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Time to prepare the public, mayor

Thursday, Apr 2, 2020

* Credibility matters during a crisis and Mayor Lightfoot undermined her credibility yesterday. Here’s Heather Cherone at the Daily Line

Mayor Lori Lightfoot insisted again Wednesday that Chicago’s municipal finances are weathering the storm whipped up by the coronavirus pandemic, even as Gov. JB Pritzker says the state’s budget will be “vastly different” than he planned.

Pritzker told reporters that he could not list all of the changes that will have to be made to the state’s plan for 2021, which he introduced in February based on projections that the state’s economy would continue to thrive.

“It will be a vastly different budget, there is no doubt,” Pritzker said, adding that he has begun working with his team to develop estimates for revenues and expenses. […]

The mayor said she had “great confidence” in her finance and budget team, which predicted a “substantial” economic downturn in 2021.

Chicago has a diverse revenue stream, with no one source accounting for more than 13 percent of the city’s revenues, Lightfoot said. In addition, “economically sensitive revenue streams like state income tax and sales tax” make up about 25 percent of the city’s budget, the mayor said.

Um, her budget proposal was chock full of holes, some of which are still not filled (a $163 million emergency services reimbursement from the federal government, for instance). And it was also balanced by doing things like drawing down years of savings up front on a bond refinancing scheme ($200 million). She further relied on the General Assembly to approve a graduated real estate transfer tax to bring in an additional $50 million, but that never happened.

She got an almost total pass from the Chicago media for that budget and that attitude mostly continues.

Also, her budget did not predict a “substantial” economic downturn. Sales taxes were projected to rise by $37 million. She predicted overall revenues would increase by $352.2 million and that she could wring $537.6 million in savings.

Yeah. How’s all that working out?

* Lightfoot is right that the economy could vigorously bounce back after this is over. And she will be getting significant help from the latest federal stimulus law, which funnels a bunch of money to municipalities with more than 500,000 residents.

But, I mean, look at this

Can the downtown hotel market go to zero?

It took a step closer the week of March 22, when the downtown hotel occupancy rate fell to 5.9 percent, down from 9.3 percent a week earlier, according to STR, a hotel research and consulting firm based outside Nashville, Tenn.

* Setting aside the over-heated rhetoric in Paul Vallas’ Tribune op-ed, he’s not wrong here

The city’s $4.45 billion corporate fund, which pays for core city services, is heavily dependent on taxes directly impacted by the pandemic and the economic shutdown.

Taxes such as the sales tax, parking tax, amusement and transportation-related taxes are all tied to business sectors taking a direct hit. Additionally, shared revenues from the state of Illinois are impacted by a slowdown of economic activity.

Obviously, revenues tied to hotel room rental, sporting events, concerts and theater entertainment, parking garages, the convention business, gasoline sales, property transfer taxes, CTA ridership, parking and red-light tickets have all been impaired or eviscerated.

And he has some decent revenue ideas as well, so go read it.

- Posted by Rich Miller        

18 Comments
  1. - Wow - Thursday, Apr 2, 20 @ 10:08 am:

    When the medical situation flattened out, and the economic malady sets in (recession) the City budget will blow up and so will her favorability numbers.


  2. - Amalia - Thursday, Apr 2, 20 @ 10:15 am:

    this will be a time to assess all properties and personnel and decide how services can be delivered more efficiently. there are too many police districts, libraries and polling places. cut.


  3. - crazybleedingheart - Thursday, Apr 2, 20 @ 10:16 am:

    what credibility? from the campaign? the teacher’s strike? the cop academy? the refusal to take action on coronavirus until Pritzker made her look bad?

    how did that taking her family to dinner in a restaurant go? did anyone ever follow up on that?


  4. - Oswego Willy - Thursday, Apr 2, 20 @ 10:22 am:

    To the post,

    Lots of moving parts to this;

    Mayor Lightfoot’s aloof (I’m being generous) outlook at the budget in the current crisis.

    The reality of that budget Lightfoot thought was hunky-dorey.

    The “new” reality of undeniable challenges to make *any* budget work once the crisis subsides of lessens.

    It’s like the Thompson Pivot.

    Being honest now to the realities of today and tomorrow are absolutely critical, even if the news is either terribly bad or worse than… terribly bad. The time is now to say the truths first ignored and now truly can’t be ignored or glossed over.

    If any elected leader decides that half truths of a lack of honesty will work in these economic times, they will find resistance far-far greater than the resistance they will face with tough choices ahead.

    This isn’t “walk and chew gum” two things. This is, frankly, everything. The crisis as the most critical but honesty to the damage in a budget and responding as a government now and forward *is* one and the same.

    A budget is a weigh and measure of priorities in dollars and cents, putting pencil to paper policy with monies. When a crisis hits, these budget issues highlight where lacking is (revenue) and where decisions are made (cuts).

    Don’t wait. It’s almost too late, the way the mayor has gone about this from before and now, but there needs to be this realization now before this entire crisis refuses to allow some plan forward.


  5. - amalia - Thursday, Apr 2, 20 @ 10:30 am:

    one of the three candidates for Police Supt. is very inspiring….former Chief of Dallas police. would love him to be the chicago chief as his performance during the sniper incident was memorable.


  6. - Last Bull Moose - Thursday, Apr 2, 20 @ 10:55 am:

    During the financial crisis of 2008 Chicago faced a $500 million hole in a $6 billion budget. The aldermen were initially briefed in small groups to meet the open meeting laws. The budget cuts were brutal.

    This downturn will be much worse. Unless the federal government can replace lost revenues through grants, services will have to be cut.


  7. - Montrose - Thursday, Apr 2, 20 @ 11:03 am:

    I have been so confused by her statements about the city’s budget. She was all about being honest about the city’s dire financial straights when she came in and has noted in the past it would be a multi-year effort to get out of the hole. She prides herself on being a straight talker, so why she is now trying to pretend the budget is fine and dandy is beyond me. At least own you don’t know what this crisis will mean. She should be following Pritzker’s example. I think she is enjoying her meme celebrity too much.


  8. - Southwestsider - Thursday, Apr 2, 20 @ 11:14 am:

    Vallas is right on the money. Meanwhile, the Mayor is guarding the lakefront.


  9. - Angry Republican - Thursday, Apr 2, 20 @ 11:27 am:

    I’m not worried; I’m sure mayor Rauner is willing to “take the arrows” for the budget.


  10. - NorthsideNoMore - Thursday, Apr 2, 20 @ 12:34 pm:

    To Vallas Oped: While he has insight on budgeting, but lacks credibility in crisis budgeting. Same guy failed to file $100s of millions of dollars worth of paperwork with the Feds back in the day when city was struggling mightily with finances. Daley had to go to DC to bail Vallas and the city out for this “oversight.” Some say it was done intentionally. Hizzoner ending up in the hospital the same week as I recall.


  11. - La Dictadora - Thursday, Apr 2, 20 @ 12:35 pm:

    What credibility? She assured aldermen that there are plenty of tests and publicly said the city has enough ventilators, beds, and PPE. Keep track of what she says, it’s reactive and ignorant. She wastes her time obsessing over people who hurt her feelings (e.g., her petty response to Paul Vallas) instead of leading and following a strategy. She’s mirrors Trump but no one’s watching her closely, and Chicago press isn’t holding her accountable.


  12. - Just Another Anon - Thursday, Apr 2, 20 @ 12:36 pm:

    Tough times call for tough measures. Sounds like a major need to renegotiate the giveaways in the CTU contract. That resets the field for the CPD contract (which is 3 years expired at this point) where they may be willing to accept less than the 16% over 5 year pay raise and healthcare cost freeze.

    Priorities have to be to cut the bloat, graft, and patronage in the City jobs and departments. Balance the budget by cuts on everything that isn’t infrastructure, transport, or essential services (Fire, PD, Sanitation, etc.). Rollback TIFs. Cutback the City Council to 25 alderman (save about 9 million a year). Take half the “menu money” and put that into essential services (save about 32 million a year).

    There’s no one shot cure here. Its going to take cuts in many places to get things manageable. The cuts aren’t going to be popular and people aren’t going to be happy, but swallow the medicine and make the tough votes.


  13. - Oswego Willy - Thursday, Apr 2, 20 @ 12:42 pm:

    === renegotiate the giveaways===

    I know. It’s organized labor. They are the culprit. Ugh.

    Talk about rebranding…

    === bloat, graft, and patronage===

    Is this the new “waste, fraud, and abuse”?

    ===Cutback the City Council to 25 alderman===

    File this under…

    “Everyone has their own priorities”…

    === The cuts aren’t going to be popular and people aren’t going to be happy===

    Reading your comment, it’s written more as your priorities and buzzwords, and angst.

    If your comment was a floor speech during a city council meeting… that would be the take too.


  14. - Just Another Anon - Thursday, Apr 2, 20 @ 12:48 pm:

    @OW

    Glad to see you are providing such concrete solutions.

    >your priorities and buzzwords, and angst.

    So I’m sounding like you now, am I?


  15. - Oswego Willy - Thursday, Apr 2, 20 @ 12:59 pm:

    === So I’m sounding like you===

    LOL

    Cutting the council isn’t happening.

    Renegotiating the contract? Good luck with that reality.

    ===bloat, graft, and patronage===

    Dude, this is embarrassing to read, let along thinking someone believes this is a fiscal policy.

    === Glad to see you are providing such concrete solutions.===

    Since my comment… was to the politics and the handling of the situation and not specifically to policy… either you don’t understand words, or you couldn’t think of a way to defend your silliness so “oh yeah… you…” makes sense too.

    Here some solutions;

    * Rollback TIFs (see you had one) but even that might not be workable (?)

    * Take half the “menu money” and put that into essential services, which is a good budgetary strategy if it doesn’t cost votes later…

    See me agreeing with your honest policy thoughts… see the differences…

    Property taxes will need to rise, a look at, a hard look at, programs, maybe whole programs cut… kinda like…

    === There’s no one shot cure here. Its going to take cuts in many places to get things manageable.===

    If that’s too vague, ask yourself to be more specific.

    This is a dire, real, and imploding situation that won’t be easy. Choosing “your own priorities” as actual overall answers, lots of folks doing that lately.

    How’s all that?


  16. - Wizzard of Ozzie - Thursday, Apr 2, 20 @ 1:13 pm:

    This crisis is reveling our leaders for who they actually are. Gov Pritzker is empathetic, smart, and creative. That’s come across to anyone paying attention.

    Mayor Lightfoot (memes aside) has been behind at every step. She also has a Trump-like aversion to criticism. I don’t understand why she should would say that the budget is ok. I’ve heard over and over again that this year was going to be worse than last year’s hole, and that was before COVID. I’m guessing it’s just because the narrative was coming from Paul Vallas. But she generally reacts poorly to any criticism.

    A few weeks ago (time is only a concept at this point) Lightfoot was asked about the City’s PPE supplies and she said it was fine. Nothing to worry about. No reporter pressed her on that. Anyone who is paying attention knew that wasn’t the case. I was floored that no one called her out on it. She needs to get over her worst, Trump-ian instincts and take any and all advice, help, and assistance.

    I hope she grows from this. But my sense is she is that there is no one her team correcting her at this point.

    Thanks for calling her out Rich. Hope other reporters follow suit.


  17. - M - Thursday, Apr 2, 20 @ 1:28 pm:

    It appears the Chicago mayor does not understand how long this health crisis is going to last.


  18. - Southwest Sider - Thursday, Apr 2, 20 @ 3:32 pm:

    ==Property taxes will need to rise==
    Just as property performance is declining rapidly.

    PS - someone else is using my moniker, but without a space. I’m a different Southwest Sider. Fair enough that there would be more than one of us.


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