Pathetic

Yesterday Chicago Mayor Lori Lightfoot announced her budget for the city for next year. It balances a shortfall of $1.2 billion in revenue with wishful thinking, planning for a federal bailout, and loan restructuring that, if it is even possible, may be too expensive for the city to bear. I’m in broad agreement with the editors of the Chicago Tribune:

Given the extraordinary challenges Chicago is facing, the key question surrounding Mayor Lori Lightfoot’s budget proposal unveiled Wednesday is this: Did she do the best she could given the circumstances?

Yes and no. Lightfoot’s budget blueprint for the rest of this year and next year might not look painful to the average Chicago taxpayer. But it relies heavily on expensive borrowing; its balance sheet depended significantly on federal aid from June, not restructuring; and it does not make lasting changes to the tax-and-spend policies that drive deficit spending. The Lightfoot administration says that goal was impossible, given the severity of the coronavirus pandemic.

The Chicago Tribune has been reporting on the city’s questionable borrowing practices since at least 2013. In its series, “Broken Bonds,” the newspaper outlined the precariousness of a borrowing addiction that spent bond money intended for long-term projects on short-term costs. Here is the opening paragraph to that award-winning series that bears repeating nearly a decade later:

“Between 2000 and 2012, Chicago spent $9.8 billion in general obligation bond proceeds with few restrictions and virtually no oversight. In a first-ever accounting, the Tribune found that nearly half of the money went to paper over Chicago’s growing budget problems. The city spent millions in bond funds on short-lived equipment such as Palm Pilot software, spare vehicle parts and items you might find on a weekend shopping list: trash bins, flowers, even bags for dog waste. That’s equivalent to taking out a 30-year mortgage to buy a car and making your children — or grandchildren — pay it off, with interest.”

Scoop-and-toss, as the practice is known, is a financial crutch that involves selling bonds — borrowing — and then using the borrowed money to pay off short term costs or old bonds — sort of like using a credit card to make a payment on another credit card. Under Lightfoot’s budget plan for 2021, the city will rely on $501 million in scoop-and-toss borrowing.

“It is scoop and toss,” Lightfoot said. But given the levers available during a “once-in-a-generation economic meltdown,” the mayor said they had to use “unique tools.”

How much will that borrowing eventually cost taxpayers, along with refinancing planned for the current budget year? The mayor’s budget team wouldn’t say. They would only predict that city taxpayers would come out ahead, once harm to the economy and instability costs were factored in if they didn’t use scoop-and-toss financing in this emergency. In other words, it’s the least worst option.

What goes unmentioned is that the budget contains practically no economization. What percentage of the city’s workforce does the mayor plan to layoff? 1%. That’s while 15% of Chicagoans are unemployed. The city didn’t lay off or furlough any city workers during the city’s lockdown. They were all deemed essential.

In addition practically no one believes that Chicago’s population will be greater next year than this year or greater the year after that than next. That means that fewer and fewer Chicagoans must carry the burden being placed on them by decades of irresponsible borrowing. It’s high time for some shared sacrifice.

9 comments… add one
  • Drew Link
  • CuriousOnlooker Link

    I have a little sympathy for the current mayor.

    Even if she gives up reelection; her budget would need to be approved by the city council; and I doubt a budget slashing 15% of the civil service would pass the council. To do what is needed, Chicago needs to convince the mayor and every city council member to give up elected office.

    I guess the mayor’s hope is she is not in charge when the proverbial train goes through the tunnel. The former mayor’s timing (in quitting office) continues to look better and better.

    That budget is why I think the census will be “annulled” if Biden is elected. Even a federal bailout package will not cover 10 years worth of reduced funding due to a reduced population base. This applies to NYC/SF, two other base of power for the Democratic party.

  • She’s outside her depth. It was clear she was when she knuckled under to the CTU. She was elected to do two things: reform the CPD and hold the line on property taxes. It does not look as though she will succeed on either. And to the best of my knowledge she’s the only mayor of Chicago under whose administration organized looting of Michigan Avenue has taken place.

  • PD Shaw Link

    Our city budget is almost balanced, they will need to draw on reserves. The issue is sales taxes; sales taxes; and sales taxes. It’s not so bad here because there weren’t any riots that got out of hand in terms of arson, looting, etc. Hard for local businesses to make sales in a pandemic; harder still if the police won’t/can’t stop mobs from destroying their business.

    The last few days our Mayor, a democrat, but with a community banking background, has been begging the Governor not to close indoor dining and bars. We’re in a third wave with cases higher than the previous wave and hospitalizations the same as the first wave. This will probably determine how ugly next year’s cuts will be.

  • I didn’t even touch on COVID-19. Okay. What is it that Mayor Lightfoot didn’t get that she wanted in dealing with COVID-19? Answer: nothing. What she wanted didn’t work. Another failure at enormous cost. I have no sympathy for her. She’s incompetent.

  • CuriousOnlooker Link

    My mayor is proposing a budget cut of 14% for 2021; the number of employees will be 14% less then before the pandemic (they had some layoffs already).

    And the city is still forecasting small amounts of red ink for the next 4 years; if things don’t improve more than forecast, they will have to cut more at the end of the 4 years.

    It is tough out there.

  • Grey Shambler Link

    “I have no sympathy for her. She’s incompetent.”
    She’s also female and BLACK. Watch your mouth.

  • As I said the number of city employees the mayor is talking about laying off is 350. That’s of 35,000. While the citywide unemployment rate is 15%. It’s pathetic.

  • Greyshambler Link

    city employees:
    And those are her base.
    How do you elect leaders who don’t reflect the will of their self interested voters?
    And Chicago is a microcosm of America when the electoral college is gone. Progress.
    That’s what “progressives” call progress.

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