Chicago Mayor Rahm Emanuel at the Municipal Forum of New York on Monday

Chicago Mayor Rahm Emanuel presented his case to municipal investors on Monday for a budget proposal that hikes property taxes to fund police and firefighter pensions.

Speaking in Manhattan to the Municipal Forum of New York, Emanuel said that the only alternative to his budget was to make massive cuts to the city's workforce and services.

He said that the record property tax increase in the budget is designed to shore up police and firefighter pensions and will go specifically to fund rising contributions. He said those revenues would be "hermetically sealed" for pensions only.

Property taxes currently generate $863 million a year for the city; the proposed 2016 budget calls for a phased-in increase that would generate an additional $543 million a year in 2018.

"I don't take lightly raising property taxes," he told the Muni Forum, "I didn't do it during the first four years I was in office."

He stressed that he is pushing for an expansion in the homestead exemption to lessen the impact on senior citizens and lower income residents, but state approval to do that is needed.

"We believe that this is consistent with meeting our financial objectives," the mayor said, referencing his overall economic strategy that focuses on both fiscal and budgetary stability. "Revenue for pensions will be addressed."

Emanuel said since taking office in 2011, his administration has ended practices such as raiding city reserves and selling off assets and has moved to reduce the use of one-time revenues to balance the budget, bringing down the city's structural deficit.

The city is curtailing the use of scoop-and-toss financing, which involves issuing long-term debt to pay off bonds that are coming due, reducing the amount by $100 million next year and phasing the practice out by 2019.

In presenting his budget last week, Emanuel blamed past leaders for approving benefit packages without having the revenue to fund them.

"Now the bill has come due," he said, referring to state mandate that takes effect in 2016 to stabilize police and fire funds. The city must pay the two funds $550 million more as it moves to an actuarially required contribution. The budget counts on state legislation that would cut the city's increase to $328 million next year.

The budget also includes some cuts, but the mayor said if the property tax hike is not approved then over 2,500 police officers and 2,000 firefighters might have to be laid off, garbage collection may be cut back to every two weeks and recycling could be eliminated.

The vote by the City Council on the proposed budget is set for Oct. 28.

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