PI Original Micah Maidenberg Tuesday September 14th, 2010, 3:09pm

Daley's Last Budget

The city of Chicago's balance sheet is filled with red ink. As Mayor Richard Daley prepares to offer the last spending plan of his long career, aldermen need to articulate new approaches to city budgeting.

Red ink everywhere. Such is the tattered state of the city of Chicago's balance sheet as Mayor Richard Daley prepares to offer the last budget of his long career. The city's corporate fund -- the pool of taxpayer dollars that pays for everyday government operations -- is estimated to fall nearly $655 million short of the $3.39 billion in expenditures the fund is expected to cover next year.

The gap is the highest Chicago has ever seen, and Daley is laying the blame (PDF) for falling tax revenues -- with some justification -- squarely on the national recession. Left unsaid by the mayor, but not some of his most vocal city council critics, is that Daley didn't prepare for that recession during better economic times when the city was running surpluses. His secretive style on subsequent privatization deals may have cost the city hundreds of millions of dollars and his autocratic control of tax increment financing cash (more on that in a second) isn't helping the city now, either. Then there were the waste and corruption issues that bedeviled his administration, costing taxpayers time and time again.

In October, the mayor will give his budget address to City Council, making public his proposals for solving the crisis. New reports suggest that much will be on the table, from privatizing the city's summertime festivals, animal pound, and vehicle maintenance shops (and more) to generating revenue from ATM's and video rental boxes on city property. Unspecified cuts to city services have been discussed. Employees will be laid off because of an expected consolidation of city departments. Like last year, Daley could seek furlough days for city workers, unionized and not. He could also tap the city's remaining reserves to help fill the deficit. Those reserves, of course, are now dwindling rapidly, despite the mayor's previous rhetoric about using them as future rainy day funds.

While Daley has repeatedly said he won't seek a property tax increase, other observers, like powerful 14th Ward Ald. Ed Burke, think such hikes (and service cuts) are coming sooner or later. In addition to the operational deficit this year, the city's debt burden is staggering -- $5,399 per resident last year, according to Bloomberg News. Chicago, in other words, should brace for a cold bath in the post-Daley era.

"You simply cannot maintain Mayor Daley's vision with the current sources of revenue. The money is not there for the services and the capital projects the mayor was delivering. It just doesn't add up" Bill Abolt, the mayor's budget director from 2002 to 2004, told the Chicago News Cooperative.

Given this context, City Council members must not abdicate their responsibilities during Daley's last budget season. Aldermen should scrutinize every line of the budget and examine all of the contracts inked by the Daley Administration. They need to articulate new approaches. Yesterday, Ald. Brendan Reilly (42nd Ward), for example, suggested the city step up code enforcement, train inspectors to work in multiple departments, and require city managers to increase the number of workers the supervise.

Reilly also stated the city should draw on its TIF reserves and reform how such funds are used going forward. That ideas seems increasingly obvious to political observers of all stripes. Some $700 million in TIF dollars, controlled for the most part by the mayor, is sitting unused in the city's TIF bank. As we've noted before, declaring a surplus of those funds would send much of the TIF money back to the Board of Education (53.5 percent of it), while the City of Chicago would garner 20.9 percent of the total.  Assuming the $700 million figure floated by the city's budget director earlier this year, that total would equal about $146.3 million.

That slice of the TIF pie wouldn't close the city's budget gap, but it certainly would help. And with taxpayers about a year out from 2009's  spate of TIF grants for downtown corporations, declaring a surplus to boost next year's budget would begin to restore a degree of accountability to the TIF program. "[I]f he taps them one year," the Chicago Reader's Ben Joravsky wrote in August, "the public will want them tapped every year -- they'll think of them as a piggy bank forever after. "

This could prove the bright side of the city's brutal budget season ahead. It's the public's piggy bank, after all. Not merely the mayor's.


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