Mayor Lori Lightfoot unveiled a $16.7 billion spending plan Monday that boosts funding for police and relies on federal money to help fill the city’s budget hole as she seeks to move Chicago past the ongoing pandemic and to address rampant gun violence.
Lightfoot also for the first time outlined how she will spend nearly $2 billion in federal funds from the Biden administration’s American Rescue Plan, with most of the money going toward filling the city’s budget hole over the next three years.
Of the $1.9 billion given to the city by the federal government, $782 million will go towards filling the city’s revenue hole in 2021, $385 million will help address the city’s revenue hole in 2022 and $152 million of it will be used for revenue replacement in 2023, potentially easing political pressure on the mayor and alderpersons while provoking criticism that the city could do more.
Lightfoot’s 2022 budget also boosts police spending to $1.9 billion, up from $1.7 billion in 2021, a move that will likely be criticized by some as elected officials debate the best way to address the city’s violence, which has remained elevated after surging in 2020 to some of the highest levels in decades.
The mayor’s third spending package only includes modest property tax increases. As part of her budget, Lightfoot will boost the property tax levy by $76.5 million. Most of the levy increase is going toward debt service on capital plan and CPI increase, though roughly $28.6 million is expected to come from new development and the expiration of tax-increment financing districts.
Last month, Lightfoot laid out a $733 million budget shortfall for 2022.
The major opened her budget address Monday by invoking a series of deep Chicago problems, including a wide life expectancy gap between Black and white residents, systemic racism and rampant heroin use in parts of the city that leaves areas “looking like a scene from ‘The Walking Dead.’”
She then drew on the Old Testament’s story of Moses leading the Israelites to the Promised Land as a parable for unity and determination through challenging times.
“We have no Moses, but we do have each other, and we have the lessons of history from those Biblical times to the present,” Lightfoot said. “Our people need us and, importantly, we have an obligation to them, to ourselves and to future generations to seize with gusto the opportunities that this moment presents: to learn the lessons of history, and not repeat the mistakes of the past.”
Without a significant property tax hike, Lightfoot may have an easier time getting her budget passed than she did last year. But the mayor will likely face increased pressure from aldermen and activists who want her to spend more from the nearly $2 billion the city is receiving from President Joe Biden’s American Rescue Plan package to fill the hole and fund favored programs.
She’s also potentially facing resistance from some Latino aldermen. Before the speech Monday, members of the council Latino Caucus said there weren’t enough Hispanics involved in crafting the spending plan to make sure the interests of the growing community get fair treatment.
At a City Hall news conference, Latino Caucus Chairman Ald. Gilbert Villegas said group members would need to decide whether they can back the budget despite inadequate Hispanic representation among city government decision makers.
“After two years (of the Lightfoot administration), this is where we’re at,” Villegas said. “So that will be a discussion I’ll be having with the members, whether they think our community is in the budget. The mayor has said the budget is a moral document, and I think morally we have to do the right thing to make sure we’re representing our community.”
Progressive groups held a Monday morning news conference to press Lightfoot to fund more affordable housing, mental health and community public safety programs.
But some progressive aldermen noted Lightfoot’s plan reflects several of their priorities.
“I think it’s pretty clear that people in the administration have been copying this coalition’s homework,” said Northwest Side Ald. Carlos Ramirez-Rosa, 35th. “This coalition for months has been calling for certain investments to ensure that the federal American Rescue Plan dollars that the city’s receiving are spent on the things that our communities need.”
Ramirez-Rosa said he’s “cautiously optimistic” that Lightfoot seems to have adopted several of those key tenets, but said he wasn’t certain he would back the overall spending plan. “As we know with this administration, the devil is always in the details,” he said.
Last month, Lightfoot laid out a $733 million budget shortfall for 2022.
Chicago’s structural deficit will also continue to grow in 2022 because of state-imposed requirements for the city to increase funding for its pension funds. The city’s pension expenses will spike from $1.8 billion to $2.3 billion. Long-term, Lightfoot hopes to use revenue from a Chicago casino to help address that problem, but the plan faces an uncertain future as the city has struggled to attract interest in the casino project.
Since becoming mayor, Lightfoot has also spoken about the need for pension reform, though she hasn’t made headway on that in Springfield or unveiled a plan of her own while focusing on more immediate pandemic-related financial problems.
Lightfoot has made clear she doesn’t intend to use all the funds from the federal rescue plan on the upcoming budget shortfall, saying in August that to do so would be “utterly irresponsible, ineffective, and leave us with nothing to support ourselves, God forbid another crisis strikes our city.”
Lightfoot also said her budget and federal relief dollars will create more than 40,000 jobs, help clean thousands of vacant lots, plant 75,000 trees and help spur more affordable housing. About $3.4 million will go towards the elected police oversight board passed by aldermen and Lightfoot after contentious debate.
Aside from the $1.3 billion for revenue replacement, Lightfoot plans to spend the rest of the money on various programs.
That includes $126 million aimed at helping families through programs such as a monthly cash assistance program for low-income households. Among other initiatives are $103 million for health spending, including in-home services to new moms and victims of gender-based violence; $85 million for various violence prevention programs; $9 million on environmental spending; $65 million for youth programs; and $32 million aimed to help the homeless.
American Rescue Plan money will also go toward supporting tourism, small business support, the arts and community development, among other areas.
After announcing in a televised August 2019 speech that Mayor Rahm Emanuel had saddled her with an $838 million deficit for 2020, Lightfoot said she made structural changes to cut costs through so-called zero-based budgeting and by eliminating vacant positions.
The mayor also turned to several one-time fixes to close the gap rather than calling for large-scale revenue increases such as property tax hikes that would have hit broad swaths of Chicagoans and been difficult politically.
Many aldermen were happy there was no big property tax jump in the mayor’s proposed budget for 2020, and passed her package 39-11. But some of them wondered privately why she didn’t leverage her popularity coming off her election win to ram through a hike then rather than waiting until later in her term.
Last year, Lightfoot scored a relatively narrow but important victory as the City Council adopted her $12.8 billion budget for 2021, which included a $94 million property tax hike and controversial debt refinancing to help close a $1.2 billion deficit. She called it her “pandemic budget.”
Aldermen voted 28-22 in support of the property tax increase and passed the full budget by a 29-21 vote.
That budget also included a provision to raise property taxes annually by an amount tied to the consumer price index. It raised gas taxes by 3 cents per gallon and relied on an increase in fines and fees collection, including a plan to boost revenue by ticketing residents who are caught going 6 mph over the limit by speed cameras.
In addition, Lightfoot asked to refinance $501 million in city debt for the 2021 budget, which would provide a jolt of new revenue next year but likely cost taxpayers more down the road. Similar borrowing tactics under Mayors Richard M. Daley and Rahm Emanuel drew deep criticism.
Behind the scenes, Lightfoot worked hard last year to generate support for her budget. In a meeting with the Black Caucus, Lightfoot told aldermen that those who don’t support her budget shouldn’t expect their wards to be prioritized and added, “Don’t come to me for s— for the next three years” if they didn’t support her spending plan.
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