I won’t raise amusement tax, but cigarette tax hike possible

Mayor Rahm Emanuel on Tuesday ruled out raising the city’s amusement tax, but kept alive a cigarette tax hike provided the money is spent on improving children’s health. The Chicago Sun-Times reported last week that Emanuel was considering a one percentage point increase in the amusement tax — to 10 percent — that would have left Chicago with the highest ticket tax in the nation. On Tuesday, Emanuel took the amusement tax increase off the table and added it to the list of local taxes he has promised not to raise.

It happened when the mayor was asked whether he’s concerned that yet another increase in the cigarette tax would prompt even more smokers to drive across state lines to purchase cartons of cigarettes at a cheaper price. “Well, first of all I haven’t made a decision on that, but I can say this: There’ll be no property tax increase. There’ll be no sales tax increase. There’ll be no fuel tax increase. We’re eliminating the per-employee head tax, which was a job-killer. We’re doing it ahead of schedule. And there will be no amusement tax increase,” the mayor said.

“If we do consider [raising] the cigarette tax, it has to invest in children’s health.” The mayor’s spokeswoman Sarah Hamilton later disclosed that Emanuel has also ruled out a fee for garbage collection that would have mirrored the fees imposed in many suburbs. Chicago’s per-pack cigarette tax was increased by 32 cents in 2005 and by 20 cents in 2006. That raised the city’s tax to a whopping 68 cents. At $4.67-a-pack, Chicago now has the nation’s second-highest combined state and local tax rate on cigarettes. New York City tops the list at $5.85-a-pack. Chicago’s two-tiered amusement tax was last increased in 2009 — from 4 to 5 percent for mid-sized venues and from 8 to 9 percent for large sporting events.

The lower tax rate applies to live theatrical, musical and cultural performances in venues with more than 750 seats. Smaller theaters are exempt. Until an ill-timed controversy over the conservative politics of Joe Ricketts, patriarch of the billionaire family that owns the Cubs, team owner Tom Ricketts was still hoping to use 35 years’ worth of amusement tax growth to help finance a $300 million renovation of Wrigley Field. Emanuel was prepared to sign off on that plan, a $150 million variation of a financing scheme he once called a “non-starter.”

The other $150 million would have come from relaxing Wrigley’s landmark status to allow the Cubs to wring more advertising and sponsorship revenue out of the stadium. Any increase in the amusement tax would have increased the city’s $88.2 million-a-year take and reduced the number of years the Cubs would need to siphon growth to renovate Wrigley. But it would also have encountered strong opposition from live theaters, movie theaters and from Chicago’s five professional sports franchises: the Cubs, Sox, Bears, Bulls and Black Hawks. City Hall announced last week that a 2013 budget shortfall pegged at $369 million just two months ago has been reduced to $298 million, thanks to rising revenues and greater than anticipated savings from the mayor’s “wellness” plan to curb skyrocketing health care costs.

That allowed Emanuel to move up by six months his plan to eliminate the head tax. Emanuel’s first budget was balanced with $220 million in taxes, fines and fees and 535 layoffs. It doubled water and sewer rates over the next four years, locked in annual cost-of-living increases after that and raised city sticker fees by $10 to $15, also followed by annual inflationary increases. It raised the city’s hotel tax from 3.5 to 4.5 percent, hiked a laundry list of criminal, nuisance and parking fines and imposed a $2-a-weekday hike in parking taxes billed as a “congestion fee,” even though it is confined neither to rush periods nor congested downtown and River North areas.

Aldermen also signed off on the mayor’s plan to close three district police stations and eliminate 1,252 police vacancies to save $82 million. This year, the mayor is planning “targeted layoffs” and more “managed competition” between city employees and private contractors, including vehicle booting. Police and fire cuts that could be substantial must await the outcome of contract talks with those unions. That will force Emanuel to include a placeholder pay raise for police officers, firefighters and paramedics that may or may not be big enough.