Without revenue replacement from Congress, Chicago faces ‘really difficult or impossible choices,’ mayor says

Chicago will be faced with a series of “really, really difficult or impossible choices” without another round of stimulus money to replace revenue lost during the coronavirus pandemic, Mayor Lori Lightfoot said Monday.

Chief Financial Officer Jennie Huang Bennett reiterated that the stay-at-home shutdown of the Chicago economy triggered by COVID-19 would cost the city “in excess of $500 million” this year — and pegged the 2021 shortfall at “upwards of $1 billion.”

Huang Bennett reiterated the long-term cost to Chicago would depend on how quickly the local economy bounces back and how much revenue replacement money is earmarked for cities and states in the next wave of stimulus money coming from the federal government.

“We are going to need some level of federal funding to help support us during this time frame, which is appropriate. I mean — what we’re facing by way of COVID and the revenue losses and also many of the expenditure increases are ... the result of a one-time event that you would never have expected over a lifetime,” the CFO said during a conference call.

Already, Chicago has received $1.13 billion in federal stimulus money, but only to cover expenses tied to the city’s response to the pandemic. None of it will replace lost revenues.

The money includes: $376.7 million for operations and concession relief at O’Hare and Midway Airports; $189.3 million for “epidemiology and lab capacity” and $46.7 million in community development block grants.

During an earlier conference call with City Hall reporters, Lightfoot acknowledged “the partisan divide has reared its ugly head in Washington D.C.” since Speaker Nancy Pelosi pushed through the U.S. House a $3 trillion stimulus bill that includes $1 trillion for cities and states.

But the mayor remains “hopeful, and I keep pushing for a compromise that will get real relief to cities” across the nation.

“Chicago is, in some ways, better able to absorb some of these blows that we’ve suffered than smaller towns and municipalities across Illinois. But make no mistake: We are all hurting and we’ve got to get relief,” Lightfoot said.

“The magnitude of the problems and the challenges that we all face is such that only the federal government has the resources and the wherewithal to act at a scale that’ll make a meaningful difference. Without that, we are looking at a lot of really, really difficult or impossible choices.”

Next to a property tax increase, Lightfoot said the least palatable of those choices is to cut the budget and lay off city employees.

“The easy thing to do would be to cut city services and to put city workers out in the street. I’m loathe to do that. I can’t take either of those two tools off the table. But we’re gonna do that as a last resort,” she said.

Huang Bennett said no imminent borrowing is planned, but it is being explored. So are pension bonds.

Pressed on what the city would do without revenue replacement help from Washington, she said, “It’s either increased revenues, reduced expenditures or one-time measures. ... We have options available to us. ... Some of those options are more painful than other options. All of those options are on the table right now.”

Lightfoot said the movement to “de-fund” the police department that has gained steam since the death of George Floyd is, at its core, a cry for help for the city to invest in long-neglected South and West Side communities.

It’s a pain she understands fully, which is why she declared war on poverty and proposed her $750 million plan to invest in 10 neighborhoods in those areas — and made that proposal long before Floyd’s death at the hands of Minneapolis police touched off a national firestorm.

How can Chicago afford what she called an “urban renewal agenda” in the middle of a budget crisis made infinitely worse by the pandemic?

“Particularly now, because our revenues are down and so many businesses are hurting, if we don’t use the government as a stimulus to grow the economy — and you can only grow the economy if you are investing in neighborhoods — then we really significantly limit our vision of who we are gonna be as Chicagoans,” the mayor said.

“We’ve got to bring more people into the economy. We’ve got to make sure that businesses are supported and there’s a real pipeline to good paying jobs. One of the ways in which the city really can invest in the middle class and jobs is through city employment.”