By: Ted Dabrowski and John Klingner
Think what you want of Mayor Lori Lightfoot’s COVID-19 Recovery Task Force, but she’ll never get a shot at actually accomplishing its proposals. As long as the mayor continues to ignore the city’s slide toward bankruptcy, she won’t “eliminate inequalities” or “expand economic opportunities” for Chicago’s minority communities. Broken cities have little to no chance of helping those most in need.
Lightfoot is seemingly oblivious to the depths of the city’s financial crisis. None of her lofty goals for the city have ever addressed the city’s massive debts and deficits. Her task force’s recommendations are just the latest example.
Lightfoot originally promised that her task force would offer “bold, visionary action to reduce [the crises’] impact on those who were already struggling. There can be no half measures,” she said. And yet the group’s report made no mention whatsoever of what’s really damaging Chicago’s communities: overwhelming debts, punishing taxes and exorbitant labor costs.
During her campaign, Lightfoot never communicated a vision for a fiscal turnaround for the city, which was in shambles and already rated junk (see Appendix 1). And when it came time to put together her first city budget, the best she could do was cobble one together. Her plan counted on one-time gains and vague cuts, but no real reforms and no real savings. Everybody knew it wasn’t actually balanced, even based on Illinois’ flawed budget math.
But perhaps most telling was when COVID-19 hit. In early April, she dismissed the damage being done by the coronavirus, saying the city had planned for a crisis in her 2020 budget. “I think we’re very well-situated to weather this storm because we anticipated…some kind of economic downturn…we built the budget this year to be able to be responsive to that kind of worst-case scenario.”
Lightfoot went even so far as to call former city budget director Paul Vallas “foolish” when he said the mayor needed a wartime financial plan.
The impacts of COVID-19 and the city’s subsequent lockdown have exposed just how wrong she was. Lightfoot finally admitted last month that COVID-19 has ripped a new $1 billion hole in the budget.
But it’s not just Lightfoot’s inactions that are worrisome. It’s also what she’s done to make the city’s finances even worse.
To begin with, she’s backed off from making any calls for an amendment to the state’s pension protection clause. Without it, she can’t reduce the city’s retirement debts to a level residents can afford. She’s hinted that massive property tax hikes may be the only way to pay that debt down.
Nobody is more on the hook nationally for pension debts than Chicagoans. Moody’s calculates that Windy City households are each burdened with $140,000 in local and state pension debts, nearly two times more than what residents in Los Angeles owe, three times the burden of Philadelphia households and five times those in Phoenix (see Appendix 2). Minority communities will never achieve real prosperity when every household is burdened with what amounts to a second mortgage.
Lightfoot has also insulated the city’s public sector workforce from the effects of the coronavirus, all at the expense of city services and the private sector.
The mayor declared layoffs were a “last, last, last resort” for city workers, even as Chicago’s shutdown crushed businesses, blew a new hole in the budget and put hundreds of thousands out of work. Meanwhile, many government workers ended up at home with full pay for over three months.
And Lightfoot spiked labor costs by offering the Chicago Teachers Union the “most generous” contract they have ever gotten (see Appendix 3). Her attempt to buy labor peace will cost Chicagoans an extra $1.5 billion through 2024 – and that’s excluding extra pension expenses.
All of the above will worsen Chicago’s perfect financial storm. The city’s poor and minority residents will suffer most when the mayor ends up borrowing more, slashing services, and raising taxes and fees to try and stop the city from falling apart.
The city’s finances are not the only thing Lightfoot has failed to change. The Mayor’s task force talks of expanding “economic opportunity,” “reigniting activity” and creating “vibrant business communities.” But so far, Lightfoot has done little to make Chicago a more attractive place for businesses and entrepreneurs.
Chicago’s commercial property taxes are already the 2nd-highest in the nation, far above any other major city besides Detroit (see Appendix 4). Industrial property taxes are the 15th-highest. And Wallethub ranks Chicago as one of the worst places to start a business – it’s ranked 85 out of the nation’s 100 biggest cities.
On the margin, what company or entrepreneur wants to move to Chicago when what awaits them is high taxes that will grow even larger as the city tries to pay down its massive debts?
The mayor’s task force doesn’t address the city’s overtaxing problem. Instead, It reintroduces the tired ideas of more incentives, programs and subsidies that only help businesses the city favors.
That government-centric model has been tried over and over again, each time with new enthusiasm and a fresh coat of paint. Rahm Emanuel tried it with his Neighborhood Opportunity Fund and “The Chicago New Americans Plan” for immigrants, for example.
But decades and billions of dollars in spending later, Chicago is still wrestling with the same poor neighborhoods and lack of opportunities, particularly for minorities and the young.
Now Chicago doesn’t even have money to spend. The city, as Vallas warned in April, is in the midst of a “code red financial meltdown.” Lightfoot needs to start acting like it.
Read more about Chicago’s financial crisis:
- Mayor Lightfoot’s Astonishing Denial of Chicago’s Fiscal Crisis
- COVID-19 spreads to half of all Chicagoland retirement homes. How did this happen?
- Big raises for CTU, state’s AFSCME shows where federal aid to Illinois will end up
- Why Chicago’s Lightfoot should push for a pension amendment, not tax hikes