Chicago’s Budget Crisis
Last year, the Corporate Caucus came together for an historic opportunity to pass a budget that was fiscally responsible, detail-oriented, and genuinely in the people’s best interest. Unfortunately, our leaders failed to rise to the occasion..
Last year's budget cycle was always going to be especially challenging. Federal funds were drying up, and negotiations were shaped by fears of either a property tax increase or severe budget cuts. The Mayor's proposal avoided a property tax hike and most cuts, but it did so controversially by restoring the corporate head tax, relying on significant borrowing, and making a smaller voluntary advance pension payment.
That proposal failed to secure the necessary support in the City Council, including from some progressives. In response, a coalition of moderate and conservative alderpersons, led in part by Ald. Scott Waguespack, put forth the alternative budget that ultimately passed.
Unlike the mayor's proposal, however, that budget received shockingly little scrutiny. As noted by the Civic Federation, its revenue assumptions were flawed, it failed to address the city's significant reliance on borrowing, and it depended on short-term measures such as selling uncollected city debts to third-party debt collectors. It also relied heavily on lifting Chicago’s longstanding ban on video gaming terminals in bars and restaurants for revenue. Shortly after its passage, Chicago received two credit rating downgrades that cited many of these issues as reasons, as well as the dysfunction between City Council and the Mayor's office.
What the 29 council members ultimately delivered was a budget built on regressive fees and questionable fiscal assumptions. It did little to curb the city's dependence on borrowing and failed to provide meaningful new structural revenue. It embraced third-party debt collection despite its well-documented inequitable impacts. It increased rideshare fees and liquor taxes on everyday Chicagoans while further entrenching the city's growing reliance on gambling for tax revenue.
And, as many predicted, the alternative budget led to a $89 million budget shortfall that could lead to mid-year layoffs, reduction in city services, and a missed advance pension payment.
A strong, independent City Council should be celebrated and encouraged. But if independent budgeting is to become the norm, all proposals must be subjected to the same level of scrutiny and skepticism to avoid these errors in the future.
If you or a loved one owes debt to the city, the City Bureau has a great guide that includes resources for you. Among other things, the guide notes that city-run relief programs would not apply to debt that is sold, as it would no longer be owed to the city. Additionally, Mayor Brandon Johnson signed an executive order prohibiting the sale of medical debt and establishing guidelines for third-party debt collectors.
