* 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.