Preckwinkle plans to tax cable TV, bowling and golf
Wednesday, October 14, 2015
by Hal Dardick
Months after winning approval for a controversial penny-on-the-dollar sales tax increase, Cook County Board President Toni Preckwinkle now wants to extend the county's 3 percent amusement tax to cable TV and recreational activities such as bowling, golf and many for-profit sports leagues.
The additional $20 million — most of it coming from cable taxes — would help close a projected $199 million hole in the operating budget, Preckwinkle said. The county would get much more from the sales tax hike and spend it on shoring up government worker pension funds, loan repayments and capital projects such as roads, bridges and major technology upgrades.
"We're taking the difficult but necessary steps to ensure the long-term financial sustainability of county government," Preckwinkle said during her 2016 budget address Wednesday. Later, she characterized the expansion of the amusement tax as a "modest" effort to close a loophole, given that the city already charges its 9 percent amusement tax in those same areas.
The proposal was a stark contrast from a year earlier, when she delivered a painless budget blueprint with no tax, fee or fine increases prior to the general election. That plan easily won approval from the County Board, which may not be the case this year.
Finance Committee Chairman John Daley, a Chicago Democrat and ally of Preckwinkle, conceded a budget with an amusement tax expansion "is a tough sell." Indeed, other commissioners were quick to question it, with John Fritchey, D-Chicago, saying "there's only so much of a burden you can put on taxpayers and businesses before we reach a tipping point."
Also lining up in opposition was the Chicagoland Chamber of Commerce, saying in a statement that "families and businesses are already struggling to absorb the sales tax increase" approved in July, and Comcast, with a spokesman calling the TV service "the only affordable entertainment option for some people."
Ivan Samstein, Preckwinkle's chief financial officer, said the tax would apply only to cable video services, not Internet connections, and add about $2 a month to the average cable bill. In addition to bowling, golf, tennis and for-profit sports leagues, the county amusement tax also would be extended to the markup on sports ticket resales, he added.
Beyond that, Preckwinkle called for a new county tax on the liquids that fuel electronic cigarettes to bring in about $1.5 million a year. The county would charge 20 cents for every milliliter of liquid sold under a plan similar to one put forth by Mayor Rahm Emanuel as part of his 2016 budget.
In addition, Preckwinkle is relying on nearly $21 million in tax revenue growth mostly due to a better economy, nearly $12 million in state reimbursements for probation costs, more than $6 million from special taxing district surpluses and $6 million from cracking down on cigarette and gas tax collections.
She also expects to reduce local taxpayer spending on the county's massive public health care system by $39 million and to save nearly $33 million by not filling 236 vacant jobs and cutting 51 others.
About half the job cuts would come at the Sheriff's Department, where a unit would be eliminated that keeps track of people in an alternative sentencing program who are required to report in daily. Those duties would be contracted out to community organizations, a move Samstein said Sheriff Tom Dart backs. The rest of the cuts would be in offices under Preckwinkle's direct control.
Preckwinkle's budget also would cut $3.4 million in contract funding for a program in Chief Judge Timothy Evans' office that assists people facing mortgage foreclosures. Preckwinkle proposed the elimination of a $710,000 court diversion program for drug offenders under a contract with State's Attorney Anita Alvarez's office, saying it is not improving outcomes and "is an irresponsible use of our resources."
Sally Daly, a spokeswoman for Alvarez, disputed Preckwinkle's evaluation, saying the program was effective and provided critical drug treatment for nonviolent offenders. And late Wednesday, Preckwinkle's office released a statement saying the program could not be cut because it was funded by grants.
Given Preckwinkle's backing of Kimberly Foxx, her former chief of staff, over Alvarez in next March's Democratic primary, some commissioners were questioning if there were political motives.
In all, Preckwinkle plans to cut costs by nearly $108 million. Some of the money would be saved as a result of the planned demolition of three County Jail buildings made possible by programs that have reduced the number of inmates to about 8,200, the lowest level in 24 years. On that front, Preckwinkle took credit for her efforts to get more people charged with nonviolent crimes out on bail while awaiting trial.
Still, overall county spending is expected to increase by about $500 million to $4.5 billion in the budget year that begins Dec. 1. Much of the additional spending would result from rising pension funding, increased costs for major construction and technology projects, and higher public health system spending.
While health care system costs are rising by nearly $109 million, the bulk of it will be covered through CountyCare, which is funded through a Medicaid expansion resulting from the Affordable Care Act. Some of that money is passed through to other health facilities not run by the county.
The county's general fund spending, used to keep government operating on a day-to-day basis, is going up by less than $32 million, or about 2.2 percent, Preckwinkle said. "This is a very responsible and modest budget," she told the Chicago Tribune Editorial Board.
In July, the County Board narrowly approved increasing the county sales tax to 1.75 percent. That pushed up the overall rate, which also includes allotments to the state, city and RTA, to 10.25 percent. That will be the highest rate among major U.S. cities.
Although the 1-percentage-point sales tax increase will go into effect Jan. 1, the county won't receive its first state distribution of those additional funds until April — four months into its budget year. That means it will collect about $308 million in new revenue from the sales tax increase in 2016. About $270.5 million of the sales tax windfall will go to pension funding.
In 2017, when the county expects to collect nearly $474 million more from the sales tax increase, the money will be divided among the same costs, with nearly $341 million going into the county pension fund.
Preckwinkle has argued that she can't rely on Springfield to pass legislation that would help reduce the county's pension costs. "As we can see from the current stalemate in Springfield, we were right to act," she said during her budget address.