Chicago on the road to financial solvency, Lightfoot assures investors
The mayor also noted that more than half of the $1.9 billion in federal aid will be used to retire $965 million in scoop-and-toss borrowing — though she faces resistance from City Council members who call it a Wall Street bailout.
Mayor Lori Lightfoot tried Thursday to convince investors she has put Chicago on the road to financial solvency, in hopes of minimizing borrowing costs when $1.4 billion in general obligation bonds are sold to bankroll her capital plan.
During the annual investors conference — held virtually for the first time after a year-long hiatus — the mayor didn’t shy away from the many challenges Chicago faces. She couldn’t. Investors asked her directly about their biggest concerns during a question-and-answer session moderated by Jennie Huang Bennett, the city’s chief financial officer.
Lightfoot argued she has had “a lot of successes” financially.
“If we hadn’t seen the COVID-19 meltdown in our revenue that directly affected our budget, we’d be talking about a budget surplus right now, just on the basis of the measures that we put in place before,” she said.
“No mayor likes to raise property taxes. But we did some incredibly smart things by having increases tied to” the consumer price index, Lightfoot added. “Nobody wanted to do that. But we were able to get together the majority we needed to bite that bullet so that we are having consistent revenue streams and not having these great swings.”
Even with that $94 million property tax increase and annual increases going forward, Lightfoot balanced her 2021 budget by refinancing $1.7 billion in general obligation and sales tax securitization bonds and claiming $949 million of the savings in the first two years.
That approach extended the debt for eight years and returned Chicago to the bad borrowing days former Mayor Rahm Emanuel had ended.
The mayor’s financial team has told aldermen that more than half of the $1.9 billion avalanche of federal COVID-19 relief funds headed to Chicago would be gobbled up by retiring all $965 million in scoop-and-toss borrowing used to eliminate the pandemic-induced shortfall.
On Thursday, Lightfoot and Bennett reiterated that promise to investors — even though there will be heavy resistance from a City Council dead-set against what some aldermen call a Wall Street bailout.
“We had to do some one-timers to close the budget gap for 2021 because we didn’t know whether there would actually be any other monies available. I’m looking to eliminate some of those one-timers and use some of the [relief] money to do that,” she said.
As for spending the rest of those relief funds, Lightfoot added: “People have to feel these monies. They have to feel like we have heard them. That we understand their pain. And that we’re doing things to relieve that pain so they can also recover. If individuals and families don’t recover in a holistic way, our recovery will be muted at best.”
There were three elephants in the virtual room.
One was Chicago’s chronically under-funded pensions.
That problem, the mayor argued, can be solved only in Springfield. But instead, the General Assembly made things infinitely worse by passing a “disastrous” firefighters pension sweetener “under the cover of darkness in the lame-duck session,” Lightfoot said.
“Putting more stress on a broken system — pension funds that are severely under-funded — in the midst of an economic crisis makes no sense to me whatsoever,” she added.
“At some point, it’s my hope that everybody involved will get serious and come to the table. We know what the solutions are. What we’ve been lacking is the political will.”
The second elephant in the virtual room was what Lightfoot called the “unprecedented uptick in violence.” Once again, Lightfoot blamed the pandemic.
“When you think about public safety, it’s not just a police or law enforcement [problem]. It’s a lot of social services. A lot of community groups on the ground. Every single part of that infrastructure — from the courts to the prosecutors — have been dramatically impacted by COVID-19 shutdowns and closures and we’re still coming out of that,” she said.
The flip-side of that coin is police reform and accountability.
A former Police Board president who co-chaired the Task Force on Police Accountability, Lightfoot argued the path to progress on those fronts is “long,” and measured “in months or years” — not days.
But she argued the Chicago Police Department has made great strides — in training, in community service (done weekly by every front-line officer) and in a homicides clearance rate once “in the teens” but now above 60%.
Elephant No. 3 was the nonstop tension between City Hall and the Chicago Teachers Union that triggered a teachers strike and nearly prompted a second walkout over reopening Chicago Public Schools.
Lightfoot was asked about that in the context of Chicago’s population losses.
“One of the first questions that young families have about whether or not they’re gonna stay in the city is, what’s the quality of the public school system? Can I walk to my neighborhood school? What is that gonna look like?” the mayor said.
“And, no question, this conflict is not helpful, to say the least.”