Mayor lays out 'roadmap for fiscal reform'

CHICAGO (WLS) -- On Wednesday, Chicago mayor Rahm Emanuel laid out a plan to fix Chicago's financial crisis, and he admitted that higher taxes could be part of the solution. He spoke at the Civic Federation.

It was Emanuel's first speech on Chicago's worsening fiscal crisis since city voters decided he deserved a second term.

The mayor repeated some of the talking points used during his successful re-election campaign, saying, "I believe in making fundamental reforms while making key infrastructure investments."

But the veteran business leaders wanted details. Just how would Emanuel resolve the city's operating budget deficit and pension debt? And would the answer involve new revenue as in higher taxes?

"I've been honest," the mayor said. "Revenue has to be part of the solution."

Chicago's budget deficit is near $300 million and the city is required by law to make $550 million police and fire pension payment by year's end.

The Civic Federation's Laurence Msall says higher taxes are inevitable.

"The question is how much more taxes will the citizens of Chicago have to pay," Msall said.

During his speech, which lasted nearly an hour, Emanuel blamed his predecessor's "poor fiscal management" without actually saying Richard M. Daley's name.

"The city's annual deficit ballooned from $122 million in 2007 to $654 million in 2011," he said.

Emanuel's released a so-called "road map" to restoring fiscal health. He promised to end financial gimmicks that push off debt into the future or risk higher interest rates, said he will sell only fixed rate bonds and will not borrow to pay legal settlements or lawsuits. He also promised to continue to rebuild the city's rainy day fund depleted by the Daley administration.

"Every one of these practices," he said of his predecessor's actions, "were developed in years past to hide, mask or not confront the real cost of operating the government."

How the city resolves its most pressing money problem, the pending pension payment, depends on how the Illinois Supreme Court rules on pension reform legislation. That ruling is expected sometime in May. Cities and towns across Illinois are awaiting that decision before making local budget decisions.