Last
week Chicago Mayor Lori Lightfoot gave a state of the city address, that
surprised some by its brevity, but as many are noting this has become her
signature style: keep the message simple, and involve residents with a true
desire for their input, much as her nocturnal visits to some of Chicago’s worst
crime ridden neighborhoods, when she first took office dented those who underestimated
her determination to tackle crime.
The
position, she made front and center, was not new to most Chicagoans, and
lawmakers, but the figure, the central figure of an $838 million deficit, put the shilly shallying
aside about the more wonky details of urban economics that local alliances, and
misalliances have noted.
The
most notable aspect of her speech, coming on the edge of the Labor Day holiday,
was that she would risk her political life on dealing with the deficit; for, as
many journalists and economists have noted: nothing can be done in the city
without money to feed that beast and move on to tackling the most challenging
“to-do” list for a recent urban mayor.
“We
have some hard choices to make. There is no doubt about that and I will not
sugarcoat that reality. But I am confident, with the incredible talent in this
city, working together we can make the necessary choices that will put us on
sound fiscal footing not just for today, but for the future.”
Already,
she has critics nipping at her heels ---- most notably with Tuesday’s first day
of school for Chicago Public Schools, and a teachers union that
has shown her no love, when their
endorsed candidate, Cook County Board President Toni Preckwinkle was defeated
by her.
While
Lightfoot scours every corner of the city budget looking for ways to save money,
the Chicago Teachers Union has rebutted the offer of a 16 percent pay raise
over five years, and President Jesse Sharkey has been saber rattling, to make
it all the more difficult for her, as she tries to row a boat that has had poor
captains for decades.
The
teachers could strike as early as October, and that is sure to garner unwanted
headlines.
The
city's homelessness problem has increased, twofold, with the city’s “el” train
system as the place of repose for over 80,000, in a point of time study, by The
Chicago Coalition for the Homeless, with 80 percent doubled in other
people’s homes, and the rest on the street, or, on the all night trains and
buses.
Just
outside the Harold Washington Library where Lightfoot made her speech, the Chicago Tribune
reported that protesters “Carrying signs reading “Lori Lightfoot’s Broken
Promise” in the style of her “Bring in the Light” mayoral campaign logo,
homeless advocates criticized her for not living up to a pledge to fund
affordable housing. Others urged her to cut off funding for the controversial taxpayer
subsidy for the proposed Lincoln Yards development.”
Lightfoot
was not specific on how she would address the deficit, but did say that she did
not want to do another property tax increase, that some have said might be
inevitable after, the one by her predecessor of $53 million, that hit property
owners hard, with much was passed onto tenants.
Hitting
the brakes hard on spending, maybe even harder, after a report, also released
on Tuesday, from bond rating agency S&P Global Ratings, and was reported by
Crain’s Chicago
Business who said:
“In
a statement, S&P Global Ratings says the city’s commitment to solving its
pension woes, a commitment first made by former Mayor Rahm Emanuel, is "at
the core" of the city’s current BBB+ rating—above junk, but only by two
levels.
However,
it notably added, “We would view any measure that would lower annual
contributions into Chicago’s pension systems negatively. That’s a reference to talk that Lightfoot
might seek to lower and move farther into the future the pension-payment ramp
adopted at Emanuel’s request.
On
the other hand, the New York firm said, “We would view measures that either
trim liabilities through benefit reductions or a dedicated revenue stream
toward pensions positively.” S&P didn’t get specific, but officials have
talked at reviving what now appear to be moribund plans for a Chicago casino
that could help pay pension debt or moving to reduce the 3 percent annual
compound COLA that about half of the city’s retirees now are scheduled to
receive, perhaps by amending the Illinois Constitution.”
“Next year, the city
must contribute an additional $121 million to its pension funds in order to
keep them on the path to solvency. And the city’s required pension payments
will have jumped by nearly $1 billion a year by 2024. It must also pay about
$650 million in debt service. In recent years, the city has used borrowed money
in order to help balance budgets and pay for short-term
services,” reported local station WBEZ.
Lightfoot’s formal
budget proposal will be released after she addresses the City Council on
October 23rd.
Tied
to the future, if not the near future, is her campaign promise to start
investment in the areas that have been long neglected, and are tied to the
increasing crime rate that has characterized the city as a war zone.
“Thus,
our pathway to fiscal health has to run through households and neighborhoods
like Roseland, and Rogers Park, Austin and Englewood, from the southeast and southwest,
and neighborhoods like Pullman and Park Manor. We must lead with public
investment, along with private partnerships, to catalyze neighborhoods where
generational poverty has people in its crushing grip, “she emphasized.
In
what some called a political speech, the new mayor also tackled one of the more
divisive local issues that of the dividing line between I-80 and Chicago, and
noted, “People in this state know – as I do – that I-80 is not a border - That
there cannot be a “Chicago” versus “The Rest of the State.”
“All
of Illinois is looking for solutions. And to really solve these problems, we
all have to be partners in reform,” she noted, and this may be a nod to
Governor J.B. Pritzker for targeted help joining pension funds in a statewide
pool to limit the liability and increase resources, in a massed group, but one
that Pritzker has demurred, yet as we have noted before, she is ready to do
battle for the new graduated tax referendum he has placed on the referendum for
the fall ballot.
“We
have been, since the time of the transition, in conversation with the governor
and his team, the legislative leaders and their respective teams,” Lightfoot
said last week. “We need to have help from Springfield to address the
challenges we have as a city. Now some people say well we can’t do a Chicago
bailout but the reality is Chicago is 80 percent of the economy of this state.”
In
the works is the casino project, but it may not be placed where she wants it,
in neglected south, or west side neighborhoods. But, no matter, where it is located, the
needed revenue is necessary to fill city coffers; yet there has been some
debate over exactly how sweet the deal is for the operators, and, in turn, the
city.
Reuters noted that “Legislation
signed in June by Illinois Governor J.B. Pritzker authorized a casino for
Chicago as part of a state-wide gambling expansion that included sports
betting.
But
the analysis, conducted by Las Vegas-based consultant Union Gaming Analytics,
said the law contained the highest effective gaming tax and fee structure in
the United States, making it difficult to finance a Chicago casino and operate
it at a profit.
Total
development costs, including licensing and other fees, would generate “at best
a 1% or 2% return annually, which is not an acceptable rate of return for a
casino developer on a greenfield project,” according to the analysis, which
looked at five proposed sites for the project.”
“If
we don’t secure this casino and the revenue it generates, we will be forced to
make painful choices on finding other revenue sources, and we all know what
those are, the sources we wish to avoid,” Lightfoot said.
The
allusion to a property tax increase as apparent, but the first move was the
quick cue to the hiring freeze of “3,000 vacancies, including the Chicago
Police Department. A September class of CPD recruits has been cancelled.”
The
Chicago area is the nation’s third largest market behind Las Vegas and Atlantic
City, New Jersey but the possibility of a deal that benefits all parties, is
showing cracks.
“In
late June, the CEO of Penn National Gaming, the state’s largest gambling
operator, said a Chicago casino “would be a very difficult investment to make.”
Other big casino companies have either expressed similar sentiments or not
commented.” said Crain’s Chicago Business, in mid-August.
Somewhat
cryptically, Lightfoot addressed the problem of congestion, which sent some to
scratch their heads on what she might have meant, while some think that there
might be HOV lanes, or possibly a head
tax, to discourage those that want to come downtown, and drive, instead of
taking public transportation, might take the form of a commuter tax.
It’s
not over, not by a long shot, and October is just around the corner.
.
No comments:
Post a Comment