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Lightfoot to unveil plan to ‘fix it ourselves,’ erase $1.2 billion shortfall without federal help

On Wednesday, the mayor will outline the $94 million property tax increase she plans to propose, the roughly 350 employees who will lose their jobs and the services she must cut to, as she put it, “fix it ourselves.”

The Chicago economy is being hit hard by the global pandemic, and the cost is likely to exceed half a billion dollars, according to the city’s chief financial officer.
A nearly-empty Daley Plaza, as seen in April from the roof of City Hall, during the statewide shutdown. The pandemic left its mark on a usually-bustling Loop — and on Chicago’s city budget.
Ashlee Rezin Garcia/Sun-Times

Mayor Lori Lightfoot has warned Chicago aldermen to prepare for their toughest budget vote “probably ever,” given the $1.2 billion shortfall that must be erased and their shared desire to invest in people and communities in spite of it.

On Wednesday, the mayor will explain why her strained relationship with the City Council will be put to the test. She’ll outline the $94 million property tax increase she plans to propose, the roughly 350 employees who will lose their jobs and the 1,000 vacant jobs she plans to cut to, as she put it, “fix it ourselves.”

Seventeen months into her four-year term, Lightfoot is where no Chicago mayor wants to be: between a rock and a hard place.

At some point, Chicago is almost certain to get another massive infusion of federal stimulus funds to replace at least some of the revenue lost to the stay-at-home shutdown and prolonged economic slowdown triggered by the coronavirus pandemic.

But it won’t come soon enough to spare her from outlining a spending plan more painful than beleaguered Chicago taxpayers have ever seen.

Lightfoot is bound by law to propose a balanced budget and round up the 26 City Council votes needed to pass it. She doesn’t have the luxury of leaving a blank space for “federal stimulus funds.”

If Congress rides to the rescue before the new budget takes effect Jan. 1, the mayor can dissolve the bitter pill she has asked taxpayers to swallow.

“The least-favored options are property taxes and layoffs. But the reality is, we have gotten zero additional support from Washington, D.C. That seems increasingly unlikely ... before we’re gonna need to present a budget to the City Council. So we’ve got to prepare for some painful decisions,” the mayor said last week.

“We have been asking everyone to contribute. Everyone. Some have said ‘yes’ and stepped up and offered in lots of different ways. Others have pushed us away and not been willing to participate. ... But the reality is: We have to be fair. We have to be equitable in the way in which we approach this. And that’s what we intend to do.”

Key allies have been told the mayor plans to propose a $94 million property tax increase. That’s even though she will have a tough time getting a property tax increase of any size passed.

“When Rahm proposed the $588 million property tax increase [for police and fire pensions and school construction], it was tough for him, and he had a good relationship with the City Council. The whole North Side went against him,” recalled one alderman, who asked to remain anonymous.

“Lori Lightfoot doesn’t have any friends in the City Council, so it’ll be even tougher.”

Another alderman, also asking to remain anonymous, traced at least some of the discontent to the fact the City Council still meets virtually.

“There are a lot of strained relationships, even among committee chairs. That’s why you’re seeing a lot of free-wheeling, willy-nilly stuff. Everybody has muscle over Zoom,” the alderman said.

Ald. Gilbert Villegas (36th), the mayor’s council floor leader, said he has urged Lightfoot and her top aides to “over-communicate” with aldermen before the budget vote.

“That hasn’t been her strong suit. But she’s gonna do better because she has to,” Villegas said.

Ald. Gilbert Villegas (36th) chats with other aldermen before the Chicago City Council meeting Tuesday, Nov. 26, 2019.
Ald. Gilbert Villegas (36th) chats with other aldermen before a Chicago City Council meeting last year.
Ashlee Rezin Garcia/Sun-Times file

Villegas refused to rate the chances for passing a property tax increase. A year ago, a budget that avoided nearly all of the tough choices — because it was precariously balanced with one-time revenues — still got 11 “no” votes.

Ald. Jason Ervin (28th), chairman of the City Council’s Black Caucus, keeps pushing the mayor to tap at least some of the $900 million in reserves generated by former Mayor Richard M. Daley’s decision to privatize the Chicago Skyway, the city’s parking meters and downtown parking garages.

Never mind that Chief Financial Officer Jennie Huang Bennett has warned the rainy day fund is Chicago’s only life raft if it starts “pouring” and “COVID lasts for an additional year.”

“We could politically use the reserves in some way, shape or form — especially if you’re talking about raising taxes,” Ervin told the Sun-Times.

“If you decide to raise property taxes and there is a significant reserve balance,” it will be a tough sell.

Lightfoot has asked organized labor to work with her to find $200 million in savings —through layoffs, pay cuts, furlough days or a combination of the three.

A significant number of the 1,000 vacancies the mayor plans to eliminate are certain to come from the 847 sworn vacancies and more than 200 civilian openings in the Chicago Police Department. Getting rid of those would surely please activists who have clamored to “defund” CPD since the death of George Floyd.

But any plan to eliminate police vacancies would face stiff resistance, with homicides and shootings up 50% over last year and Chicago on pace to top 750 homicides in 2020.

“We already have police districts across this city that are operating with four [or] five officers on a given shift for the whole district because they’re sending the rest of the shift downtown to cover Michigan Avenue,” said Fraternal Order of Police President John Catanzara.

So, there is literally nothing the FOP is willing to do to help erase the $1.2 billion shortfall?

“Hell, no. We have no contract now for over three years. We’re the last union to even be talked to about a contract — and that was by design. You think we’re gonna sit here and take it over the barrel now?” he said.

“She’s a big girl, and she wanted the job. Figure it out. That’s what you do as a leader. Whatever she’s gotta do, she’s gotta do. That’s on her.”

Chicago Fraternal Order of Police President John Catanzara speak at a pro-police rally in Grant Park last year.
Chicago Fraternal Order of Police President John Catanzara speaks in July at a “Defend the Police” rally in Grant Park.
Pat Nabong/Sun-Times

Without the FOP’s help, Lightfoot will be forced to achieve her $200 million savings benchmark with hundreds of employee layoffs. That’s even if, as expected, she declares a tax-increment-financing surplus that tops last year’s record $300 million.

“We want to help the city achieve savings that do not impact city services” or the number of city employees, Chicago Federation of Labor President Bob Reiter wrote in a text message to the Sun-Times.

“I would assume that, if we found cost savings, there’d be no reason to reduce city services.”

The labor federation has an ownership stake in Sun-Times Media.

Last weekend, the mayor’s financial team held virtual briefings with small groups to avoid violating the Open Meetings Act — again. Dismayed aldermen learned little about the mayor’s plan they hadn’t already read in newspaper stories.

Sources said there was talk of raising the city’s $9.50-a-month garbage collection fee and about separating that higher fee from water bills because water bill collections have declined since Lightfoot removed the threat of shut-offs.

Top mayoral aides also reiterated the mayor’s intention to raise — from 7.5% to 9% — the personal property lease tax on computer leases and cloud services.

But that was about it. Key allies were later told about the $94 million property tax increase and warned that a gas tax increase was also a possibility.

The Finance Committee already has held two “subject matter hearings” on revenue choices available to Lightfoot and aldermen.

During the second hearing, Lincoln Park Ald. Michele Smith (43rd) thought Bennett was laying the groundwork for another massive property tax increase by saying the doubling of Chicago’s property tax levy engineered by Emanuel “has not really increased the level of tax burden on property taxpayers as measured by the tax rate.”

Smith countered at the time: “I do represent a community that pays a lot in property taxes. And many longtime homeowners who are valuable parts of our community have seen their property taxes go up so much that they may leave.”

Bennett cautioned Smith on that day not to “read between the lines” of her comments about the impact of Emanuel’s $588 million property tax increase or her comments about Chicago property tax bills still being a bargain compared to some suburbs.

She simply meant the impact of the Emanuel tax increase was “muted” by a “significant increase” in equalized assessed valuation and “ultimately by new property that’s come on the tax rolls,” she said.

“We saw the highest amount of new property in 2019. We have new property taxpayers or new value of property largely commercial which helps to absorb that tax burden. It’s not to say there wasn’t an increase in the tax burden. But a lot of that has been muted by these other considerations,” Bennett added.

The scary part of the $1.2 billion shortfall: It includes some — but not all — of the money needed for retroactive pay raises for Chicago Police officers whenever the police contract is settled, either at the bargaining table or through arbitration.

Catanzara has pegged the cost of the mayor’s 10% pay raise over four years at $410 million and at well over $500 million for the union’s counter-offer of 17% for officers who continue to live in the city; under the union’s proposal, officers could live in the suburbs but would get a raise half that amount if they do.

City Hall sources insisted Catanzara’s price tag is $100 million too high. But they refused to say how much money the mayor has set aside to cover officers’ back pay. Nor would they say how much bigger the shortfall could get.