Friday, December 9, 2016

Chicago is not broke, says public interest defender Tom Tresser

Tom Tresser
 Chicago’s latest budget, resting as it does on a variety of regressive taxes, and increased property taxes might have made Mayor Rahm Emanuel happy, yet for many there is more than simply dodging the bullet on pension payment backlogs and higher taxes than the 2017 budget does. For so long, and for so many, the mantra, has been that the city was broke, and beyond repair.

But others wanted to take a creative and imaginative approach to city finances, infrastructure and financing. Leading the pack is Tom Tresser who has brought together a collection of opinions into one slim volume titled, “Chicago is Not Broke”, an analysis of why and how things went wrong, but also prescriptions for how it can, and should get better for all residents. I spoke with him in a rollicking, anecdote filled, and impassioned interview; one that had me in thrall with his commitment, and vision for a better Chicago.

First on the table was the 2017 budget that was recently, and unanimously passed by the City Council, which pleased the mayor to no end. While Tresser ruefully acknowledges the ability of the mayor to pass a budget with no dissents, he feels that “it really supports 5 or 6 wards; 45 out of 50 are not doing that great. Look at the  unemployment figures among African American youth; and look at the 160 schools where there is no library, or no librarian, that is not investing wisely.”
For many progressives and community leaders, especially those on a grassroots level, the election of Donald Trump has caused concern if there will be continued support, for the more vulnerable members of society, and Tresser too is concerned, whether there can be “justice and equity” for civic projects.

Tresser stresses that “in the civic imagination, we’re broke, but we have no ideas to solve our problems,and we tend to run around like hamsters.” And, one of the things that makes him angry is that all too often Chicago has been hellbent on “creating debt to enrich the insider that [in turn] enriches the bankers, but not for the rest of us.”

The book is divided into five sections; the first is an introduction to the budgetary process by local economist Ralph Martire,and an overview of the Chicago budget.and an examination of some of the steps that can be taken.  In the second, section, there is an examination of the cost of corruption -- since Chicago is frequently cited as one of the most corrupt cities in the nation.

Martire’s detailed breakdown of the city budget is must reading for everyone concerned about city finances. For the 2.7 million residents it reads like a Rosetta stone for the series of documents that make up the entirety of the budget, and one whose complexity, can make such an examination daunting.

Looking at what are essentially six separate budgets, Martire acknowledges that there is “no one element a citizen can review to analyze the city’s budget,” and asserts that this complexity hinders transparency. Not included in the $9.32 billion budget, for 2016, were amounts for Chicago Public Schools, the police department, the Chicago Housing Authority, the CTA, and the city’s community college system; with amounts ranging from $ 5.7 billion to $696 million.
He leaves the readers with one salient point:  the budget is essentially a political document, and “rarely highlights controversial decisions.”

Dick Simpson, former aldermen, and now political professor at University of Illinois at Chicago, and coauthor Thomas J. Gradel, notes that  corruption costs [the city] about $500 million a year,” say Tresser and also cites, as an example, the enormous cost to the city of the Barbara Byrd Bennett debacle where she was charged, as Chicago School Board Superintendent, with ripping off Chicago Public Schools for over $2.3 million in kickbacks to her former employer, in exchange for a $2 million bribe from them.

The end result was more monies lost to the nation’s third largest school district, and also a huge loss of confidence. Most importantly he notes that “Political corruption in Chicago is extensive and persistent,” but so are the “tax dollars, in lives ruined or lost and in the loss and faith in government.”

While this may not be news to many city residents, and observers, the costs for other scandals, when tallied, add up to even more: $500 million per year, with the Jon Burge monies at $100 million and counting, and from the past, $100 million in 10 years, for the Hired Truck scandal.

As Simpson states, “All these forms of graft and corruption, large and small add up. To paraphrase U.S. Senator Everett Dirksen, a million stolen there and a million stolen there, and sooner or later it adds up to real money.”

Next up, says Tresser, is Jackson Potter with high finance, some would say hijinks, of toxic interest swaps from the hands of former Chicago Board of Trade, CEO, David Vitale, to deal with abandoning old-school budgetary practices. As he told the Chicago Tribune, a fix was needed and with that in mind, he suggested a new method that, would trade one liability for another, or “whatever the market would bear in return for cash up front.”

The end result was that the school district would pay a fixed interest rate, and in return the banks would pay a variable interest rate to bondholders, a move that Vitale felt would save the district a lot of money. But, it was a gamble that didn’t bargain with the collapse of the global market, in 2008, and “the CPS could not longer cover the interest on their bonds for the swap.”

Unfortunately, banks have not been held accountable, and the loss of $582 million, spent on payments, could have “filled the entire $480 million budget deficit and avoid devastating classroom cuts that include 5,000 teacher layoffs and cuts to special education.”

Perhaps no story of 2016 got more media attention than that of the Laquan McDonald case; and those of the by now, infamous, and tragic, shots that killed the black teenager, as he was walking away from police. The aftermath, the suppression of the dash cam video, the alleged  collusion between the mayor’s office and that of former Cook County State's Attorney, Anita Alvarez, who received a punishing defeat at the hands of Kim Foxx  in the primary leading to the municipal election.

For Tresser the cost of this police abuse, and the lies of police officers, again hits the cost of corruption, this time “the nearly $600 million in settlement to the victims families for wrongful convictions and paying Jon Burge’s bills, for consistent patterns of abuse; what does it take to move beyond these patterns of abuse?”, says Tresser.

The amounts spent have proven to be a never ending loop of payments that could have been used citywide for a variety of debts, and social and human capital, for the aleintatin of communties - especially those of color, in asking for protection, and seeking redress of police abuse.

But, the kicker, the standout problem of Chicago finances, for Tresser, is that of TIFs Tax Increment Financing  - a program designed to freeze taxes in poor areas, for a specific period,and then use those monies to build resources, both commercial and community, in low income, often blighted, neighborhoods.

As with so many things that look good on paper, ,the practice soon became one that enriched posh neighborhoods, for such building as the posh French Market, in the West Loop, hardly a blighted area, and a cash cow for investors and construction companies.

They also, as Tresser notes, became a slush fund for Chicago mayors, that they could dip into as needed. As he claims,”there are 164 TIF districts with $1.4 billion, and one of my goals is to educate the public on what is a TIF.” He  feels that the average citizen needs to know where they are, and all politics being local, that this information is vital. He held a grassroots meeting this past February, at the Chopin Theater, in the 27th Ward and there was record attendance.

Some numbers: a diversion of $7 billion in taxes to questionable projects that are “off the books,” so to speak, and $850 million to the city’s business district, the Loop, and not to blighted sections, as designed. It’s important as Tresser notes, that “TIF dollars are gifts, not loans.”

He has also begun the TIF Illumination Project to address the issues of what can be done, if anything to renegotiate some of these deals, identify the profits and maybe change the “process of bonding” for “capital costs, such as infrastructure or city buildings.”

These are but some of the most salient chapters of “Chicago Is Not Broke”, for a copy of the book, go to the book's website,  or through Amazon, for a Kindle version only, and select local bookstores in Chicago..

1 comment:

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