerts and sporting events, parking garages and hotels. In addition, Daley wants to double the cigarette tax, increase the alcohol tax, delay raises for 4,800 nonunion workers and eliminate more than 300 vacant jobs. Groceries and medicine would be exempt from the tax increases.

Still, Daley said in unveiling his plan, the proposed taxes and cuts would not be enough to make up for a sluggish economy, rising city costs and inadequate state and federal help to pay for government-mandated programs such as No Child Left Behind and domestic security.

As a result, political watchers said, Daley has been enlisting help from the private sector -- much to the labor community’s chagrin.

“Outsourcing does not automatically mean they’ll save money,” said Tim Leahy, secretary and treasurer for the Chicago Federation of Labor. “However, it will definitely mean that they will lose control.”

Daley said he planned to privatize the janitorial workforce at O’Hare International Airport’s domestic terminals, eliminating 220 jobs. The mayor turned down an offer by the workers -- who belong to the Service Employees International Union Local 73 -- to give up three holidays, 12 sick days and work an extra 30 minutes per shift for no extra pay in order to keep their jobs.

Late last month, the city approved a $1.83-billion deal to privatize the Chicago Skyway, a roadway built in the late 1950s that traverses the city’s southeast side.

Under the agreement with Cintra-Macquarie Consortium, a Spanish-Australian group that will lease the highway for 99 years, the $2 toll for autos is expected to rise to $2.50.

The city plans to set aside $825 million from the lease to cover future infrastructure costs and serve as “essentially a savings account that will generate new revenue for decades to come,” Daley said. The remainder will be tapped to clear outstanding Skyway bonds and pay off other higher-cost city debt, Daley said.