As teachers strike, the grim reality of Chicago’s finances sets in
Mayor Lori Lightfoot’s budget includes no property tax increase, but only because she is banking on help from state lawmakers. It also counts on new revenue and savings from cuts and efficiencies that — with all respect, mayor — we’ll believe when we see.
Like the CTU, her inclinations are politically progressive. She favors a greater public commitment to affordable housing, mental health services, neighborhood investment and other initiatives that put ordinary people, not big business or the privileged, first.
But as we watched Lightfoot deliver her speech, we also saw a chief executive of a major American city who knows that she must balance that progressive agenda with competing priorities.
Above all, the mayor knows, she must do everything reasonably possible to avoid another property tax increase. People all over the city tell her that every day. At the same time, she must maintain a healthy business climate.
As Lightfoot said later in the day, during a meeting with the Sun-Times Editorial Board:
“My values on education are 100% aligned with the vast majority of the things that the CTU wants. But we are very different on style and approach to things. As a mayor of the entire city . . . I have to do it in a way that is true to my values, but I also have to do it in a way that is true and respectful of the entirety of the universe of the city of Chicago.”
Can’t catch a break
Lightfoot stands on the same side of the ideological fence as the CTU, and for that reason she might have thought she’d catch a break. But good intentions will get you only so far in this town. Power is the game. The teachers will continue to strike for as long as they think they’ve got something to gain.
Now that Lightfoot has presented her 2020 budget, we are more convinced than ever that the city already has given up plenty in its negotiations with the teachers and must hold the line. The city’s finances are separate from the school district’s finances, strictly speaking, but the same taxpayers foot both bills.
And Lightfoot’s proposed budget reminds us just how shaky the city’s finances are.
Lightfoot’s budget includes no property tax increase, but only because she is banking on help from the state Legislature and Gov. J.B. Pritzker. It relies on a couple of big sources of one-time revenue, as well, which will do nothing for the bottom line of future city budgets. And it counts on suspiciously large savings from cuts and efficiencies, as well as new revenue, that — with all respect, mayor — we’ll believe when we see.
One fix: The transfer tax
Lightfoot is looking to Springfield for permission to enact a graduated real estate transfer tax in Chicago — basically a tax on the sale of big houses and mansions — that she estimates would pull in at least $50 million for the 2020 budget and $100 million a year for future budgets.
We support that. Progressive taxes beat regressive taxes; and the alternative, as Lightfoot warned without actually speaking the toxic words, might be a property tax hike. She just talked about “painful choices.”
The mayor’s budget includes $163 million in additional revenue from emergency services reimbursements — 2 1⁄2 times more than what the city currently pulls in. That’s money usually paid by an individual, an insurance plan or Medicaid for an ambulance run. There would have to be a massive increase in Medicaid payments for this purpose, state sources tell us, and the city might not get that much.
The mayor’s budget also includes $150 million in savings from zero-based budgeting, which is a process of building a budget from scratch, department by department, with an eye toward preserving only core services. That’s a whopping budgetary savings, and it begs for a public inventory list of all the cuts and efficiencies.
A particularly controversial proposal by the mayor is to refinance $1.3 billion in city debt at a lower rate and take the entire $200 million savings up front. That would go a long way toward filling the city’s budget hole, which the mayor puts at $838 million, but leave none of the savings for future years. As Civic Federation President Laurence Msall told the Sun-Times’ Fran Spielman, that “creates real questions as to how you’re going to pay that debt service next and in future years.”
All of these shaky or questionable new sources of revenue, as well as others, should drive home to anybody — including the CTU — that our city’s finances are precarious. Further concessions to the teachers, though the Chicago Public Schools is a separate taxing body, would only exacerbate the city’s overall financial crisis.
The high road
Mayor Lightfoot took the high road on Wednesday. There was no blaming previous administrations. There was no scolding the City Council. She spoke like a leader, eloquent as always, presenting her budget as a statement of high-minded values.
There will be new money, though not much, for neighborhood business investment.
There will be new money, though not much, to address the problem of homelessness.
There will be a new program to reduce water utility rates for low-income homeowners.
These and several similar initiatives are welcomed, but for the most part they are modestly funded.
We point that out not as a criticism, but as further evidence that Chicago’s finances are exceptionally tight.
The mayor’s budget is a starting point for her administration to work with Springfield and the City Council to get things straightened out.
There’s a lesson in this for all of us, teachers included.
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