Lightfoot vows straight talk on city budget if tax increase needed due to financial hit from coronavirus
It was the first time since the local economy was ground to a halt by Gov. J.B. Pritzker’s stay-at-home order that Lightfoot has acknowledged the possibility of a mid-year correction to her precariously balanced budget.
Mayor Lori Lightfoot vowed Tuesday to be “straightforward and very transparent” with Chicagoans if and when she concludes tax increases are needed to cover declining revenues and rising costs tied to the coronavirus.
The mayor cracked the door open to the mid-year corrections — which most aldermen and municipal finance experts have been expecting — after once again ruling out layoffs, furloughs and program cuts in this extraordinary time of need.
“We do not anticipate any of the draconian things … layoffs, furloughs and so forth. That’s a last resort. What we need to be doing at this time is not shrinking government in terms of our place in the economy. We need to be using government resources as a stimulus, if anything. That’s why we’ve seen the stimulus bills at the federal level. The same applies here at the local level,” the mayor said.
“The worst thing we can do when we’re going through this kind of struggle is slash city services, slash city workforce and put people on the street. Now, we have to make sure that we’re striking the right balance. But when people are going through this really difficult economic time, we’ve got to think creatively about the way that we weather it and not say to folks who are out of work, unemployed, who are really struggling, `By the way, give us more of your money.’”
But having said that, Lightfoot cracked the door open to a tax increase.
“I’m gonna be very clear-eyed about the fact that if there is a need to raise additional revenue after we see in the long term what this impact will be, I’m gonna be straightforward and very transparent about it,” she said.
“But in his intermediate time, it’s still really early for us to understand the full magnitude of the impact. We know certain sections obviously have really been hit hard: hospitality, restaurants and service industries. Those have really … born the brunt of the shutdown. But we also see other industries that are really doing quite well: Groceries, pharmaceuticals and others.”
The mayor said she plans to release some information “in the coming days” on what her financial team sees as the immediate impact on city revenues and on the dollars that will flow into Chicago from the federal stimulus package.
The city is “still waiting on guidance” it needs from the U.S. Treasury Department to produce that intermediate report, she said.
For weeks, Lightfoot has argued Chicago is well positioned to weather the storm of increased costs and declining revenues tied to the coronavirus pandemic without blowing a giant hole in her precariously balanced budget.
She has said repeatedly that “no one revenue stream is more than 13 percent” and that all of the “economically-sensitive” revenues together total just 25 percent.
Her claims about city finances ignored the fact that when the stock market drops and city pension funds don’t meet their expected investment returns, Chicago taxpayers make up the difference.
Just last week, Lightfoot ridiculed former mayoral challenger Paul Vallas for writing an opinion column claiming Chicago was “facing a code-red fiscal crisis” and that her “claim that Chicago’s budget is in good shape strains credulity.”
In a stinging public put-down, Lightfoot referred to Vallas as “desperate to be relevant” during the crisis and said he “probably hasn’t touched a city budget, doesn’t know the nuances, in probably two decades.”
Vallas served as city revenue director, budget director and Chicago Public Schools CEO under former Mayor Richard M. Daley.
Tuesday marked the first time since the local economy ground to a halt by Gov. J.B. Pritzker’s stay-at-home order that Lightfoot has acknowledged the possibility of a mid-year budget fix. It was only a matter of time before she was forced to face economic reality.
Scores of conventions have been canceled. McCormick Place, which housed the auto show just a few weeks ago, is being converted into a 3,000-bed hospital.
Airline travel has slowed to a trickle. Hotels have closed and laid off workers. Without dine-in customers, restaurant revenue is down 71 percent. The Illinois Restaurant Association president says one-fourth of Chicago restaurants may never re-open. Stores on Michigan Avenue have boarded up their windows.
People are working from home — if lucky enough to still have a job. The only things they are buying more of are groceries in general and hand sanitizer and toilet paper in particular.
All that is certain to have a dramatic impact on everything from city taxes on sales, parking, hotel rooms, restaurant meals and gasoline to amusements, ride-sharing fees, fines from parking tickets, red-light and speed cameras, ground transportation taxes and CTA fares.