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Lightfoot says budget balanced through ‘hard choices,’ but ‘cooperation’ needed from state lawmakers to avoid property tax hike

Without changes in state law, ‘we will be forced to make more painful choices when it comes to new sources of revenue,’ Lightfoot said in her first budget address. ‘And we all know what those choices are.’

Lori Lightfoot
Mayor Lori Lightfoot presides over the monthly Chicago City Council meeting and delivers her first budget address at City Hall.
Ashlee Rezin Garcia/Sun-Times

Mayor Lori Lightfoot on Wednesday presented a budget to the City Council that she said was balanced without a property tax increase — as long as the Illinois General Assembly comes through for Chicago.

“We will need cooperation from Springfield in order to get this done,” she said, referring to changes in law needed to increase a real-estate transfer tax and make a Chicago casino successful.

“But if we don’t get the authorization we need, we will be forced to make more painful choices when it comes to new sources of revenue,” Lightfoot added. “And we all know what those choices are. But I have full confidence that we will be able to work with our partners in the state capital to keep that from happening.”

Her budget, she said, eliminated a deficit of $838 million through “a combination of savings and efficiencies totaling $538 million, along with a number of carefully chosen revenue sources totaling $352 million.”

That includes $200 million saved through refinancing debt; Lightfoot also highlighted what she called “key reforms” to the city’s tax increment finance program.

Before her address, her office had announced it was declaring a record TIF surplus of $300 million, with much of that going to Chicago Public Schools. The city will get $31.4 million.

Hours before Lightfoot began her remarks, red-shirted Chicago Teachers Union members and their supporters filled streets in the Loop, then marched on City Hall. They are in the seventh day of a strike.

That extra money for CPS — about $163 million — was enough only to pay for an already-rejected offer, however.

The TIF surplus also is a one-time revenue source.

“My team has undertaken a detailed review process to reform TIF and align it more closely with our economic development needs, and our values of accountability and transparency,” Lightfoot said. “The days of the TIF slush fund are over.”

The mayor, who promised to add Sunday hours at the city’s libraries, also proposed increasing the library portion of the property tax levy by $18 million to begin to make that happen.

This budget also includes a new relief program for utility bills. It will cut water rates for homeowners with incomes at least 150 percent below the federal poverty level.

About 20,000 households will be eligible for the program, the mayor estimated. Also, after a year in the program, all past due water bill debts will be waived.

Also, now all water bills will be sent monthly, rather twice a year, and water billing will end after an account has been shut off.

In a surprise move, Lightfoot eliminated $163 million of the shortfall she inherited with a line-item labeled “emergency services reimbursement.”

Civic Federation President Laurence Msall said $30 million of that amount is expected to come from increasing ambulance fees for patients with private health insurance.

The remaining $133 million will come from reimbursements administered by the state for ambulance transports for low-income patients on Medicaid, Msall said.

According to the city, Chicago now provides about 260,000 ambulance rides a year for low-income patients, but gets only about 8% to 36% of those costs reimbursed. Going forward, that amount is expected to grow to about 50%.

“It sounds like they have an agreement with the state to get $133 million for previously un-reimbursed ambulance service for Medicaid patients taken to hospitals,” Msall said.

“It doesn’t sound risky. They’re saying they have an agreement. The risk is whether or not the state will approve the graduated real estate transfer tax and the casino [gambling] fix.”

Lightfoot had begun her remarks by reiterating her belief that the city must “leave no one behind,” and, she added, “the budget I am proposing for 2020 makes good on that resolve.”

Besides the teleprompter Lightfoot used to deliver her budget address, there were large monitors on either side of the rostrum for show-and-tell purposes.

One of the slides highlighted “new investments,” including $10 million for affordable housing and homelessness reduction, $9 million for violence prevention and $9.3 million for a “framework for mental health transformation.”

This budget is “transparent, inclusive and crafted with unprecedented input” from all over the city, she said, referring to a series of town hall meetings held in different locations.

“Over 60% of our gap was closed through structural solutions” that will stay in place “for years to come.”

The mayor plans to eliminate most, if not all, of the 3,100 vacant city jobs and abolish Emanuel’s slow-starting Infrastructure Trust.

At one point in her speech, Lightfoot acknowledged Chicago Police Supt. Eddie Johnson and praised a drop in crime statistics.

“Shootings and murders are at their lowest levels in four years,” she said, “and robberies, burglaries, and vehicle thefts have sunk to 20-year lows.

Johnson and all officers “deserve our respect and admiration for the hard work they do every day,” Lightfoot said, announcing an additional $9 million in her proposed budget to expand “street outreach through the support of additional community-based workers.”

Mayor Lori Lightfoot, shown in October as she delivered her first budget address before the Chicago City Council.
Mayor Lori Lightfoot, delivering her first budget address on Wednesday before the Chicago City Council.
Ashlee Rezin Garcia/Sun-Times

Lightfoot’s budget also includes an idea she revealed last week — an increase in fees for ride-hailing services, such as Lyft and Uber, which she said would bring in $40 million, promote the use of public transit and “improve the playing field for our taxi drivers.”

The plan would triple the tax on Uber and Lyft passengers riding solo to and from downtown — and slap a 74% increase on ride-hailing trips in the neighborhoods. It has taken a beating on social media.

Lightfoot said that “if we are smart about this, making this small increase will not hurt our neighborhoods or impair accessibility for disabled riders. ... The multi-millionaire owners of those companies have had essentially free reign in Chicago. And if they cared as much about equity as they say, they would cut their drivers in on a bigger share of profits, improve their working conditions, and not pass their costs on to them.”

Lightfoot disappointed progressives by earmarking only $10 million for homelessness and affordable housing and by refusing to re-open the six mental health centers shuttered by former Mayor Rahm Emanuel.

Instead, she promised “no more closures or cuts” and vowed to “invest in our city’s clinics to ensure they are fully utilized.”

AFSCME Council 31, which represents public health employees, accused Lightfoot of reneging on her promise to re-open the six shuttered mental health centers and failing to address the “steady erosion of frontline clinical staff.”

“Instead of keeping her commitment…the mayor appears to be heading down the same path that has left thousands of city residents and entire neighborhoods without needed services,” the union said in a statement.

“This budget gives millions more to private providers with little accountability or oversight. Most of these private agencies already have wait lists and charge co-pays, both of which are significant barriers to access for individuals in need.”

AFSCME accused the mayor of adding insult to injury by “reducing therapists in the remaining [city] clinics and adding no psychologists, psychiatrists, case managers or behavioral health assistants.”

Lightfoot did throw a bone to progressives by promising to raise Chicago’s minimum wage to $15-an-hour by 2021 because “working families can’t wait until 2025” — which is when the state arrives at that wage — “to earn enough to live on.”

Still, Ald. Carlos Ramirez Rosa (35th), dean of the six-member Socialist Caucus, was not appeased.

“If there are things that are onerous, I don’t think any alderman here is just gonna vote for this budget because the mayor is sneaking the $15 minimum wage in there,” Ramirez-Rosa said.

“The best thing to do is to have a clean vote on the minimum wage and ensure that we are having a substantive discussion about that policy and the mayor isn’t using it as a sweetener to try and pass her budget.”

Ramirez-Rosa is particularly miffed at Lightfoot’s opposition to including tipped workers in Chicago’s $15-an-hour minimum wage.

“The city of Chicago should live up to its progressive promise and eliminate the sub-minimum wage,” he said. “It promotes sexual harassment in the workplace. It promotes poverty for tipped employees.”

Even if Springfield comes through enough to avert an increase in property taxes, which Emanuel more than doubled, Lightfoot’s budget could be in for a rough ride in an increasingly restive City Council.

Two aldermen, who asked to remain anonymous, had emerged from their closed-door briefings earlier in the week believing a property tax increase would need to match the $100 million in annual revenues expected to be generated by the hoped-for increase in the transfer tax on high-end home sales.

That transfer tax would, Lightfoot said in her speech, bring in $50 million in its first year, and $100 million every year thereafter.

The amount is assumed to be lower because Lightfoot would need a two-thirds vote in Springfield for the new tax to take effect Jan. 1 instead of July 1 next year; clearly, she isn’t counting on that in her budget.

Ald. Anthony Beale (9th), the mayor’s most outspoken City Council critic, called the budget more “pie in the sky” than real because of that help it assumes is coming from the General Assembly.

“I don’t think this budget is balanced, because we’re gonna wait to see what happens in Springfield. So, I don’t think we were presented with a balanced budget,” Beale said.

Ald. Roderick Sawyer (6th), former chairman of the City Council’s Black Caucus, likewise said his biggest concern about the mayor’s budget address is her decision to rely on what he called “the unknown.”

“I want to make sure we can balance a budget on our own — not having to rely too much on Springfield because I’m not sure that’s going to come — especially in the form of transfer tax or the casino assist,” Sawyer said.

Still, Transportation Committee Chairman Howard Brookins (21st) predicted that “a significant number” of aldermen — “probably a majority” — would hold their noses and approve yet another property tax increase if Lightfoot comes up empty in Springfield.

“The only fair way to hit the people of means — which is what everybody is saying — is through a property tax. That’s the only vehicle that we have. Wealth is measured in this society based on land,” Brookins said.

“Until we shift that around in some other way, that’s the only tool we have in the tool box. That’s the fairest out of all of the taxes. If we do sales taxes, it disproportionately affects low-income people.”