There’s a reason city finances were excluded from the 110-page transition report delivered Friday to Mayor-elect Lori Lightfoot.
Lightfoot is buying time to get her arms around a budget shortfall she claims is infinitely “more dire” than the newly revised $700 million figure outgoing Chief Financial Officer Carole Brown has acknowledged.
The last thing Lightfoot wants is to have a public airing — and potential flogging — of the painful tax increases and budget cuts being kicked around by her task force on budget and financial issues chaired DePaul University CFO Jeffrey Bethke.
“Whether it’s the structural deficit for next year, the pension obligations that we have to meet, the service on the debt, open police, fire and teachers contracts and a range of other issues, we have a significant challenge on our hands. Make no mistake about it,” she said.
“We will talk about what that challenge is. But I also believe you have to talk to people about solutions. We’re not there yet. We’re looking at a range of different options. . . . But it’s important for us to actually get in and see the books for ourselves so we can understand what the magnitude of the challenge is.”
The Civic Federation reported earlier this year that Lightfoot was staring down the barrel of an immediate $277 million spike in pension payments — payments that will rise by $1 billion in 2023 — as a five-year ramp to actuarial funding ends and the road to 90% funding begins.
The corporate fund has a two-year gap of at least $613.9 million — even before factoring in the cost of police and fire contracts, retroactive pay raises for the rank-and-file and the 18-month jump in police salaries for 1,000 newly hired officers.
The mountain of debt heaped on Chicago taxpayers continues to climb, with debt service payments to match. So do settlements and judgments tied, primarily, to allegations of police wrongdoing.
Brown recently revised the first-year deficit upward to $700 million after acknowledging that the four city employee pension funds had fallen short of the assumed 7% return on investments.
But Lightfoot said Friday that $700 million figure isn’t high enough.
“I know that number has been put out by the current administration, but it’s not $700 million. It’s worse than that. I’m not sure why they choose to put that number out because it’s not accurate,” Lightfoot said.
Newly elected mayors routinely paint the worst possible picture of the budget shortfalls they inherit, then blame their predecessors for leaving behind a bigger mess. That frees them to make the painful choices on taxes and budget cuts early in a first term in hopes that Chicago voters forget about it before the next election.
The situation that Lightfoot is inheriting may well go beyond that familiar script.
“We do need help from Springfield. We’re looking at a variety of options,” she said.
“I’ve had extensive personal conversations with the governor and the legislative leaders on both sides of the aisle. We are actively engaged with them and looking at ways we can get some relief from Springfield and we hope that will happen — whether it’s this session or in the fall veto session.”