I was somewhat shocked by this editorial from the Chicago Sun-Times urging newly-elected Chicago Mayor Lori Lightfoot not simply to balance Chicago’s budget by increasing taxes (as the State of Illinois has done) but by cutting costs as well:
Mayor Lori Lightfoot is telling Chicagoans to expect higher taxes and fees as she and the City Council work to close a budget gap this summer that could be $700 million to $1 billion.
That should surprise nobody. Skyrocketing pension obligations alone have long made it obvious that more revenue will be necessary — and that the city will have to pinch pennies in union contract negotiations.
But the immediate shock to the wallet will be easier for taxpayers to bear if they see city officials working overtime to close at least part of that fiscal year 2020 budget gap with more creative cost savings.
Here are their proposals:
- Finding ways to reduce the millions of dollars the city pays to manage pension investments. The city should look at turning to private fund managers or consolidating pension funds into the Illinois Municipal Retirement Fund.
- Holding tough in negotiating collective bargaining agreements. Most of city’s collective bargaining contracts are up for renegotiation, which creates an opportunity for the city to find cost savings. The savings would come, most obviously, from holding down salary increases. But as city Inspector General Joe Ferguson argued persuasively in a report two years ago, simple work rule changes, such as how the duties of a particular job are defined, could help the city contain costs.
- Rethinking the city policy of self-insuring itself as the city spends millions of dollars to settle lawsuits against the Police Department. A suggestion has been to use an outside insurance company, which might be able to bring down those costs. Professional auditors might be able to manage claims in a manner more beneficial to taxpayers.
- Ensuring the city follows through on Lightfoot’s initial steps toward professionally managing workers compensation claims, which are significantly higher than in comparable cities. Now that Ald. Ed Burke is no longer in charge of the worker’s comp program, running it like a private club, we would expect to see major finance savings.
- Replacing the scattershot “aldermanic menu money†system of funding repairs for streets, sidewalks, alleys streetlights and the like with a centrally coordinated and more cost-efficient system based on long-term planning.
Creating an online portal for approving and issuing some types of permits. As it works now, they must go through the City Council, chewing up staff time and generating unnecessary red tape.- Consolidating city and county election services. This one won’t happen anytime soon, given the need for legislation from Springfield, and it likely would save more money for the county than the city. But it represents the kind of long-ranging planning that can instill confidence in taxpayers.
Two major cost-savings strategies go unmentioned: converting all new city employees from the present defined benefit plan to a defined contribution plan and a critical overhaul of wages throughout the city. There are laborers employed by the city who bring down $75,000 a year plus a city-provided health care plan and a defined benefit pension plan. Everyone knows those “laborers” are mostly relatives of Chicago pols being carried on the city payroll.
Chicago is already teetering on the brink of a precipice. Chicago’s low credit rating places the time at which the city will be unable to borrow in sight. Half measures aren’t enough.
