By: Ted Dabrowski and John Klingner
Chicago Mayor Lori Lightfoot has just released her new $16.7 billion 2022 budget for the city of Chicago and her proposal is far more than just a plan for how to allocate money between departments. Her bigger agenda, she says, is to right the “historic wrongs” of systemic racism, which she says is “intentional and must be changed,” to address the fault lines that date “back to our earliest days as a union.” For her, the budget is a means to put “equity and inclusion at the center of all our work.”
The budget is more consequential than ever because it’s a whopping $6 billion, or 60 percent, larger than the pre-COVID 2019 budget of $10.7 billion. Not only will many of the city’s tax revenues be up in 2022 as a result of the various stimulus packages for individuals and businesses – and $76.5 million in higher property taxes – but the city itself has an additional $3.5 billion in federal COVID dollars to spend in 2022.
Lightfoot says she also plans to be very “intentional” in how she spends that money. But in her zeal to promote equity, Lightfoot is unintentionally setting Chicagoans up for a bigger fiscal cliff – first, by ignoring the city’s worsening debts, and second, by creating more dependency through a multitude of new programs. When the Fed’s largesse runs out soon, Chicago will have millions in additional program expenses and even higher debts – and no plan for how to pay for them.
Lightfoot’s power to “invest” in new programs comes from a more than tripling in grants from the state and the federal government compared to 2019. The Grant Funds line jumps to just over $6 billion in 2022 from 2019’s pre-COVID amount of $1.8 billion. That’s where the bulk of the COVID-19 stimulus money is located.
Every other budget line is also up by double digits, too, with the exception of the amounts used to pay down debt, which is effectively flat against 2019.
And even compared to 2021, Chicago’s $16.7 billion 2022 budget is still up 10 percent, a large amount for any single year. The 2021 budget spent $15.1 billion, which in itself was more than 40 percent bigger than 2019.
The city’s operating fund
The city’s core operating fund, called the Corporate Fund, will spend $4.9 billion in 2022, up from $4 billion in 2021. Structurally, Lightfoot says the fund will face a $733 million deficit next year. To help cover that shortfall, the mayor is resorting to the same fiscal maneuvers she’s made in the past to close similar $1 billion shortfalls.
For one, Lightfoot is dipping into the revenues of the city’s controversial development funds, called TIFs, while also making the same claims of “improved fiscal management” she’s made before. If you’ve read Wirepoints past work on the mayor’s budgets, you’ll know this is the third year in a row Lightfoot has found more than $100 million in savings using that vague promise of efficiencies: $141 million in 2020, $263 million in 2021 and now $131 million in 2022.
Another $62 million in “improved revenue projections” will also help cover part of the budget gap. That maneuver is also another repetition from years past.
How Lightfoot covers Chicago’s $733 million corporate fund deficit:
Savings and Efficiencies – $298.2 million
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- Personnel savings: $46.2 million
- Healthcare savings: $21.6 million
- Improved fiscal management: $131.4 million
- Cost recovery: $99 million
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Increased revenues – $491.1 million
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- American Rescue Plan for essential services: $385 million
- Additional TIF surplus: $24.9 million
- New property growth: $18.6 million
- Improved revenue projections: $62.6 million
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Incredibly, the billions in federal revenue hasn’t stopped the mayor from raising taxes once again. Last year she raised property taxes by $94 million and again they’ll go up by $76 million in 2022.
Her tax hikes follow former Mayor Rahm Emanuel’s record-breaking tax hikes that increased the burden on Chicagoans by nearly $700 million over several years.
Chicago’s 2022 budget will also include a $400 million jump in Chicago’s pension contributions, the biggest one-year increase ever. The painful impact of the jump – there will be less money for other services – will be dampened due to the flood of federal dollars, but it will put an even greater strain on resident property taxes when federal support is gone.
Bigger fiscal cliff
The list of programs Lightfoot has committed stimulus money to is a long one: Community Safety, Returning Residents (ex-offenders), Mental Health, Affordable Housing, Immediate Support for Individuals and Families (including Universal Basic Income), Economic Development, Stabilizing Communities, Fines and Fees (reduction in), Climate Resiliency and Environmental Justice, City Parks, and more, each with their own subsidies and line-items.
The problem is, Lightfoot’s spending will make things worse for Chicagoans. Pouring all that money into programs will help some residents in the short-term, but it will do all Chicagoans more harm over the long term.
The city has been mired in a financial hole for decades, the city’s pension crisis remains the nation’s worst – households are on the hook for more than $140 billion in overlapping government pensioner debts – and Chicago is the only major city, besides Detroit, to be rated junk by Moody’s. Chicago will never be able to “eliminate inequalities” or “expand economic opportunities” as long as it’s a fiscal disaster. A broken city simply can’t help those who need it most.
And when the federal money is gone, Chicago will be left with all those government programs, more dependents and ever-higher debts – debts that the mayor has already made worse.
Lightfoot signed in 2019 what she called the “most generous contract” in the Chicago Teachers Union history. She also recently agreed to a new police contract that increases salaries by 20 percent. Both those contracts will increase Chicagoans’ pension obligations. The police pension plan, at 22 percent, is one of the nation’s worst funded and at the real risk of insolvency.
The state has made things worse as well, by passing unfunded cost of living increases for Chicago firefighters and granting the CTU even more power for use in future collective bargaining negotiations.
Emergency plan
Prior to the American Rescue Plan, Chicago and states across the nation had largely been made whole by the combination of reserves and the earlier COVID relief packages. The trillions from the CARES Act and the supplemental bills helped boost most city and state tax revenues to amounts at or above their pre-COVID levels. Wirepoints covered that in our special report: The states’ 2020 financials are in: Biden’s billions in new federal aid aren’t needed.
The reality is – and the ballooned budget numbers show – that Biden’s ARP funds are really a windfall for Chicago. Lightfoot’s major spending plans are evidence of that.
But Lightfoot and all Chicagoans would be far better off if she used the billions in aid to execute a financial restructuring of sorts – one that reduces overlapping pension debts, aligns the city’s public sector infrastructure with what its residents can afford, and reforms what labor laws she can to give taxpayers a stronger voice.
In the long run, she’d create more jobs and prosperity by actually solving Chicago’s deep fiscal and economic problems, rather than ignoring them and handing out “free” federal money instead.
Unfortunately, Lightfoot’s devotion to her divisive ideology prevents her from doing just that.
Read more about Chicago’s crises:
A set of state lawmakers want to extend CPS’ current school closing moratorium to February 1, 2027 – the same year CPS is set to transition to a fully-elected school board. That means schools like Manley High School, with capacity for more than 1,000 students but enrollment of just 78, can’t be closed for anther three years. The school spends $45,000 per student, but just 2.4% of students read at grade level.
Hopefully, all media will get the message, in Illinois, too.
Ted joined Tom Miller of WJPF to talk about Illinois’ highest-in-the-nation property taxes, why lawmakers don’t want to touch the tax’s cost drivers, just how much Illinoisans’ tax burden has grown over the decades, why Gov. Pritzker failed to meet his promise to reform property taxes, and more.
It’s a faulty plan based upon known
NOT TO WORK” initiatives.
It’s enough to make anti-racists reconsider!
When brainless fools are put in charge. Nonsense and chaos should be expected. Enjoy what you have coming to you.
This is ideologically fueled incompetence and idiocy.
This is what happens when a public official puts allegiance to ideology above serving the people.
FREE STUFF FOR EVERYONE,whos too lazy or stupid to work or help themselves,linc cards are now worth $2000 a month,your local dope dealer will give you 50 cents on the dollar for your linc card
Let’s just say it. Lightfoot’s plan is to help those who won’t help themselves with OPM…Other People’s Money.
unintentionally ? IL Democrats are just politicians in little China folks. Wake up Illinois
I am glad I got the hell out in Oct 1980.
Most people like you who have left say they should have left sooner. So sad that so many people don’t realize how much better life can be outside of Illinois.
If the world ends in 2023 then Lighthead looks like a genius.
I am happy to announce that in one week, my family and I will be out of Chicago and IL for good. The everyday news of shootings, Foxx, Preckwinkle, Lightfoot and Pritzker spending like drunken sailors and implementing the Democrat agenda leaves no regrets for us but regrets for those stuck behind. We will be leaving with a significant amount of net worth, but there is a significant state and county transfer tax to bleed the last couple of $$ out of us. We are the last of our group of friends to leave, and not to sound egotistical, BUT, good luck… Read more »
You’ll miss the heavy winter snow, the unplowed streets, pushing your car out of icy ruts and of course- the crime. Good luck!!
LOL,good one!!
“Bring in some Afghans and Haitians!”
The hardest part about leaving is the realization that the state of IL wants you gone. It’s not at all about money. They federal government will just bail them out again in the future, just as they were bailed out earlier this year.
The people who run the city and state hate you. They hate people like you you. They want you gone. They want you replaced with Afghans, Haitians and illegal Mexicans. This is the goal.
Sometimes the best thing to do is to run away and don’t look back. In reality, it’s a win/win. You win by leaving. The Dems win because they don’t have to worry about you voting against them anymore.
Hmm! Three black women running Chicago, the State’s Attorney’s office, and Cook County. How’s that “diversity” working out for you? Constipation by “diversity” as they carve up what’s left of the pie for themselves.
Still not equitable! On balance, three czarinas from Cook County still weigh less than the king in Springfield.
Fiscal and cultural insanity. Choking the geese that lay the golden eggs (private sector taxpayers — employees, & large & small businesses.
Heavily leveraged property debt in Chicago is profitable (for over-levered political cronies/banks) because the solution exists to get payout in 4 years and walk away when crisis occurs, and yadda yadda… Federal bailout. A solution at the national level could be a new financial rating system, akin to bond rating agencies’ systems (which have become too corrupted to be trustworthy). The ranking could be an inflection point for certain metrics: public debt as a percentage of taxable EAV. percentage of median/mean household income needed to fully fund local pension obligations, including insurance/OPEBs. percentage of mean/median household income required to qualify… Read more »
I don’t know why but I have a hunch much of the $B’s in new grant monies, available because of the Red State bailout, will go to Democrat operatives. Just sayin’.
That’s not true it’s going to go to “community organizations” to help people.
The caption for the article on the home page is, ”Lightfoot is unintentionally setting Chicagoans up for a bigger fiscal cliff by ignoring the city’s worsening debts, and by creating more dependency through a multitude of programs. When the Fed’s largesse runs out Chicago will have millions in additional expenses and even higher debts – and no plan for how to pay for them.” Unintentionally? Implying Mayor Lightfoot and / or her financial advisors do not realize the consequences of the proposed budget? Basically saying Mayor Lightfoot and / or her financial advisors are budget stupid? Or perhaps it is… Read more »
She knows exactly what she is doing and she doesn’t care about the long term ramifications. She’s kicking the can down the road like every other mayor has done for decades. The city’s finances are unlikely to collapse during her tenure with all that federal stimulus money and fixing her mess will be someone else’s problem in the future. She is destroying the city in the process in real time as we watch the restaurant industry collapse, the Bears are leaving Chicago, Michigan Ave/State St. turning into skid row, the Gold Coast is undesirable, River North is violent mayhem, crime… Read more »
Well said. But Lightfoot believes that all this extra money is the cure for these problems that you mention. She–and her acolytes–believe that all this socialism will “fix” the problems of crime, homelessness, despair, etc. They think these problems are a matter of resources, not policy. The problem with trying to show them that their arguments are flawed is that they will always just counter with the response that “it’s not enough resources.” It never is. The biggest problem in Chicago that is at the core of all problems are the gangs and the lack of family structure. The government… Read more »