With an $882 million budget gap to fill less than five months before the mayoral and aldermanic election, there have been no shortage of reports recommending ways to solve Chicago’s financial crisis.
On Thursday, the Civic Committee of the Commercial Club, one of Chicago’s most influential business groups, weighed in with a 66-page report it called “Chicago’s Fiscal Future: A Roadmap to Reform.”
It includes dozens of recommendations to rein in spending, shrink a city payroll that ballooned during the pandemic and wean the city off its historic addiction to borrowing money and using other one-time revenues to avoid making politically unpopular choices.
The report also suggests ways to empower a City Council that unanimously rejected Mayor Brandon Johnson’s proposed $300 million property tax increase and blocked the mayor’s proposed corporate head tax.
Most of the ideas are familiar ones, particularly on the pension front.
They include: offering city employees a voluntary buyout program; consolidating the four city employee pension funds into a single fund to reduce administrative costs and improve investment returns and requiring the Chicago Public Schools to “gradually assume” the $175 million annual pension payment for non-teaching school employees.
Pension obligation bonds suggested but never pursued by former Mayor Rahm Emanuel are not recommended “at this time” and should be considered “only if market conditions improve,” the report suggests.
With 40% of Chicago’s operating budget gobbled up by pension and debt payments, the report also recommends that city debt “only be issued to pay for capital needs” and that savings generated by debt refinancing be used “over the life of the bond term” and never for “immediate budget relief.”
The city should also “adopt the goal of paying down 25% of debt within five years and 50% within ten years.”
Johnson has steadfastly refused to consider layoffs and/or furlough days for fear of alienating the unions that helped put him in office. But the Civic Committee says the city workforce must be “right-sized” to rein in personnel costs that have ballooned by 41% since the pandemic.
To avoid a repeat of last year’s “down-to-the-wire frenzy” that nearly resulted in a government shutdown, the report recommends that the mayor be required to present his budget by Sept. 1, and that the City Council have its own budget office within three years.
Johnson is campaigning for re-election on a renewed promise to “tax the rich.” That’s what Civic Committee president Derek Douglas fears most.
“The biggest concern we have is that… we end up seeing a bunch of proposals that we would consider anti-growth like the head tax. I fear that’s going to come back. I hope it doesn’t. It was rejected last year. But I fear that it could come back and other types of, `Let’s try to grab whatever tax we can,’“ Douglas told the Sun-Times.
“Particularly what I fear is that there’s going to be a continuation of what I felt was kind of villainizing the business community as if the business community was the problem… My fear is that people are going to try to create an us-against-them narrative to fight over a shrinking pie.”
The Civic Committee acknowledged that new revenue needs to be “part of any long-term, comprehensive solution.”
But the report says Chicago must “earn the right to seek additional revenue” by first “demonstrating its commitment” to confront what Douglas calls the “five or six issues causing the most stress… that are not getting as much air time, but have to be part of the conversation.”
“It’s not just a conversation about, `Tax the rich. Tax the rich,’“ Douglas said.
The Commercial Club is a 400-member cross-section of Chicago’s most influential business, cultural, civic and philanthropic leaders. The Civic Committee is a 100-member subset of that group. In the race for mayor, Illinois Secretary of State Alexi Giannoulias, a leading challenger to Johnson’s re-election bid, is getting strong support from the city’s business community.
Against that political backdrop, Douglas was asked whether he’s concerned that Johnson may ignore the report.
“I don’t even know what he’s talking about when he says the billionaires are trying to control” Chicago, he said. “These are companies that employ hundreds of thousands of people in the city of Chicago — the same working class people he’s talking about. Where do you think they’re working? They’re working at these companies. They’re providing the jobs… They’re the villains?… That’s the type of stuff he thinks we need less of? I don’t understand.”
The mayor’s office had no immediate comment on the report.