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School Cuts Should Be Unacceptable

Further cuts to our schools are unacceptable. A $500 million cut to CPS would lead to as much as a 28% reduction in our school budgets. Class sizes would balloon to over 40 students across both elementary and high school. After-school, summer, and sports programs that are already running on thread-bare funds would be cut to the bone. Cuts to our already insufficient clinical and social service supports would harm our most vulnerable students further, at a time when the social service net across city and state services is being over-burdened and dismantled. CPS has just 300 social workers. A 28% reduction would result in a 1500 to 1 ratio of students to social worker, 6 times as great as the recommended ratios. These draconian cuts would also imperil an expansion of staffing and resources for Restorative Justice, a crucial component to help move schools away from the damaging reliance on policing and zero tolerance.

Cuts to Services Hurt Chicago

Chicago’s population loss throughout the 2000s was seen most dramatically in the south and west sides where historic and persistent divestment and instability have pervaded. Stability in the local K-12 educational institution is a major component of where working-class families choose to base their futures. The constant threat in CPS of further cuts to programming, loss of after-school and sports programs, more school closures and loss of staff, are what helps drive Chicagoans out of the city, not progressive tax increases. We won’t get to a sustainable solution while motivated by an unqualified fear of the wealthy leaving the multiple, growing, profitable opportunities in Chicago’s new development economy. Any sustainable revenue package to shore up our school system must tap into this growing development sector in order to keep the working and middle-class residents who under-gird our school systems from pulling up stakes.

Why Chicago Must Support More Revenue

The state must provide greater and more equitable education funding, for CPS and for the rest of the state - that is unquestionable. But the problem at the state level is the same as at CPS – there needs to be sufficient sustainable and progressive revenue. Rauner stands in the way and Springfield is slow to move, so we can’t count on immediate relief. Our Revenue Recovery Package is a way to demonstrate that when Rahm claims that it's Springfield or Bust to save our schools, he's lying. City Council has the legal authority, and the City of Chicago has the economic base to stave off the irreversible damage that looming budget cuts will have on our schools, staff and students. Our Revenue Recovery Package has taxes that are mainly placed on corporations, new growth sectors such as tech, UBER, and the booming tourist industry. There is one clearly regressive tax out of a package of 8 items (see below). That is the vehicle tax and even that is going to hit the airlines for about 70% of the revenue (plus gas prices are at record lows). We realize this is a different set of options than the state package, but it's important that we signal those options exist. The most progressive options, e.g. commuter tax, tax on luxury services, income tax, transaction tax, etc, must be established at the state level. The municipal code of the city is a blunt instrument that is restricted in how it can generate revenue, but the city has home rule powers and tough decisions must be made to get CPS out of a mess they created.

The Revenue Recovery Plan incorporates the following sources:

Reinstate Employers Expense Tax

Potential School Funding: $94 million

What it would do:

Reinstate, increase, and streamline the collection of the the Employers Expense Tax at four times the previous level.

Who would pay and why:

Corporations and not-for-profits with 50 or more employees would pay. The main complaint from corporations about this tax was not its cost, but that they had to file quarterly paperwork and redo headcounts. They called it the nuisance tax. The City can ease that burden by making it an annual tax. This generates the most revenue from the biggest companies.

Compared to other cities:

Other cities have various ways to tax corporations and businesses that benefit from their cities. For example, New York City has a “commercial rent tax” that pulls in over $700 million.

Personal Property Lease Transaction Tax

Potential School Funding: $35 million

What it would do:

Increase the Personal Property Lease Tax rate from 9.0% to 11.0%.

Who would pay and why:

This impacts vehicle renters (mostly visitors), as well as businesses that lease computer software and hardware, as well as cloud-computing services offered by the new and growing tech sector. Working class Chicagoans are mostly unaffected.

Compared to other cities:

Many other states and local cities already have a wider base for taxing sales and services that includes software use, cloud computing, and other leases.

Ride-Share Tax

Potential School Funding: $15 million

What it would do:

Impose a tax on ride-sharing services like Uber and Lyft: $5 Airport drop-off pick-up /$1 per ridesharing trip/$0.50 fee per taxi rides

Who would pay and why:

These growing businesses have escaped standard regulation, with the investment backing of Mayor Emanuel’s brother, Ari, leading to inequities with medallion cabbies such as in insurance coverage — while the company pockets the profits. Making the companies pay are a way of leveling the playing field.

Compared to other cities:

Other cities such as NYC have imposed more regulatory over-sight on Uber and Lyft.

TIF Surplus

Potential School Funding: $100 million

What it would do:

Freeze or defer future TIF projects and dedicate full surplus to CPS

Who would pay and why:

Downtown has profited the most from TIFs.

Compared to other cities:

Chicago has siphoned more money to TIFs than other large cities. California even rolled back the authority of development agencies to use TIF.

Hotel Tax

Potential School Funding: $30 million

What it would do:

Increase the City’s Hotel Accommodations Tax from 4.5% to 6.0%.

Who would pay and why:

Hotels in Chicago are in a boom moment. Hotel profits are through the roof and hit historic highs this past year. The hotel companies and visitors will pay.

Compared to other cities:

Other cities have comparable local taxes or higher, e.g. Houston (7%), St. Louis (7.25%), Indianapolis (10%), NYC (5.85%).

SSA Tax Levy

Potential School Funding: $100 million

What it would do:

The City of Chicago has the authority to establish Special Service Areas within the City of Chicago and levy taxes on the properties within the SSA boundaries to fund municipal services and related capital improvements. The City could create special service areas to pay for additional capital expenditures at schools. Citywide capital funding can be re-directed to the neighborhoods with a property base that cannot support an SSA.

Who would pay and why:

Chicago has spent billions building up new schools. Debt is paid back out of CPS operating dollars. Wealthier communities and selective enrollment schools have benefited the most from this building boom. Future capital improvements and building in upper-income areas of Chicago should be funded out of local SSAs.

Chicago Vehicle Fuel Tax

Potential School Funding: $98 million

What it would do:

The City’s current rate of 5 cents/gallon generates an estimated $48.9 million per year (FY 2015). Due to falling gas prices over the past few years, an additional 10 cents may be imposed.

Who would pay and why:

Most of the additional tax revenue will be generated by the airline and truck companies.

Compared to other cities:

NYC taxes motor fuel at a 4.5% rate as well as a 75-cent per gallon tax.

Lucas “Star Wars” Museum

Potential School Funding: $30 million

What it would do:

It looks like a museum on the lakefront for a billionaire’s private collection is not viable. Now we have an opportunity to redirect those critical resources to 400,000 students in CPS.

Who would pay and why:

The Mayor has spent an inordinate amount of time and political capital to finance a museum for a billionaire’s private collection on the lake. Take that energy and commitment and apply it to the 400,000 students in the Chicago Public Schools who have suffered from decades of divestment.

Total New School Funding: $502 million

Chicago Teachers Union