Lightfoot’s budget is shaky, but lives in the real world

The mayor’s budget, up for a final vote in the City Council next week, would provide a little bit more for the progressive causes on which she ran for mayor, such as increases in funding for neighborhood business development, helping the homeless and lengthening library hours.

But it’s a budget that will never please the real lefties — and so be it.

And because the mayor desperately wants to avoid another big property tax hike — but struck out this fall in Springfield — her budget relies on some of the shakiest revenue projections we’ve seen in a generation.

It may go down well enough with a majority of aldermen — and the rest of us — for now, but watch out.

Work in progress

The best way to view Lightfoot’s proposed budget, even if it flies through the City Council on Tuesday, is as a work in progress. Believe the numbers when the facts catch up to the estimates. Be happy that it includes no major property tax hike — only a modest one to cover the cost of opening libraries on Sundays — but rule out nothing down the road.

It’s tough to feel good about a budget that counts on $163 million in additional reimbursements from the state to cover the cost of city ambulance services. That’s federal money, disbursed by the state, that Washington must approve. The Trump administration has never been Chicago’s friend.

It’s tough, in addition, to trust the existence of $150 million in savings, reflected in the budget, supposedly found by the mayor’s office simply through a process of zero-based budgeting. That’s an enormous savings. It feels semi-magical. Did other mayors just miss it?

The budget relies as well, regrettably, on claiming the entirety of $210 million in savings from refinancing $1.5 billion in city debt. That’s real money the city can count on, but the best budgets don’t lean on onetime revenue pops that leave nothing for future budgets.

Are we feeling critical? Not excessively.

Alternative revenue sources?

We appreciate the financial realities the mayor is up against, and we can’t pretend to have many better solutions. We also share Lightfoot’s skepticism about three of the alternative sources of revenue most often pushed by her critics — a 66% increase in the city’s hotel tax, a 3.5% city income tax and a stiff corporate head tax.

Chicago’s composite hotel tax, 17.39%, is among the highest in the nation. Among big cities, the tax is higher only in New York. A great way to drive away conventioneers and tourists, who spent some $16 billion in Chicago last year, is to hike the tax even higher.

As for a city income tax, that’s no better a sales pitch for living in Chicago than higher property taxes. Our city has much to offer. It’s pretty terrific. But there are limits to what residents will pay in taxes before even more of them move to the suburbs or out of state.

A corporate head tax, levied on a company according to its number of employees, might make sense, though the business community hates it. The tax could be set at a significantly lower rate than the $35-a-month proposed by Ald. Carlos Ramirez Rosa (35th), and small businesses could be exempted. The tax might also include a cap to spare the biggest businesses from the worst effects — and to get them on board with it.

But whatever its merits, a corporate head tax is not about to happen in the next six weeks, nor should it. It’s a controversial tax that require analysis, open and respectful debate, and careful tuning.

CPS pension reimbursement

Of all the new or enhanced sources of revenue in Lightfoot’s budget, just one makes no sense at all to us. That would be the mayor’s decision to require the Chicago Public Schools to reimburse the city for $60 million in pension contributions previously covered by City Hall.

Yes, in a perfect world, CPS, not the city, should cover its own pension costs. As a practical matter, though, Lightfoot is robbing Peter to pay Paul. City taxpayers and CPS taxpayers are one and the same.

This budget represents Lightfoot’s Plan B. She had hoped for more help from Springfield, most notably by way of legislative approval of a progressive real estate transfer tax for Chicago. The tax was blocked by Chicago legislators who insisted that much of the revenue be used to help the homeless, and by downstate Republican legislators who loathe any kind of progressive tax.

We support a progressive real estate tax. We hope the Legislature will take up the issue again early next year.

So, without great enthusiasm, we support this budget. We appreciate that Lightfoot had limited realistic options.

But if those revenue projections fall short?

Get ready for Plan C — significantly higher property taxes.

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