Ted’s remarks at the City Club of Chicago event: “Chicago’s $838 Million Shortfall: Hard Choices Ahead”
Today, we are here to talk about the city’s 2020 budget, but I’d argue that’s the wrong way to look at this crisis.
It seems to me that everybody, every year, treats the city’s one-year budget deficits as if that’s the real issue. As if that’s the real problem that needs to be solved. In fact, everybody breathed a sigh of relief when Mayor Lightfoot didn’t resort to a property tax hike to close the gap. That shouldn’t have been the big achievement.
That’s the problem. By focusing on-one year budgets, it’s like we’re treating an intensive care patient with aspirin. Chicago’s problems are far larger than a one-year deficit. Its problems are multi-year, multi-government and structural.
When you add them all up, Chicago’s problems make it an extreme outlier nationally. Chicago households are burdened with far more debt than any other major city in the country.
The city’s credit rating sits alone with Detroit at junk. CPS is even worse than Detroit.
Chicago is also an outlier among the big cities in its population drop – nobody else has lost people four years in a row.
And property values, in real terms, are worth less today than they were in 2000. Chicago’s growth drags far below that of other big cities.
Focusing on one-year budgets only perpetuates those problems.
Our position at Wirepoints is that Chicagoans are stuck with more retirement debts than they can ever repay. Add up the debt of overlapping governments and put that burden on those households with the means to pay – say those making $75,000 or more – and you’re looking at a burden of $400,000 per household. That’s an impossible amount.
That burden will force more Chicagoans to flee, joining the 200,000 residents who already left between 2000 and 2010. And the city’s downward spiral will continue.
Chicago is in a mess because its politicians have failed to attack the city’s long-term problems: the cumulative, overlapping debts and the collective bargaining laws that end up inflating those debts year after year.
That’s why we’ve got to stop looking at these problems on a short-term, piecemeal basis. Because when we do it that way, one government in isolation, it allows lawmakers to get away with things that make no sense.
How else do you explain Mayor Lightfoot going to Gov. Pritzker to ask for a state takeover of city pensions, and then right after that, she offers what she calls the most lucrative contract in the CTU’s history?
If you are an ordinary Chicagoan, that doesn’t make any sense. And it shouldn’t. But it’s the system that we have. It enables the bad behavior by both politicians and the unions.
Every year it’s the same thing. Politicians try to put a patch on something that’s fundamentally broken.
But if they were to try and do things right, Mayor Lightfoot would change course and put together a workout team – a restructuring group – that determines how to reduce Chicago’s debts so that the city can become competitive again in taxation, services, and its economic environment.
She’d also use the bully pulpit as mayor of the nation’s 3rd-biggest city to demand an amendment to the pension protection clause and a rollback in collective bargaining laws. After the strike, she may consider that.
What I’ve just said is unlikely, yes, but I’d argue entirely necessary. And inevitable. The alternative is collapse. And nobody wants that.
Read more about Chicago’s financial crisis:
- Lightfoot’s budget won’t stop Chicago’s downward spiral
- Chicago’s Pitch For New Bond Refinancing Is Mighty Fishy
- Chicago teachers strike: Why is no one talking about pensions?
- Here is the list of benefits Mayor Lightfoot is offering to the teachers’ union and why it’s terrible for Chicagoans
- Why Chicago’s Lightfoot should push for a pension amendment, not tax hikes