CITY HALL —When Mayor Rahm Emanuel delivered his first budget address in October 2011, he was peering into a financial abyss.
The city faced a budget deficit of $635 million, and the new mayor told aldermen they had no choice but to lay off city employees, reduce library hours, close mental health clinics and hike a host of fines and fees for everything from staying overnight in a hotel to parking in a Downtown garage.
“Smoke and mirrors and one-time fixes simply won’t get the job done,” Emanuel said in 2011. “It’s time to provide Chicagoans with an honest city budget – one that focuses on current needs while still investing in our future.”
Emanuel’s first budget proposal cut spending by $417 million.
But when Emanuel takes the podium at 10 a.m. Wednesday to deliver his final budget address, the lame-duck mayor will declare that his policies and programs — many of which were laid out in that 2011 budget address — have pushed Chicago back from the brink of financial peril and onto firmer footing.
While Emanuel frequently claims credit for the drop in the city’s structural deficit — expenses minus revenue — to $98 million, the smallest projected budget deficit since 2008, the path he took to right the city’s financial ship also shaped the most enduring criticisms of his tenure — and no doubt played a role in his decision not to seek a third term as Chicago’s mayor.
To the relief of aldermen facing tough re-election fights in February, the approximately $10 billion 2019 budget won’t contain any new tough-to-swallow tax hikes or spending cuts. However, taxpayers will get the bill for the second phase of two already approved increases: the 5 cents per ride increase for ride-hailing services that funds CTA improvements, as well as another installment of a 29.5 percent surcharge on property owners’ water and sewer bills earmarked to pay pension bills.
But the spending plan will likewise not address how the city will foot a $400 million bill starting in 2020 the city must pay to shore up its four pension funds under a change in state law that ties payments to actuarial estimates. Currently, the city’s payments to its four pension funds are fixed by state law.
Whoever wins the 2019 mayoral election will be immediately confronted with how to pay the bill for the city’s pensions, which is set to jump 31 percent.
The financial stability that Emanuel is so proud of is due to several massive tax increases, including the largest property tax increase in Chicago’s history — approved in 2015 — and a 30 percent increase in the water and sewer tax — approved in 2016 — as well as a robust economy.
However, the city’s structural deficit is set to balloon again in 2020 to $251.7 million and then in 2021 to $362.2 million, just as the bill for the city’s employees pensions come due.
Public Safety Reorganization
In 2011, Emanuel found $82 million in savings by reorganizing the Police and Fire departments, which included a reduction of the number of police districts from 25 to 22. That move has been blamed by some for contributing to the conditions that led to a surge in violence that swept the city in 2016, causing homicides to spike to a level not seen since the 1990s.
In addition, Emanuel eliminated vacant police and fire positions from the city’s budget. That forced officials to cope with the surge in violence by ordering officers to work overtime, rather than hiring.
In September 2016, Emanuel reversed course, and announced he would hire 1,000 new police officers, a process that is set to be completed in 2019.
More Debt Collection, Higher Fees, Tougher Penalties
The budget also relied on $33 million in savings from “more aggressive management of debt collections.”
After negotiations with aldermen, Emanuel’s first budget raised the fee not having a required vehicle sticker from $120 to $200.
Not only did that move fail to generate the $16 million officials expected, it “came at a devastating cost for thousands of Chicago’s poorest residents, particularly those from African-American neighborhoods,” according to an investigation by ProPublica Illinois and WBEZ.
Reduce Library Hours, Lay Off Staff
Emanuel proposed closing libraries for four hours on Monday and Friday mornings to save $7 million. That plan drew howls of protests, and prompted the resignation of Library Commissioner Mary Dempsey, who backed former Police Board President Lori Lightfoot before Emanuel dropped his bid for a third term.
After negotiations with aldermen, Emanuel agreed to scale back the cuts, but they still amounted to 26 percent of the library’s total workforce and closed the branches all day on Mondays for a period of time before those hours of operation were restored.
An audit by Inspector General Joseph Ferguson released in May found the city’s 80 branches still do not have enough staff to meet the needs of library users and community residents.
Mental Health Clinics Shuttered
Emanuel’s first budget also shuttered six of the city’s 12 mental health clinics, triggering vehement protests and national attention.
While the closures saved the city $3 million, Emanuel said the move was primarily designed to expand the types of treatment available to residents and deliver those services more efficiently.
The closures of clinics in Rogers Park, Logan Square, Woodlawn, Auburn-Gresham, Morgan Park and Back of the Yards remain a source of controversy, with a survey released in June finding that residents of the Southwest Side were still suffering as a result of the closures.
A 2014 report from the Chicago Department of Public Health described the consolidations as a success, which the city still touts. The closures, they say, maintained “capacity to serve clients at the city clinics, while strengthening the overall mental health infrastructure amid historic changes under the (Affordable Care Act).”
Residents of Avondale, Logan Square and Hermosa will vote on a measure Nov. 6 that would hike property taxes by 0.025 percent to offer free mental health services for any resident. The program would have a budget of $825,000, according to the proposal. The push was detailed by Block Club Chicago.
What We Know Will Be Included The 2019 Budget:
- $97 million from the city’s Tax Increment Financing Districts for the Chicago Public Schools, according to WBEZ.
- $10.4 million to “expand and extend” the city’s mentoring programs as part of its violence prevention efforts from an agreement reached with ride-hailing companies Uber, Lyft and Via to settle claims they failed to properly vet drivers.
- $2.07 million to hire formerly incarcerated men and women in three programs. Eighty people would be to clean and beautify vacant lots in high-crime neighborhoods; 34 people would be hire as part of the CTA’s Second Chance Program and another 25 would be hired by the Department of Transportation’s Greencorps programs.
- $27.5 million for police reform, including cost of the monitoring team that will be charged with ensuring the city and Police Department comply with the changes order by the judge, as first reported by the Sun-Times.
- $1.3 million more to buy garbage and recycling bins in an effort to get new trash cans to residents faster, as first reported by the Tribune.
- $500,000 more for rat abatement that would allow crews to go into yards to search for and close rat holes rather than responding to complaints, as first reported by the Tribune.
- $308,000 more for tree trimming, a line-item sure to be popular with aldermen running for re-election.
- $71.6 million in savings and reforms, “including significant savings in commodities and equipment purchases, department reductions and reducing healthcare costs,” according to the mayor’s office.
- $38 million was carried forward from last year’s budget “through strategic planning from the use of prior year funding,” according to the mayor’s office
What Won’t Be In The Budget:
- $10 billion in borrowing to pay down the city’s $28 billion in pension debt — and limit the need for another massive property tax hike. Emanuel has told reporters he has not made a final decision.
- New taxes, fees or tax hikes