Preckwinkle defends plan to boost sales tax, blames pension crisis
Updated 6:30 pm
Board President Toni Preckwinkle is considering a one percentage point increase to the Cook County sales tax, a complete change in course from the position that helped her gain her spot at the head of the county board.
Back in 2010, then candidate Preckwinkle aired a campaign ad that promised she would “repeal the whole Stroger sales tax. You’ve earned your pennies, I’ll save them for you,” she said, referring to her predecessor, Todd Stroger.
But now, Preckwinkle says despite her responsible financial stewardship, the increase is necessary to pay down the county’s massive underfunded pension liabilities.
“When I came in I made a commitment to eliminate [the tax] and we did that,” Preckwinkle said. “In the process we shrank county government … and we have … reduced our expenditures by $465 million, and that doesn’t count the $100 million-plus that we will be cutting expenditures [this fiscal year]. After that second budget year, it was clear to us that we were getting a handle on our own internal issues, the deficit, but what was ahead of us was the pension crisis.”
And Preckwinkle says because state lawmakers failed to pass pension reform, that crisis now demands a tax increase.
“We have tried mightily in Springfield to get help in this area,” Preckwinkle said. “Every month that we don’t get pension reform in Springfield it costs us another $30 million. So in addition to our $6.5 billion unfunded liability that we started out a year ago we now have another $360 million added to that because we can’t get pension reform.”
Commissioner Larry Suffredin says a one point increase would boost the current rate past 10 percent in the majority of the county, which makes him worry about local retail.
“To places like furniture stores, shoe stores, jewelry stores, this puts them at a tremendous disadvantage,” Suffredin said.
But Preckwinkle says the sales tax increase is the lesser of two evils.
“Given the magnitude of the money that we had to raise, we had two choices, we could even raise property taxes or the sales taxes … there was zero appetite for a property tax increase,” she said.
Suffredin and Commissioner Peter Silvestri said they hadn’t yet had a chance to talk to other board members about their feelings on the potential tax increase. The proposal needs the support of nine of the county’s 17 commissioners.
“We have generally a bad taste toward sales tax, but part of that was the way it was introduced,” Silvestri said. “It was not quite the same as people working together toward a real plan.”
For his part, Silvestri said he is “generally opposed to this stuff, but since the county is in much better shape under Preckwinkle,” he would consider it.
“I made it clear [to her] that there’s gonna have to be cost reductions, and I’m not saying she’s not a reformer, but we need to do more,” Silvestri said.
Commissioner Bridget Gainer said her concern is about having a sales tax vote “outside of the context of the budget” when there are still budget numbers, like employee health care expenses, coming back to the county that could yield additional cost savings.
Preckwinkle says 85 to 90 percent of the money from the proposed sales tax increase would go to pension payments. The rest would help boost the county’s infrastructure budget.
When asked if Chicago and the state of Illinois will also have to raise taxes eventually to pay down pensions Preckwinkle simply said “of course.”
Lauren Chooljian is WBEZ’s City Politics reporter. Follow her @laurenchooljian. Patrick Smith contributed to this story.