Feb. 23 (Bloomberg) -- Rahm Emanuel, the mayor-elect of the third-most-populous U.S. city, faces the same question roiling statehouses across the country: how much will public employees have to sacrifice to keep government afloat.
Emanuel, who wasn’t endorsed by most Chicago unions, said he will reach out to labor leaders to gain consensus on the city’s pension and budget gaps to avoid confrontations like those between public workers and Wisconsin Republican Governor Scott Walker.
“I’m going to make them my partner,” Emanuel said at his first news conference after yesterday’s election. “I reject the way Wisconsin has approached this.”
Emanuel, 51, a former congressman who served two Democratic presidents in the White House, won 55 percent of the vote to become his hometown’s next mayor in May as Richard M. Daley retires after 22 years in the job.
Avoiding a runoff, Emanuel will be Chicago’s first Jewish mayor and the first former top aide to President Barack Obama elected to office.
He will face a declining population, a 2012 budget deficit forecast at more than $600 million and shortfalls in the pension funds for city workers. While Emanuel repeated pledges to maintain a defined-benefit system and to forgo a pension as mayor, he said sacrifices will be needed by all.
“There will be shared changes,” said Emanuel, who earned at least $17 million as an investment banker after leaving the administration of President Bill Clinton in 1998. “I believe they have to know that everybody has something involved in this, otherwise people feel somebody got a special break.”
He declined to outline any potential tax increases beyond his proposal to expand the city’s sales tax to include luxury services such as dog facials and limousine rentals.
“I’m not looking at property taxes,” he said at the city’s Union League Club.
Daley, 68, who with his father, Richard J. Daley, ran Chicago for 43 of the past 55 years, leaves Emanuel a city adorned with public amenities like the lakefront Millennium Park and burdened by fiscal and political hurdles.
“He will still have big challenges working with the city council and dealing with the structural deficit,” said Dick Simpson, a political science professor at the University of Illinois at Chicago.
Repeated use of reserve funds to balance budgets led Standard & Poor’s to cut Chicago’s credit rating on Nov. 5 by one level to A+, the fifth-highest grade.
Emanuel, Obama’s former chief of staff, said in a Feb. 8 speech that the city must take immediate action to control pension costs.
While Emanuel won endorsements from some unions, the city’s police, fire and other labor groups backed former Daley chief of staff Gery Chico. More than 10 percent of the city’s 2.7 million residents belong to unions, said Nick Kaleba, a spokesman for the Chicago Federation of Labor, which didn’t endorse a candidate. Nine out of 10 municipal employees are union members.
Emanuel already faced tense labor relations because he helped Clinton win passage of the North American Free Trade Agreement and made critical comments about unions as Obama’s top aide.
“They are particularly unhappy with his call for a more vigorous debate of the number of employees and residency requirements,” Simpson said. “There are going to be battles between him and the unions.”
During the campaign, Emanuel was more vocal than other candidates in his calls for “shared sacrifice” by those who work for the city of 2.7 million people.
Emanuel beat a field that included Chico, a former Daley chief of staff and one-time Chicago school board president; City Clerk Miguel del Valle; and former U.S. Senator Carol Moseley Braun. Chico, 54, was Emanuel’s nearest rival with 24 percent of the vote.
While only 42 percent of the city’s 1.4 million registered voters cast ballots, Emanuel said that “doesn’t diminish the sense of reform and the urgency that is required” to address the city’s problems.
“Fifty-five percent of voters are clear about reform,” he said. “They know the status quo is unacceptable.”
There will be at least 20 new members of the city council after the April 5 runoff election, an influx that has the potential to be a “counterforce to the mayor,” said Alan Gitelson, a political science professor at Loyola University Chicago.
His relations with the city’s 50 aldermen could be immediately strained, Gitelson said.
In a televised debate last week, Emanuel said Alderman Edward M. Burke, a Chico supporter and chairman of the finance committee, could lose his police bodyguards, driver and potentially his chairmanship.
His relationship with Burke will be a “major problem” for Emanuel, said Gitelson, who noted that Burke is the council’s longest-serving member.
Emanuel said at his news conference that he was “open to different roads to take” and wanted to listen to the new council.
“They need to be partners in reform,” he said.
About a third of the current aldermen have Daley to thank for appointing them to their posts as he filled spots triggered by resignation or corruption convictions, Simpson said.
Emanuel raised $10.6 million through Jan. 19, four times as much as Chico, campaign disclosure records show. Since then, Emanuel has raised at least $1.4 million more.
The new mayor could use any of his remaining campaign resources to win aldermanic allies by helping them in their own runoffs, Gitelson said.
“He’s going to have a fair bit of money left over from his war chest,” he said. “That solidifies allegiance to the mayor.”
A flap over Emanuel’s residency dominated the campaign in December and January. A week before early voting began Jan. 31, Emanuel’s name was off the ballot after an appellate court ruled that he didn’t meet a residency requirement.
Restored to Ballot
The Illinois Supreme Court put him back on by unanimously ruling Jan. 27 that Emanuel, who had moved to Washington in 2009 to work for Obama, satisfied the law.
“Thank you, Chicago, for this humbling victory,” Emanuel said last night in a speech at a union hall. “You sure know how to make a guy feel at home.”
Emanuel remained composed in public before the election, not showing what he has acknowledged to be a sometimes expletive-laced, explosive personal style.
Daley didn’t formally endorse any of the candidates, though he has a long relationship with Emanuel, who worked as a fundraiser on Daley’s first successful mayoral campaign in 1989.
Emanuel said he would be focused on his transition, not running the city.
“There will be one mayor at a time,” he said. “Mayor Daley is the mayor until May 16, not Rahm Emanuel. He has my full support.”
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