Lightfoot acknowledges coronavirus impact on a city budget that relies heavily on tourism taxes
With two trade shows canceled and more in the balance, Lightfoot said her game plan is to be “very aggressive in marketing Chicago” and hope that “once this virus runs its course, we’ll be back to business as usual.”
With two trade shows canceled and more hanging in the balance, Mayor Lori Lightfoot acknowledged Wednesday the coronavirus has already had an impact on a city budget that relies heavily on tourism taxes, but said she hopes the downturn won’t last.
“We thrive on our convention and tourism business. It fills restaurants. It fills hotel rooms. People get to come and see the city and they come back because they have a great experience. So obviously, there’s an economic impact,” the mayor said.
“The reality is that cities like Chicago that are major convention centers across the world are experiencing concerns and cancellations. You can’t readily replace that. … Our hope is that, once this virus runs its course, we’ll be back to business as usual.”
So far, two shows have been canceled because of the novel coronavirus.
The International Housewares Association decided not to hold its four-day Inspired Home Show at McCormick Place. The show had been expected to draw 60,000 patrons.
Next came Modern Business Experience, a much smaller event for 6,000 patrons sponsored by Oracle that was due in Chicago March 24-to-26.
“It’s not a total surprise the few cancellations we’ve had. … There are a number of conventions that are continuing to go forward. We feel good about that. … But obviously, it’s a disappointment when any of them cancel,” the mayor said.
“What we’re gonna do is to continue to be very aggressive in marketing the city of Chicago for our convention businesses.”
Lightfoot’s $11.6 billion budget was precariously balanced with one-time revenues.
The mayor is also counting on $163 million from raising ambulance fees paid by private insurers and getting federal approval for reimbursements administered by the state for ambulance transports for low-income patients on Medicaid.
That hasn’t happened yet — nearly five months after the mayor said approval was “imminent.”
Civic Federation President Laurence Msall has warned that the city does not have “adequate reserves to address an unexpected drop in economic activity” tied to the coronavirus.
He has urged the mayor to identify a “Plan B” in the event tourism-related revenues —everything from sales, restaurant, parking and hotel taxes to CTA fares and congestion fee — “don’t continue to grow as projected.”
That includes planning for a “worst-case” scenario, in which the virus “continues to grow” and travel, work, school and entertainment patterns are interrupted.
Lightfoot apparently sees no need for such disaster planning. She’s hopes the panic will subside as the public is reassured that Chicago is prepared.
“What we’re doing is to assure the public. … here in Chicago, but also elsewhere that might be visiting, that this is a virus that should be treated like the influenza season that we experience every single year,” she said.
“We want to reassure the public that the opportunities for infection remain low based on the information we’ve received from the experts. But our preparation is extraordinarily high. … Eighty percent of the people who test positive are not in a life-threatening circumstance. Given our hospital infrastructure, our incredible public health infrastructure, we are well situated to address any issues.”
The mayor was asked what the threshold would be for at least one element of a worst-case scenario. That is, closing the Chicago Public Schools. It’s a subject Lightfoot was reluctant to entertain.
“I don’t know that we have a kind of a magic triggering point. But what I can tell you is that we’re nowhere near that yet,” she said.
The stock market has suffered heavy losses tied to the coronavirus and its impact on business. That’s almost certain to reduce investment returns at city employee pension funds. If investments fall short, the city needs to make up the difference.
But, Lightfoot said she’s not concerned.
“If you’re nervous on a day-to-day basis, that’s probably not a market you should be in,” she said.
“The markets are gonna ebb and flow. As we saw, they went down last week. They soared back on Monday. They’re retreating a little bit. This is what’s gonna happen until we get to a much more settled place with our learning about the disease.”
It’s not surprising financial watchdogs are sounding the alarm about Chicago’s preparedness to weather a sustained economic downturn tied to the coronavirus.
In December, a Wall Street ratings agency that stands alone in rating Chicago bonds as junk concluded Chicago and Detroit are the U.S. cities least prepared to weather the storm of another recession because of “extraordinarily high” fixed costs and crushing pension obligations.
Contributing: David Roeder