By: Ted Dabrowski and John Klingner
The Chicago Tribune reports Mayor Lori Lightfoot is considering a slew of one-off actions to help close what city officials claim will be a $1.2 billion shortfall in next year’s budget. Her ideas include a $94 million property tax hike, a cloud tax, $13 million in layoffs and some shifts in costs to the city school district.
Absent in the list of savings is anything that can be considered a structural reform. Chicago’s finances are among the nation’s worst, yet Lightfoot still refuses to even consider real changes to how the city operates.
A majority of the savings, reportedly about $300 million, come from “improved fiscal management,” a line item that was used to close gaps in the 2020 budget. Use of TIF surpluses is expected to provide the bulk of the cash needed to close any remaining budget gap.
The Tribune article neatly sums up the difficulty Lightfoot has in crafting a budget this year:
“The mayor has been considering up to $200 million in cuts to Chicago’s roughly 32,000-person city government workforce, though layoffs and furloughs will draw criticism from labor unions and damage a segment of Chicago’s middle class.
If the mayor borrows to plug the shortfall, she likely will be criticized for putting the current financial burden on future generations. If the city refinances its debts then uses the money to shore up finances in the short term, she’ll likely be criticized for relying on one-time fixes.
If the mayor raises property taxes, she could face backlash from residents whose finances already have been walloped by the pandemic-fueled economic downturn.
If Lightfoot raises fines or fees, she could be criticized for walking back on her promises to end what she has called the city’s “addiction” to fines and fees.
Dipping into the city’s rainy day fund could negatively affect the city’s already dismal credit rating.”
Entirely missing from that analysis? Any mention of needed pension reforms. That’s particularly troublesome since pension contributions by the city will continue to go up by some $700 million by 2023.
Chicago’s pensions are the worst funded in the nation. Several of them, including the police, fire and municipal funds, are in danger of running out of assets entirely. Their ratio of assets to yearly payouts have collapsed considerably since 2001, making them some of the most likely become pay-go. Wirepoints wrote about that in: COVID-19 pushes nation’s weakest public pension plans closer to the brink: A 50-state survey
Read more about Chicago’s financial crisis:
- ‘Seismic Disruption’: Chicago Estimates Combined Budget Shortfall of $2 billion for This Year And Next
- Chicago Devoured by the Tiger JFK Warned About
- Mayor Lightfoot doesn’t get it. A broke Chicago can’t ‘eliminate inequalities’ or ‘expand opportunities.’
- Chicago home prices at the bottom of the barrel nationally