City of Chicago 2022 budget increased nearly 60% from pre-COVID 2019 period, as Lightfoot prepares to implement “fairness” program – Wirepoints
By: Ted Dabrowski and John Klingner
Chicago Mayor Lori Lightfoot just released his new $ 16.7 billion in 2022 budget for the city of Chicago and its proposal is much more than a simple plan of how to distribute the money among the departments. Her greatest agenda, she says, is to right the “historic wrongs” of systemic racism, which she says is “intentional and must be changed,” to address the loopholes that date back “to our earliest days as a union. “. For her, the budget is a way to put âequity and inclusion at the center of all our workâ.
The budget is bigger than ever because it represents $ 6 billion, 60% more than the pre-COVID 2019 budget of $ 10.7 billion. Not only will many of the city’s tax revenues increase in 2022 due to the various stimulus packages for individuals and businesses – and a $ 76.5 million increase in property taxes – but the city itself has An additional $ 3.5 billion in federal COVID dollars to spend in 2022.
Lightfoot says she also plans to be very “intentional” in how she spends this money. But in its zeal to promote fairness, Lightfoot unwittingly prepares Chicagoans for a bigger tax cliff – first, by ignoring the aggravate debts, and second, by creating more dependency through a multitude of new programs. When the Fed’s largesse soon runs out, Chicago will have millions in additional program spending and even higher debt – and no plans on how to pay it off.
Lightfoot’s power to “invest” in new programs comes from the tripling of state and federal grants from 2019. The grant fund line grows to just over $ 6 billion in 2022 by compared to the pre-COVID amount of $ 1.8 billion in 2019. That’s where most of the COVID-19 stimulus money is.
All other budget lines are also up in double digits, with the exception of the amounts used to repay debt, which are in fact stable compared to 2019.
And even from 2021, Chicago’s 2022 budget of $ 16.7 billion is still up 10%, a significant amount for just one year. The 2021 budget spent $ 15.1 billion, which in itself was more than 40% higher than in 2019.
The city’s operating fund
The city’s core operating fund, called the Corporate Fund, will spend $ 4.9 billion in 2022, up from $ 4 billion in 2021. Structurally, Lightfoot says the fund will face a deficit of $ 733 million. ‘next year. To help close this deficit, the mayor is using the same fiscal maneuvers she has done in the past to close similar deficits of $ 1 billion.
On the one hand, Lightfoot taps into the income of the city’s controversial development funds, called TIFs, while making the same âimproved tax managementâ claims it has made before. If you’ve read Wirepoints past work on the mayor’s budgets, you know this is the third year in a row that Lightfoot has achieved more than $ 100 million in savings thanks to this vague promise of efficiency: $ 141 million in 2020, $ 263 million in 2021 and now 131 million dollars in 2022.
An additional $ 62 million in âimproved income projectionsâ will also help close part of the budget deficit. This maneuver is also another repetition of years gone by.
How Lightfoot covers Chicago’s $ 733 million corporate fund deficit:
Savings and Efficiencies – $ 298.2 million
- Staff savings: $ 46.2 million
- Healthcare savings: $ 21.6 million
- Improved tax management: $ 131.4 million
- Cost recovery: $ 99 million
Revenue increase – $ 491.1 million
- US bailout for essential services: $ 385 million
- Additional TIF surplus: $ 24.9 million
- New real estate growth: 18.6 million
- Improved revenue projections: $ 62.6 million
Incredibly, billions in federal revenues have not stopped the mayor from raising taxes again. Last year she raised property taxes $ 94 million and again, they will increase by $ 76 million in 2022.
His tax hikes follow former Mayor Rahm Emanuel’s record tax hikes that have increased the burden on Chicagoans by nearly $ 700 million over several years.
Chicago’s 2022 budget will also include a $ 400 million increase in Chicago pension contributions, the largest year-over-year increase on record. The painful impact of the jump – there will be less money for other services – will be lessened by the influx of federal dollars, but it will strain residents’ property taxes even more when federal support wears off.
Biggest tax cliff
The list of programs for which Lightfoot has committed stimulus funds is long: community safety, return of residents (ex-offenders), mental health, affordable housing, immediate support for individuals and families (including Universal Basic Income) , economic development, community stabilization, fines and fees (reduction of), Climate Resilience and Environmental Justice, City Parks, and more, each with their own grants and positions.
Problem is, Lightfoot spending will make matters worse for Chicagoans. Putting all that money into programs will help some residents in the short term, but it will hurt all Chicagoans more in the long term.
The city was stuck in a financial hole for decades, the city’s pension crisis remained the the worst in the country – households are obliged to over $ 140 billion in the overlap of government retiree debts – and Chicago is the only major city, besides Detroit, to be undesirable evaluated by Moody’s. Chicago can never “eliminate inequality” or “expand economic opportunity” as long as it is a fiscal disaster. A broken city just can’t help those who need it most.
And when the federal money is gone, Chicago will be left with all these government programs, no more dependents and ever higher debts – the debts that the mayor has already aggravated.
Lightfoot signed in 2019 what she called the “Most generous contract” in the history of the Chicago Teachers Union. She also recently agreed to a new police contract which increases wages by 20 percent. These two contracts will increase the retirement obligations of Chicagoans. The police pension plan, at 22 percent, is one of the least well funded and the real risk of insolvency.
The state also made matters worse, passing unfunded cost of living increases for Chicago firefighters and granting to CTU even more power to be used in future collective bargaining.
Prior to the US bailout, Chicago and the nation’s states had largely been healed by the combination of supplies and initial COVID relief packages. The trillions of the CARES Act and additional bills have helped increase tax revenues in most cities and states to amounts equal to or greater than their pre-COVID levels. Wirepoints covered this in our special report: 2020 state financial statements available: billions in new federal aid from Biden not needed.
The reality is – and the inflated budget numbers show it – that Biden’s ARP funds are truly a boon to Chicago. Lightfoot’s major spending plans are proof of that.
But Lightfoot and everyone in Chicago would be far better off if it used the billions in aid to execute some kind of financial restructuring – a restructuring that would reduce overlapping pension debts, aligns the city’s public sector infrastructure. with what its residents can afford and reform labor laws. it can give taxpayers a stronger voice.
In the long run, it would create more jobs and prosperity by solving Chicago’s serious fiscal and economic problems, rather than ignoring them and handing out âfreeâ federal money instead.
Sadly, Lightfoot’s devotion to her divisive ideology prevents him from doing just that.
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