People who follow the news in Chicago know it’s in a heap of trouble, mostly financial. In fact, it’s in so much trouble it’s looking for help in the most unlikely of places — the effectively bankrupt state of Illinois.
Desperate public officials make desperate choices. Perhaps that’s why Chicago’s new mayor, Lori Lightfoot, in office for just a couple of months, is looking for financial help from the state.
In her defense, where else does she have to turn? More important, what implications does it have for the rest of the state when its most powerful political entity comes calling?
Chicago hasn’t had a great reputation for fiscal prudence over the past 20 years. Mayor Richard Daley II, son of Mayor Richard Daley I, left a pile of debts and deficits to his successor, Mayor Rahm Emanuel.
Emanuel made some efforts to deal with the financial morass he inherited, mostly failing because the problems are so big. Now, it’s Lightfoot’s turn, and there is no question that she’s serious.
Chicago’s financial problems will sound familiar to those who keep track of the state’s financial problems. They’re pretty much the same — debts, budget deficits and underfunded pensions.
She has scheduled an Aug. 29 prime-time speech to city residents, during which she will, according to The Sun-Times, “lower the boom on beleaguered Chicago taxpayers.”
She inherited a $1 billion budget deficit and, doubtless, she’ll have some interesting proposals on how to raise that money from taxpayers.
But which taxpayers? City taxpayers, state taxpayers, special segments of city taxpayers otherwise known as the rich and corporate.
Lightfoot’s first trial balloon, one let go a couple weeks ago, was quickly shot down.
Noting the city’s $28 billion pension underfunding problem, Lightfoot suggested the state assume that debt. That’s a great idea for the city, but not so much for the state.
Gov. J.B. Pritzker didn’t hesitate before suggesting that doesn’t make a lot of sense for the state, already buried in pension debt, to take on even more. He said, sensibly, such a move wouldn’t be good for the state’s bond rating.
Lightfoot also is asking for help in restructuring planned taxes for a proposed casino in Chicago.
Such a venture ought to be a gold mine. But state officials have loaded the plan with such large upfront tax payments that a casino consultant recently expressed doubts that any would-be operators will seek a license to operate.
If legislators are serious about a casino in Chicago, they ought to adopt a more realistic tax framework, one that will ensure success both for taxpayers and the casino operator.
Finally, Lightfoot is seeking legislative changes that would allow the city to impose taxes on professional services, like lawyers and accountants, and real estate transfer taxes on high-dollar residential sales.
Chicago politicians dominate statewide offices in Illinois as well as the General Assembly. So they can be expected to listen sympathetically to much of what Lightfoot is seeking.
But there are limits.
If the Legislature allows the city to tax services, that would hamper the state’s ability to tax those same services.
An even bigger problem is that Lightfoot said she wants some of this revenue to fund social service programs. What then becomes of the $1 billion deficit?
No one should underestimate the challenges that Lightfoot faces or her determination to address them in a meaningful way. She’s not only inherited a financial disaster, but recent substantial property tax increases Emanuel imposed to ameliorate the situation.
How much more can or will Chicago taxpayers take? The same question, of course, can be asked of Illinois taxpayers?
Lightfoot, of course, won’t be asking those question. She has specific requests, and all she wants to hear for an answer is “yes.”