$94M Property Tax Increase - The Mayor has depicted the tax increase as a modest way for every Chicagoan to pitch in to help close the deficit. While the average yearly cost to someone with a home valued at $250,000 is only $56/year, I’m concerned about increasing ANY costs to residents during a time when property owners and renters alike have been hit hard economically. In our Ward, 70% of our community rents, which means our average owner has a higher value property which in turn will mean higher cost in the tax increase. This is a cost that will likely be passed on to renters, both residential and commercial.
Gas Tax Increase - Again, this is a minor increase, but I have concerns about our city relying so heavily on regressive taxes that hit working people and low income individuals harder than others. This proposed tax increase only projects about $15M in new revenue, I’m hopeful we can make that up elsewhere.
Personnel Cuts - The Mayor’s budget recommends furloughs, layoffs, and the elimination of about 1,000 vacant positions to save us $106M. The 5 furlough (unpaid time off) days will be for every non-union employee. This includes myself, the Mayor, ward staff and our Ward Superintendent. The layoffs are estimated to impact 350 employees, though it’s not clear yet which positions they will be. The vacancy eliminations span nearly every department and about 600 of the positions being removed are from the police department, though many appear to be civilian positions. Last year we saw about 3,000 vacancies left in the budget. I’d like to see whether we can go a little leaner in order to reduce the layoffs being proposed.
Police Budget - While there are cuts to the police department budget due to the vacancy reductions, the Mayor made it clear that she does not believe in defunding any core functions of the police department. The police budget draws a large percentage of our funds (roughly 40%) and it’s clear that many of the problems we’re facing in our neighborhoods are issues that police cannot fix or change. Police are not social workers, they’re not counselors or mental health professionals, and as a city the overuse of this department and lack of oversight for decades continues to cost us hundreds of millions of dollars in the consent decree and lawsuits. We’ve got to do something different to address public safety in our city. I’ll be fighting to bring a non-law enforcement mental health crisis intervention response model to our city and to allocate more funds for domestic violence and violence prevention programs which will better serve our residents and allow the police to focus on the tasks we count on them to do.
Stay tuned to our website, the newsletter and the social accounts for upcoming budget town halls as our team works to keep you informed and keep me accountable to you as alternatives are being considered in advance of the budget vote.
Mayor Lightfoot's Budget Proposal
On Wednesday, October 21, Mayor Lori Lightfoot gave her 2021 Budget Address. In it, she described the unique challenges 2020 has presented our city and our communities. COVID-19 has had dire consequences on the city's finances.
The abrupt halt of economic activity has left the city with an $800 million budget shortfall for 2020. The 2021 budget forecast expects similar challenges we faced in 2020, with an estimated $1.2 billion budget gap. Of that projected budget gap, 65% is contributed to the economic fallout of COVID-19.
During her address, Mayor Lightfoot outlined her path towards filling the shortfall and creating a balanced budget for 2021. This year, City Council is faced with difficult decisions as we enter the budget season.
You can watch a recording of the address here. A full copy of the 2021 Budget overview is available here, and a full copy of the 2021 recommendations is available here. Beginning Monday, October 26, daily budget hearings from each of the City departments will commence. Visit the City Clerk's website for the schedule and to stream the hearings.
The Office of Community Engagement is hosting two 2021 Virtual Budget Town Halls, the first on Tuesday, October 27, at 5:30 pm, and the second on Thursday, October 29, at 5:30 pm. Both will be streamed on the Mayor's Facebook page. Spanish language translation and ASL interpreters will be available for both events.
Savings & Efficiencies:
The 2021 budget proposal projects $262.6 million in savings through a series of improvements to fiscal management. This includes introducing more parking meters throughout the city, which will reduce the amount the city has to pay out to LAZ each year. The proposal also intends to increase the enforcement of certain fees, manage accounts receivables more efficiently, and the loss of collection savings.
The proposal also projects $168.3 million in savings and efficiencies that do not include city personnel changes. This consists of a new, renegotiated health care contract for city employees and an audit and review of the city's contracts. The city will scrutinize all of its contracts to see where new bids can be issued, especially for contracts that date back nearly three decades.
The 2021 budget also includes changes to city personnel, with 350 layoffs and a requirement of 5 unpaid furlough days for non-union employees. It also calls for eliminating 1,800 vacancies across all departments, including 614 in the police department. The Mayor did indicate that should federal relief come through before layoffs go into effect (March 1, 2021), this component of the budget proposal will be reconsidered.
Again, the city will contribute the TIF surplus to the 2021 budget to help fill the gap, which is projected at $33.5 million. Additionally, the Office of Budget Management is refinancing and restructuring the city's debt. This will help the city save $501 million.
Finally, the Mayor did indicate that pension reform continues to be an option that the city will explore as an opportunity for improved fiscal efficiency.
The 2021 budget proposal does call for an increase in property taxes. This increase is projected to bring in an additional $93.4 million. It is estimated that the increase will result in an additional $56 per year in property taxes for a home assessed at $250,000.
Mayor Lightfoot renewed her call on Springfield to give Chicago its fair share of the Local Government Distributive Fund (LGDF). Chicago remains an economic engine for the state, so it is only fitting that we receive a commensurate amount from the LGDF, to which we do contribute.
Finally, the Mayor stated that the 2021 budget proposal includes $184.9 million in new revenues and draws from the city's reserves. The withdrawal from the rainy day fund is modest, totaling $30 million. While we know that 2020 has felt like a torrential downpour, the city risks further deteriorating its credit score should that figure be higher. Moreover, we continue to combat COVID-19 and continue to face many unknowns at the federal level. It's imperative that the city remain prudent and maintain these reserves.
The 2021 budget proposal does include a variety of new investments and expenditures aimed to address some of the challenges our communities now face as a result of the pandemic. The 2021 budget includes $7 million to establish an economic recovery task force designed to help our communities most impacted by COVID-19 fully recover.
The Mayor's office will continue its youth programming and is proposing an additional $1.7 million investment to support these programs in 2021.
The Mayor indicated that the 2021 budget will include funding for violence prevention and mental health. This will consist of strengthening the coordination between street outreach workers and our mental health partners. The budget will also include investments to reduce domestic violence and provide victims of violence with resources.
The Mayor announced that in 2021 the city will launch a co-responder pilot to begin the process of establishing the framework for an alternative response model. This pilot program would provide residents experiencing crises that are not violent in nature an alternative response to police intervention.
Finally, the budget calls for a $10 million investment in funding for housing and homelessness prevention. In addition to the $10 million investment from the city, Chicago will receive an additional $52 million in CARES Act funding in 2021 to go towards housing assistance and homelessness.
The city was already up against a challenging budget season before COVID-19. These challenges result from previous administrations' decisions and rubber stamp City Councils; decisions including pension holidays and the city's parking meter deal with LAZ. The COVID-19 pandemic has only exacerbated the city's financial struggles.
Overwhelmingly, our office has heard from you that it is time to address the issue of public safety proactively and holistically. That looks like investments in our communities in the form of stable and affordable housing, access to resources, and economic opportunities. This is why I co-sponsored an order that was introduced to the City Council in September that calls for a Chicago Crisis Response and Care System housed within the Department of Public Health. This team would be designed after the CAHOOTS model in Eugene, OR. While I am glad to see the Mayor address the need for an alternative response for mental health crises, I worry about the co-responder model and, instead, call on her to work with my colleagues in the Chicago Progressive Reform Caucus on the legislation that has already been introduced.
So many of us have had to make tremendous sacrifices this year. Which is why I'll be scrutinizing the budget and asking hard questions during hearings. We can't keep balancing our budget on the backs of the working class.
49th Ward Budget Survey Results
As we enter the city's planning sessions for the 2021 municipal budget, we asked 49th Ward residents to complete a budget survey.
The 49th Ward office also hosted two town halls to go over the city's budgeting process, the survey results, and hear feedback before we enter budget hearings. The feedback you provide our office will help the Alderwoman advocate for the budget priorities of our residents.
Overwhelmingly, we've heard that we need to take a good look at the police budget to see if there are opportunities to divert funding from that portion of the budget to more holistically address the issue of public safety in our communities. This means that we look towards investing in our neighbors through stable affordable housing, equitable access to resources and opportunities, and alternative crisis intervention responses for non-violent emergencies (e.g., mental health crises).
Our office has been working closely with Alderwoman Rodriguez-Sanchez and others in the Chicago Progressive Reform Caucus on developing an alternative crisis response team. In September, we co-sponsored an order that called on departments to explore the costs of this and to begin to develop the framework for such a response based on the CAHOOTS model in Eugene, OR. Our office remains committed to making sure that we address public safety issues in a way that is proactive in caring for our residents.
Thank you to everyone who participated. We will make sure to keep you apprised as budget hearings begin, and the Mayor introduces her budget proposal.
49th Ward Budget Survey & Town Halls
The city is heading into its budgeting season, and we want to hear from you! Please take a moment to complete the 49th Ward budget survey online (en español aquí) to help us identify the priorities of 49th Ward residents. Your responses will help inform Alderwoman Hadden we enter discussions for next year's budget.
Our office will share the results of this survey after it closes on October 4 in our newsletter, on our social media pages, on our website, and at two 49th Ward budget town halls.
Save the dates! We will host two 49th Ward budget town halls where we will discuss the city's process in forming its annual budget, the challenges we face this year, and the results of this survey. Residents will also have the opportunity to ask questions and provide feedback as we enter the budget season.
First Town Hall: Saturday, October 10, at 10 am
Second Town Hall: Thursday, October 15, at 6 pm
Register to attend a Town Hall online at bit.ly/townhall2021budget (Spanish translation available).
Do you know someone in the 49th Ward who should complete this survey? Please share the link (bit.ly/2021budgetsurvey) with them!
2021 BUDGET FORECAST
On August 31, Mayor Lightfoot and Budget Director Susie Park released their 2021 Budget Forecast. The reality we're facing is stark, with the toll of COVID-19 having a compounding effect on the city's finances.
In fiscal year 2020, the City is facing a budget shortfall of approximately $800. The shortfall is a direct cause of the ongoing COVID-19 crisis and the economic fallout Chicago - and other municipalities across the country - is continuing to experience.
The crisis of COVID-19 and the absolute necessity for the city to respond to curtail the spread of the virus is a direct cause of this year's budget shortfall. The need for people to stay at home and socially distance reduced the city's economic activity. This is especially true for the city's tourism and hospitality industries. Restaurants were forced to close, major conventions were canceled, festivals and concerts had to cancel, and our hotel industry took a significant hit. As a result, the city's Gross Domestic Product has fallen 10%, the city's unemployment has reached 18.7% (up from 3.6% in February), and consumer spending has fallen 12%.
To fill the $800 million budget gap, the Budget Office is looking to leverage $350 million in CARES Act monies. This money can only be spent on city services in response to the COVID-19 crisis and cannot go to replace lost revenue from the economic fallout of sheltering in place. The Budget Office is also refinancing debt, which will go towards closing the 2020 budget shortfall.
Finally, the Budget Office is a part of a coalition of municipalities across the country that is calling on our Federal legislators to provide supplemental funding to fill revenue gaps, extend unemployment benefits, provide funding for infrastructure, and provide additional affordable housing assistance.
If additional federal monies are not allocated to municipalities and states across the country, the city might be forced to look at spending and services efficiencies (i.e., furloughs, layoffs, and cuts).
During the address on Monday, Mayor Lightfoot also shared the 2021 Budget Forecast. The forecast is equally as stark as the 2020 figures, with the city facing a $1.2 billion budget gap.
The 2021 Budget Forecast anticipates an increase of $421 million by the city and a decrease of $783 million in revenue. The decrease in revenue is, again, a direct cause of COVID-19 and, at this time, only a projection. This figure makes up 65% of the projected budget gap for 2021, once again exemplifying the devastating impact the COVID-19 crisis has not only had on public health but the economy.
Additionally, new costs are planned for 2021. Primarily, the city's mandated pension increase in the pension payment by almost $100 million and contractual pay increases contribute to the 2021 budget gap.
To address the projected 2021 budget gap, the Budget Office is looking for tax valuations, including large TIF surpluses. The city is also exploring the non-possessory lease tax for computers as a potential revenue stream. Additionally, the Mayor called on Springfield to provide Chicago with its fair share of the Local Government Distributive Fund (LGDF).
The Mayor's Office indicated that they've been working closely with Springfield on ushering in a casino and entertainment district to the city. A final location for the entertainment district has not yet been determined, but the city has issued a Request for Information to help inform any final plan.
Finally, the Mayor and the Budget Office are evaluating the city's contracts to see if there are any cost-saving measures that can be implemented. An increase in property taxes and furloughs are at the end of the list of tools the city is exploring to address the 2021 budget gap.
As budget hearings commence, our office will share more information about budget proposals and ways our community can engage around the 2021 budget process.