The weak economy and the city of Chicago's dire fiscal situation has put a dent in Daley's tax increment financing system. We look at where the TIF "surplus" funds are coming from and ask if the lame duck mayor is doing enough.
Chicago Mayor Richard Daley likes to point out that he has reduced the number of non-public safety city workers by more than 6,600 since he took office in 1989; his 2011 budget proposes eliminating another 277 positions next year. But what are the consequences?
Consider, for example, the lights that line city streets. In swaths of Chicago, and in particular on the South Side, the city can't replace broken lights fast enough, leaving residents fearful and quite literally in the dark. That's the conclusion reached in a joint investigation produced by the Better Government Association and CBS-2. "[N]early 30,000 people complained about complete blocks of broken street lights from January 2009 through May 2010," the BGA/CBS team found. The city says it takes 2.8 days on average to repair streetlights
but the investigation found 17 percent of streetlights took five days
longer or more to fix. One women said it took 18 days before the city came out to make repairs. Here's a clip from the segment, which aired last night:
Budget cutting seems to be the political flavor of the month right now. No one should pretend it doesn't come without a cost. Just ask South Side residents who can't walk outside at night because there's no light.
A number of top city officials and Chicago aldermen are pushing back against the potential budget cuts Inspector General Joe Ferguson listed in his recent report (PDF) about the city's fiscal problems.
During a budget hearing about the Fire Department's 2011 appropriation, fire commissioner Joseph Hoff said reducing minimum staffing levels on fire vehicles from five to four, as Ferguson's report posited, would pose a threat to residents and fire personnel alike. "In basic terms, it means lives could be lost, that of civilians and
firefighters," Hoff told the Tribune of that idea. "Property damage – fires are
going to grow faster because we're not getting water on it fast enough –
property damage is going to skyrocket." Budget director Eugene Munin said the options outlined by Ferguson would necessitate $90 million in new fees. Aldermen, meanwhile, are miffed that Ferguson's report posed the idea of slashing free sewer services for senior homeowners, subsidized water for non-profits, and cutting grants for neighborhood chambers of commerce, which Ald. Joe Moore (49th Ward) called a "penny wise and pound foolish approach, especially in these tough economic times."
The inspector general's report includes both pro and con arguments for each of the budget measures his office outlined. It does not say the City Council and mayor should definitively carry out any specific cut. It also does not include a number of cost-saving options City Council and the next mayoral administration could examine to address the city's budget deficit -- including cutting the city's large middle management corps, reforming city contracts and pinstripe patronage, and ending an economic development strategy that showers multi-million dollar tax increment financing grants on profitable corporations.
Of the $1 billion in Chicago city contracts awarded during the first eight months of this year, black-owned firms received
just $73.6 million in business, less than the $83 million given to
Asian-Americans and $142.2 million to Hispanics. African Americans make
up roughly 35 percent of the city's population. Minority contracting
fraud has been a consistent problem during Mayor Richard Daley's
tenure; an internal audit conducted this year by Inspector General Joe
Ferguson found that blacks, Latinos, women, and Asians were deprived of
at least $19 million worth of construction contracts in 2008 alone
because of "widespread" fraud.
New York City's Independent Budget Office (IBO) releases a list during
the municipality's budget cycle suggesting ways in which N.Y.C.
government can alter its fiscal outlook by saving money or raising
revenues, which we recently noted. The list offers both pro and con arguments for each option. It's the kind of information that has some members of the Chicago City Council interested in creating a budget office outside of the mayor's. Alternatively, there is also interest in possibly beefing up the city's inspector general (IG) and tasking that department with independent budget analysis.
Today, the IG's office appears to have beat those aldermen to the punch, releasing a report (PDF) modeled after New York City's IBO pro and con list that offers 24 options for closing Chicago's "effective annual deficit" of more than $1 billion, a number that accounts for recent budget shortfalls and pension obligations. "The impetus for creating this report is the City's daunting fiscal
challenges. Its recurring use of one-time revenues to address budget
deficits and its under-funding of its pension system demonstrate that
the City has a significant structural deficit in which its annual
revenues are not sufficient to pay for its annual expenditures," the report says. Many of the ideas aren't new, but the IG's office wanted to put them all in one place.
The IG's options focus on cuts, from ending free sewer service for seniors, to eliminating an annual subsidy for World Business Chicago, to ceasing funding for neighborhood chambers of commerce and city tuberculosis clinics. But the biggest savings are seen in staff cuts at the Fire Department and changes at the Department of Streets and Sanitation. Among the options listed for the latter: switching to a grid, instead of a ward-based garbage pick-up system (resulting in $29.6 million in savings) and privatizing city garbage and recycling pick-up (for an annual savings of more than $112 million). Other possible changes at Streets and San included reducing the number of laborers on a garbage truck to one, charging a fee for Blue Cart recycling, and charging non-profits that receive city garbage collection. It's possible at least some of these ideas will come up on October 27, when Mayor Richard Daley's 2011 budget request for the Department of Streets and Sanitation goes before City Council.
That's the ratio of managers in the City of Chicago's bureaucracy to frontline workers, according to 42nd Ward Ald. Brendan Reilly. In the private sector, Reilly said, the ratio is one manager for every 14 workers. Watch him explain the implications of closing that gap on the city's budget on WTTW's Chicago Tonight:
Here are few reactions from City Hall and beyond to outgoing Chicago Mayor Richard Daley's final budget proposal, wrapped up from around the web:
"It’s kind of like a homeowner that has to sell their dining room set in
order to pay next month’s rent. It doesn’t sound like a good idea. But
if they don’t get next month’s rent, they don’t have a roof." -- Ald. Ed Burke (14th Ward)
“If you put a band-aid on a bullet wound, you’re going to bleed through it." -- Ald. Leslie Hairston (5th Ward)
"We can no longer deny that we are living beyond our means. We must go
beyond the temporary fixes to confront our structural deficit in a
permanent way." -- Mayoral candidate Rahm Emanuel
"By spending money generated on the expectation of
future generations’ revenue, the Mayor’s plans could be nothing more than a bad
payday loan that our children will have to pay back." -- Illinois Public Interest Research Group field director Celeste Meiffren
And Wednesday on WTTW's Chicago Tonight, four aldermen -- two sympathetic to the mayor, two who are much more critical -- weighed in. Watch (the full clip is available here):
Hearings about the 2011 budget start next week in City Hall. For ideas about how the city's budgeting process could be improved, be sure to check out story from earlier this week.