Everything must be on the table as city, state fight back from financial devastation

Washington to cities and states: You’re on your own.

For months, the Trump administration has failed to take the lead in fighting the coronavirus pandemic, punting responsibility to the states. Now the president and his Republican Party are looking to do the same when it comes to helping states and cities survive the pandemic’s financial devastation.

A $3 trillion stimulus package passed Friday by the Democratic-controlled House looks dead on arrival in the Republican-controlled Senate, and President Donald Trump is making clear he would never sign such a bill.

Why? Because the package to rescue drowning cities, suburbs, states, small businesses and unemployed Americans would be fiscally imprudent, they claim.

We couldn’t disagree more. And, yes, this is the same Senate and president who rewrote the federal tax code in 2017 to give billions of dollars in tax cuts to the wealthiest one percent of Americans, ballooning the federal deficit.

So what does all this mean for Illinois and Chicago, as well as for towns and counties statewide?

Exactly what it means for hundreds of other states and cities, some of which already are making tough decisions: In the absence of federal aid and leadership, Illinois, Chicago and other governments will have to take painful and unpopular measures, possibly including service cuts, furloughs, layoffs and changes in public pensions.

Everything must be on the table.

The cuts will have to be surgical, not a butcher job. Essential services of government — such as public safety, clean water, safe buildings and mass transit — can’t be compromised.

And new revenue — yes, we can’t rule out tax hikes — will have to be found in an equally surgical manner, asking the most of those who are best able to shoulder the burden.

But, to repeat ourselves, everything must be on the table.

Pritzker must go bold

At the state level, Illinois likely faces a $6.2 billion shortfall when the new fiscal year begins July 1. That amount could rise to $7.4 billion if Illinois voters opt not to approve Gov. J.B. Pritzker’s graduated income tax plan in November.

Pritzker has not specified yet what services might be trimmed to reduce that budget shortfall or how new revenue might be raised. But we would urge him to go bold and nonpartisan, challenging the public policy pieties of both the right and left.

On the table, for full consideration, should be service cuts and staff reductions, to be sure, but also a possible expansion of the state income tax to include higher retirement incomes. Of the 41 states that levy an income tax, Illinois is one of only three that exempts all retirement income — no matter how wealthy you are — and that is not fair to middle-class working people.

A reduction in the annual cost of living increase for public employee pensions — now an automatic 3% hike, compounded annually — should, finally, be seriously entertained. Though this editorial page has long favored this change, we have not championed it of late because of constitutional obstacles and an utter lack of interest by Democrats.

Could pain be avoided by adjusting the way our state is financing its debts, including pension debt? We don’t know for certain, but it’s time for government’s brightest financial minds to look under every rock, consider every option.

Everything must be on the table.

Lightfoot’s ‘world of hurt’

At City Hall, Mayor Lori Lightfoot on Friday said Chicago is now looking at a $1 billion budget hole, tax revenues having dried up because of the pandemic. Without federal aid, she told Crain’s Chicago Business, “we are going to be in a world of hurt.”

Lightfoot has been loathe to lay off or furlough city employees, nor has she significantly reduced city services. Her argument, which makes sense to a point, is that government employment creates a kind of safety net during hard times. Regularly paid city workers help keep the local economy afloat.

Before even considering service or payroll cuts, the city is looking at refinancing its debt, reducing expenses and bringing in new revenue — likely meaning targeted tax increases — to get past the pandemic. We’re told a property tax hike would be among the absolute last resorts.

“Look,” Lightfoot told Sun-Times reporter Fran Spielman, “the reality is, I don’t think there’s any city budget across the country that is not gonna have to look at onetime measures to put yourself back on track.”

True enough.

Other cities going to work

Los Angeles is seeking to save $139 million by furloughing 15,000 city workers.

Houston is looking at furloughing 3,000 city workers for 10 days beginning in July, hoping to shave $7 million from a $169 million deficit created by the virus. Houston is also putting a hold on five police cadet classes to save another $13.9 million — and raising taxes and fees to generate an extra $14.5 million in revenue.

Philadelphia is looking at a whole slate of cost-cutting measures, including reducing overtime for all city workers, including police and fire. The city also is looking to cut services and hours at libraries and recreational centers and to lower spending on affordable housing and workforce development.

Would all or any of that make sense for Chicago?

Let the debate begin.

Everything must be on the table.

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