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Chicago mayor defends FY 2016 budget despite concerns

CHICAGO, Oct 14 (Reuters) - Chicago Mayor Rahm Emanuel on Wednesday defended aspects of his proposed fiscal 2016 budget after a watchdog group raised concerns about its dependence on the Illinois state legislature’s actions or favorable court rulings.

The mayor’s $7.8 billion all-funds spending plan includes a $3.6 billion operating budget as well as a historic $543 million phased-in property tax hike to pay for public safety workers’ pensions.

The 50-member city council is scheduled to vote on the budget on Oct. 28.

“Proudly, we are submitting (the budget) today. Dealing with our challenges. Dealing in an honest and forthright way. Not running away from our challenges, but meeting them head on and dealing with them in a fair and responsible manner,” Emanuel told reporters.

The Chicago-based government finances watchdog Civic Federation said on Wednesday it supports the mayor’s budget, but raised concerns the tax hike would fall short of stabilizing Chicago’s finances given “significant uncertainties” in the spending plan for the fiscal year beginning Jan. 1.

Those include the enactment of a law reducing the city’s contribution to its public safety retirement systems by $220 million and extending the timeframe for reaching 90 percent funding of the systems by 15 years to 2055.

That bill passed the state’s Democrat-controlled House and Senate, but is on hold due to an ongoing budget battle between Democratic lawmakers and Republican Governor Bruce Rauner, who spoke unfavorably about the legislation in a June radio interview.

Emanuel also wants legislation to shield residential properties valued at $250,000 or less from the property tax hike, but Rauner blasted that plan on Tuesday at an unrelated press conference.

“I am strongly opposed to the mayor raising property taxes on the people of Chicago without major structural reform, and he has not instituted major structural reform so I’m opposed, and I’m not supportive of any of his tax-increase effort,” Rauner said.

The Civic Federation also noted there is a possibility the Illinois Supreme Court could invalidate a 2014 law that boosted funding for Chicago’s municipal and laborers’ pension funds, while reducing benefits.

But an Emanuel spokeswoman said in that event, the city would lower contributions to previous state required levels. The city is also defending in court its plan to reduce healthcare costs by shifting retirees to U.S. Affordable Care Act healthcare exchanges.

The mayor expressed confidence Chicago will prevail.

“I think we’re doing the responsible thing,” he said, noting his budget takes steps to start digging the city out of its fiscal crisis. (Reporting by Karen Pierog, additional reporting by Dave McKinney, editing by G Crosse)