CTU demands are an insult to average Chicago taxpayers

CTU demands are an insult to average Chicago taxpayers

Property tax collections for Chicago Public Schools have grown nearly twice as fast as the typical Chicago household income.

Chicago Teachers Union members plan to strike Oct. 17 over more than $1.1 billion in contract demands. But in pressing expensive demands and spurning an extremely generous offer from Chicago Mayor Lori Lightfoot, CTU is ignoring reality for a vast majority of Chicago families.

The demands

Lightfoot’s administration has accepted a neutral fact finder’s recommendation and offered a contract to CTU that includes a 16% salary increase spread over five years, along with a 1% total increase in health insurance premiums during the last three of the five years. The current $79,000 average teacher salary would increase to almost $100,000 under Lightfoot’s offer, taking into account the automatic annual “step” increases for seniority.

But CTU rejected the deal crafted by the neutral party they helped pick. Instead, they plan to walk out on students Oct. 17 over a lengthy list of demands that includes:

  • A 15% pay hike across the board during the next three years
  • Reduced health insurance payments
  • Hiring over 4,000 new support staff
  • 55 additional community schools
  • CPS agreement to advocate for policies such as a corporate head tax, a millionaire tax and rent control

CTU’s demands for extra staffing, community schools and 5% annual salary increases would alone cost more than $1.1 billion over three years. Lightfoot’s proposed salary increases and planned additional staffing would total $216 million over the same period.

The reality

Chicagoans have watched the cost of Chicago Public Schools zoom past their ability to pay. The average salary for a Chicago worker is $63,500, while the median household income in Chicago is $55,300.

From 2009 to 2017, property tax collections for CPS grew nearly twice as fast as the typical Chicago family income. Meanwhile, CPS debt grew more than six times faster than the typical Chicago family income.

Taxpayer contributions to the Chicago Teachers’ Pension Fund grew at an average annual rate of 18% from 2009 to 2017. Despite that sky-high growth rate and $3.6 billion in total contributions, the pension plan’s funded ratio fell from 74% in 2009 to 50% in 2017. The net pension liability almost tripled to over $12 billion.

Over the next 10 years, city and state taxpayers will contribute over $9.5 billion combined to the pension fund, while only about $2.2 billion will be contributed by beneficiaries. Currently, CPS picks up 7 percentage points of the 9% employee portion of pension contributions and will continue to do so for employees hired before Jan. 1, 2017. Despite those billions, the pension liability will grow by at least $2 billion, with no improvement in the funded ratio, even assuming the rosy government projections are realized.

Chicagoans bear a heavy tax burden

If CPS ceded to union staffing, community schools and salary demands and funded them with property taxes, the cost to the typical Chicago homeowner could be $221 in additional property taxes in the first year, when compared to the Lightfoot administration’s original offer.

That’s before families face other potential tax increases the city may impose to close an $838 million gap in its fiscal year 2020 budget, including a potential property tax increase. And consider the tax hikes Chicagoans have already shouldered in recent history:

  • $864 million in tax increases during the last four years of the Emanuel administration, including property tax hikes and increases in fees for water, sewage and 911 calls.
  • Chicagoans pay the fourth highest property tax rate among the nation’s largest cities.
  • At 10.25%, Chicagoans pay the highest sales tax rate in the nation. Included in that is the Cook County sales tax, which increased by a full percentage point to 1.75% in 2016.
  • Other Cook County tax increases during the past 10 years include a $1 increase in the cigarette tax to $3 and a new tax on other tobacco products in 2013, and a 5% increase in the tax on beer and wine and a 25% increase in the tax on distilled liquor in 2012.
  • From 2011 to 2015, Chicagoans’ state income tax rate increased by two-thirds, from 3% to 5%. That was supposed to be a temporary increase, but the rate was permanently set at 4.95% in 2017 after a brief sunset at 3.75%.
  • Chicagoans will also share the burden of 20 new or increased state tax and fee hikes totaling $4.6 billion annually, which the Illinois legislature passed in its 2019 session.

Chicago taxpayers also face a potential progressive state income tax on the 2020 ballot, which would open the door to further income tax increases.

Chicago teacher pay is already best in the nation

Chicago’s teachers are already the highest paid among the nation’s largest school districts and among districts in the largest U.S. cities, adjusted for cost of living. Lightfoot’s contract would hike that pay substantially.

While CTU is insisting on decreased health insurance costs for its members, the independent fact finder recommended a 1% increase in their health insurance premiums during the last three years of the contract. This increased contribution is modest compared to the 3 to 5% average increase a Kaiser Family Foundation report showed was paid by American workers in 2018 alone, according to the Chicago Sun-Times.

Ultimately, Lightfoot must hold the line in her negotiations with CTU on behalf of Chicago taxpayers. Reality demands it.

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