Preliminary numbers released Monday show that the city’s financial picture is improving. City officials are forecasting the lowest budget deficit in the Rahm Emanuel era. But is the news all good?
The city is projecting a $114 million deficit in its $3.5 billion budget—lower than last year’s budget gap and 82-percent lower than the more than $600 million gap Emanuel had when he first took office in 2011, according to a financial analysis released by the city.
The forecasts also show, all other things being equal with the economy, it would grow over the next few years to $212 million and then to $330 million in 2020.
Still, Emanuel took a victory lap, noting that the picture means he believes the financial situation has gotten under control.
“Fitch and S&P upgraded Chicago’s financials from negative to stable,” Emanuel said. “We’ll have the smallest structural deficit in over a decade. Every one of the bad financial practices I inherited have been cut or eliminated, and we’re on the doorstep to a major change in that area.”
But these numbers are missing a few things.
First, the forecast is based on this year’s expenditures, so it doesn’t take into effect the hundreds of new police officers and detectives the mayor has pledged to hire next year.
Nor does it account for the new police oversight apparatus that will include bigger budgets for the Civilian Office of Police Oversight and Inspector General Joe Ferguson’s office. The Civic Federation’s Laurence Msall cautions the news has to be taken with a grain of salt.
“We don’t know what the full cost of the two-year commitment Mayor Emanuel has made in hiring new police officers,” Msall said. “We don’t know if the city’s going to continue to borrow for operations, as it has done in the past. It’s going to require some belt tightening, ideally it should come by taking the less efficient areas of city government and some of the less priority areas.”
Msall does say new taxes will probably not have to be a part of the plan, although property taxes will go up next year because of the $550 million hike that passed two years ago. The mayor also touts stabilization of the city’s four pension funds with new water/sewer taxes and 911 fees. But in two years, those costs are going to skyrocket again and the city will have to come back and find a way to pay for it.
Also Monday, the mayor refused to commit to new taxes to pay for Chicago Public Schools should Senate Bill 1, the education funding bill, fail to provide the $215 million for CPS.
Emanuel instead says he believes there will be bipartisan fervor to override the governor’s amendatory veto that slashes out that funding for Chicago legacy teacher pension costs.
“This is a four-decade long effort to finally do what people have talked about years for doing,” Emanuel said. “I believe there’ll be Democrat as well as Republican support for this as there was for passing it.”
The mayor will make his official budget recommendations to City Council this fall.
Follow Paris Schutz on Twitter: @paschutz
July 20: Despite the fight in Springfield over education funding, Chicago Public Schools leaders say they will open to students in the fall—but with fewer students.
June 6: A look at the city’s past, present and fiscal future with the outgoing city budget director who is stepping down after six years.
April 19: Can the city and Chicago Public Schools get on the road to fiscal health without bankruptcy? Lessons from other cities.