Lightfoot says budget shortfall more ‘dire’ than she thought, but how much more?
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The transition from one Chicago mayor to the next normally follows a familiar script.
Paint the worst possible picture of the budget shortfall you inherited. Blame your predecessor for leaving behind a bigger mess than you anticipated. And make the painful choices on taxes and budget cuts early in your first term in hopes that Chicago voters forget about it before the next election.
That script came to mind when Mayor-elect Lori Lightfoot came away from a meeting with Mayor Rahm Emanuel’s financial team claiming the already-daunting shortfall she’s facing is infinitely worse than she anticipated.
Lightfoot didn’t put a number on it. She simply described it as “dire.”
That’s saying something, considering that what we knew was plenty bad enough, as outlined in a recent Civic Federation report.
Pension fund contributions will rise by $270 million immediately and by $1 billion by 2023 as the ramp to actuarial funding ends and the road to 90% funding begins.
The corporate fund has budget gaps of $251.7 million next year and $362.2 million in 2021. 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.
Budget Director Samantha Fields was asked what she told the mayor-elect that made Lightfoot believe the financial mess was worse than anticipated.
“We highlighted a list of things we knew were outstanding — like Local 2 [firefighters contract], possible FOP contract and a number of other items that we’re projecting for 2020’s budget. And I think her team has done some of their own background and determined the range of those expenses,” Fields told the Sun-Times.
Fields was asked to project the final shortfall with the cost of police and fire contracts, retroactive pay and debt service costs.
“We haven’t determined where we would land for … police and fire. Those communications — we have not had those and probably won’t have those until the new administration is in place. So we haven’t calculated what those would possibly cost,” she said.
“We know that our largest workforce, which is police and fire, have their outstanding contracts. They’ve been out for a bit of time, so we’ll have to pay for retro for that. We can anticipate these things. But I don’t think that we’ve necessarily quantified them. So that figure may not be something the public has seen.”
The last time police and fire contracts were settled, in 2014, the cost of more than two years of back pay for the rank and file totaled $100 million.
The retroactive payment for firefighters and paramedics alone totaled $45 million, including two years of back salary, overtime pay, special pay and pension payments.
No short or long-term borrowing was required because Emanuel reserved funds in his 2013 budget to cover the “anticipated retroactive amount.” That’s not the case this time.
The back pay tab for Chicago Police officers was $65 million. Both contracts included the same basic terms: 11% pay raise over five years.
The police contract was the first not decided by an arbitrator since 1996.
Emanuel made sure of that by granting rank-and-file police officers the 4-percent retroactive pay raise he could have denied them because of a paperwork mistake by their ousted union president.
Instead of playing the trump card in his hand in a way that punished the rank-and-file, the mayor used it to get some measure of relief for Chicago taxpayers.
They saved $2.3 million because the back pay raise for the first year of the contract did not apply to overtime earned between July 1, 2012 and June 30, 2013. That was a period when moonlighting officers racked up large amounts of overtime while flooding high-crime areas.
Lightfoot will have no such good options.
She has a contentious relationship with the FOP, having co-chaired the Task Force on Police Accountability whose scathing indictment of the Chicago Police Department prompted the U.S. Justice Department to do the same after a federal investigation triggered by the police shooting of Laquan McDonald.
The task force demanded changes to a police contract that, it claimed, “codifies the code of silence” Emanuel acknowledged exists at CPD.
The City Council’s Black Caucus has threatened to hold up ratification of any police contract that continues to make it “easy for officers to lie” by giving them 24 hours before providing a statement after a shooting and includes “impediments to accountability” that prohibit anonymous complaints, allow officers to change statements after reviewing video and requires sworn affidavits.
Lightfoot was on a two-day trip to Springfield and could not be reached for comment on city finances. Lightfoot spokesman Nadia Perl also wouldn’t offer any more details.
Jeffrey Bethke, the DePaul University executive vice president and chief financial officer leading Lightfoot’s task force on budget and financial issues, could not be reached, either.