Lightfoot warns of employee layoffs to erase 2021 budget shortfall now pegged at $1.25B

Mayor Lori Lightfoot warned Tuesday in the strongest terms yet that employee layoffs she has long called her “second to last resort” will be needed to erase a 2021 budget shortfall she now pegs at $1.25 billion.

Lightfoot refused to say how many city employees will be targeted. She noted negotiations with organized labor to identify specific areas for cuts or concessions have just begun.

But with no replacement revenue on the horizon from Washington, the mayor said she needs to make substantial cuts to lay the political groundwork for the massive tax increases that will also be necessary to erase the largest budget shortfall in Chicago history.

“We can’t ask individual taxpayers to give us more if we don’t prove to them that we are being good fiduciaries of their tax dollars and that includes making painful sacrifices,” the mayor said at a news conference to mark the first day of remote learning for Chicago Public Schools students.

“No one wants to see that happen. No one wants to see a reduction in the kind of services that are core to what we do as a city government. But we are looking at a variety of options. And of course, we have no way of knowing at this point whether or not Congress is gonna see a breakthrough. I certainly hope so. COVID-19 has had a bipartisan impact on cities and towns all across our country and we need a bipartisan resolution.”

Last week, Lightfoot pegged the hole in her precariously-balanced first budget at $800 million and next year’s shortfall at $1.2 billion. On Tuesday, she upped the ante for 2021 — by $50 million.

“In this time where we’ve got a $1.25 billion budget deficit for next year, there’s gonna have to be some painful choices that are made and everything has to be on the table, including the potential for layoffs. That’s a conversation that we just [have] begun with our friends in organized labor,” she said.

Bob Reiter, president of the Chicago Federation of Labor, said the CFL board had a “preliminary meeting” with the mayor last week, at which “not much was revealed to us.”

“We’re not gonna solve this problem by dealing around in the dark. ... You can’t begin to have discussions around what type of actions you can make to help solve the financial problem without ... having hard numbers to look at,” he said Tuesday.

Reiter acknowledged the financial crisis confronting Chicago is a “once-in-a-generation-type of calamity” largely caused by the coronavirus pandemic.

“We all need to continue working together — labor, community and City Hall — on pressing the federal government to give us the type of aid and assistance this type of public health financial calamity requires,” he said.

“Cutting at the city workforce and [claiming] that needs to be a tip-of-the-sword strategy in order to go after any type of revenue increases that they’re seeking is likely a false narrative.”

The CFL has an ownership stake in the Sun-Times.

Anders Lindall, a spokesman for AFSCME Council 31, argued a public health crisis is the “worst time” to reduce neighborhood services that Chicagoans “need more than ever” — and that an economic crisis is the “worst time to take money from the pockets of working people or add to the ranks of the unemployed.”

“City employees themselves are taxpayers and city residents, so laying them off only further destabilizes city neighborhoods,” Lindall wrote in an emailed statement.

So far, the city’s 33,000-employee workforce has escaped the pain endured by private sector employees who have seen hours and paychecks shrink.

Chief Financial Officer Jennie Huang Bennett and Budget Director Susie Park have made it clear that cannot continue. The mayor needs concessions.

They have vowed to erase shortfalls this year ($800 million) and next without assuming any replacement revenue from Washington, through hundreds of millions of dollars in tax increases and budget cuts that include a mix of layoffs, furlough days and pay cuts.

“What we need from organized labor is for them to come to the table with actionable solutions that can help to support us in the 2021 budget. In previous years, we had the luxury of prioritizing certain solutions over others. This year, all of them are gonna be needed,” Huang Bennett told the Sun-Times last week.

“We’re not alone in this. A lot of cities across the country have had significant numbers of personnel actions because of the fact that we are in the midst of a crisis where we have seen significant unemployment in the city of Chicago. And ultimately, government has to reflect what’s going on in the broader landscape.”

For months, the mayor has called a massive property tax increase her “last resort” and morale-killing layoffs or furlough days “next to last.”

During a pandemic that has caused Chicago’s unemployment rate to skyrocket and shrunken the hours and paychecks of those still lucky enough to have jobs, Lightfoot has argued that city government should do all it can to stimulate the local economy. The last thing she wants to do is to throw even more people out of work.