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Chicago Faces $1.2 Billion Budget Shortfall In 2021 Thanks To Coronavirus, Lightfoot Says

Lightfoot warned the city will face hard choices and there will "likely" need to be layoffs.

Mayor Lori Lightfoot at a press conference announcing a statewide stay-in-place order Friday, March 20.
Colin Boyle/ Block Club Chicago
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CHICAGO — Chicago faces a budget shortfall of almost $800 million this year — and 2021 could see a historic gap of $1.2 billion, Mayor Lori Lightfoot announced Monday.

The shortfall is largely due to the coronavirus pandemic, which shut down the economy for months and devastated key industries, like tourism and hospitality, that bring in money for the city, Lightfoot said. Recent looting has also shaken people’s confidence the city is a place where they can build lives and businesses, Lightfoot said.

And as the city struggles to get its outbreak under control, next year’s budget gap is expected to be $1.2 billion, the largest in Chicago’s history, Lightfoot said.

“We have been through more this year than any city should have to endure in any time, let alone six months, back to back to back,” Lightfoot said.

The city will try to fill the gap with $350 million from the CARES Act, the federal stimulus package; and through at least $200 million from debt refinancing. Officials also hope the federal government will provide relief to cities and states that are struggling.

“Make no mistake, our economy will recover over the next few years,” Lightfoot said. “But for that to happen as quickly and stably as possible, Chicago … must have the resources to address the impacts of COVID-19 on our pandemic budget right now in this moment.

“The federal government simply must step up and support our cities and states with additional stimulus dollars.”

That appears unlikely to happen in the near future given deep political divisions at the federal level, though, and Lightfoot said her administration is “clear-eyed” and is making plans in case no help comes.

Lightfoot warned the city will face hard choices and there will “likely” need to be layoffs. City services are, by necessity, provided differently during the pandemic than they would be normally, and the city will need to look at how departments are structured and staffed, she said.

The mayor said she’d like to avoid a property tax increase, but that option and furloughing and laying off staff “have to be on the table given the size of the budget deficit we’re facing for next year, which is historic in its size.”

Lightfoot also said there must be an “important discussion” around the Police Department and public safety, though she did not commit to taking away any funding from the department, which is what protesters have been calling for.

Cutting funding to the Chicago Police Department — where almost 90 percent of the budget goes to personnel — would effectively lead to the newest, most diverse officers being let go, Lightfoot said.

But the city does need to work on “reigning in costs that were unchecked for years,” like overtime and lawsuits, Lightfoot said. Part of that will require the city to keep implementing reforms that will, in the long term, help reduce the millions of dollars the city spends on misconduct settlements, she said.

Instead of funding cuts to police, the city needs to — and will — continue to invest in social services, like mental health programs, help for people experiencing homelessness, outreach programs that focus on violence prevention, and more, Lightfoot said.

“What I’m hearing, and I think is 100 percent right, is we are speaking our values in the wrong ways,” Lightfoot said. “We are funding the police and not funding things in the community. We are not funding jobs, schools, mental health, affordable housing and all of those things. …

“I expect us to continue to [fund social services] in this year’s budget, even given the challenges that we face.”

The city can also generate revenue by building a casino. Lightfoot said she wants to build up an entire district with other forms of entertainment and restaurants, which would create more union jobs for people.

Other streams from which the city could draw revenue will be discussed as the city gets closer to Lightfoot’s official budget proposal in October, she said.

Chicagoans need to help each other and make shared sacrifices during this time, Lightfoot said.

Black and Latino communities have been hit disproportionately hard by the pandemic, and people should recognize everything they do affects everyone in the city, Lightfoot said.

“The reality is, it’s not one for one. It’s not me for me and the heck with the rest of you,” Lightfoot said. “We have to be in this together as a city. That’s how we do our work. That’s how we plan our budgets. And we need to make sure we’re taking care of each other as neighbors.”

Residents can help by adhering to health guidelines — like wearing masks, not gathering and practicing social distancing — to prevent the spread of coronavirus, Lightfoot said. Getting the outbreak under control would help speed up the economy’s recovery.

Residents will be asked to share feedback on the budget before it’s proposed this fall in a variety of ways. There will be town halls streamed on Facebook, and there’s an online budget survey that asks residents about which city services they most value.

The city is also holding a series of round tables where they’ll try to hear from residents about how the city should prioritize its spending. Organizers particularly want to engage with young Latino and Black Chicagoans, according to the Mayor’s Office.

More information on how to participate in or host a budget event is available online.

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