Chicago Mayor Rahm Emanuel (D) says without significant reforms the city’s 2012 budget will be hundreds of millions of dollars in the red, and he pledges to address the problem without raising taxes.
“We have come to that moment of truth as a city. We now must make the tough choices” to deal with the city’s budget issues in “a structural and fundamental way,” Emanuel said during a July 29 press conference.
“The taxpayers, as we know, feel nickeled and dimed as it relates to taxes” the mayor said, “and I will not ask them to pay more for an inefficient government that is not delivering services on a more cost-effective basis. I have committed to making the tough choices needed to put our fiscal house in order and protect Chicago’s taxpayers. As we move forward in this budget process, my administration is open to ideas from across the city on how to tackle the challenges we face.”
Big Deficits Getting Bigger
City budget officials forecast a $635.7 million budget gap in 2012 and predict a deficit of $741.4 million in 2013 and $790.7 million in 2014 without significant changes in how the city operates. City officials and outside observers put much of the blame on long-term union contracts with locked-in raises, rising health insurance costs for city workers, and increased borrowing resulting in higher debt burdens.
Emanuel inherited the budget problems upon becoming mayor in May. He followed Richard M. Daley, who had decided not to run for reelection. Daley had been mayor since 1989. Before becoming mayor, Emanuel served in Congress and left that office to become President Barack Obama’s first chief of staff, a position he held until resigning late in 2010 to return to Chicago to run for mayor.
Slam Against Middle Management
A draft study commissioned by the Chicago Federation of Labor and recently obtained by the Chicago News Cooperative suggests the city could save money by weeding out middle management.
“Fewer workers are actually doing the work and an excessive number of supervisors and managers are overseeing the work,” the consultants contend in the report. “We don’t need to be firing any more of the people actually doing the work—we need to get rid of the excessive number of people watching them do it.”
Kathleen Strand, a spokeswoman for the city budget office, said payroll for mid- and upper-management personnel has decreased 34 percent since 2002.
“The Civic Federation sees a need for the mayor and aldermen to work together to improve the long-term fiscal sustainability of our city, including implementing significant reforms to the responsibilities of the City Council, Treasurer, and City Clerk,” said Laurence Msall, president of the Chicago-based Civic Federation, a nonpartisan government research organization.
“Given the scope of Chicago’s fiscal predicament, it is imperative that every elected official be engaged in the difficult and painful process of prioritization and reduction,” said Msall. “With a growing structural deficit, high levels of debt, and staggering unfunded pension liabilities, every option to control costs must be on the table for discussion.”
The Federation recommends, among other things, reducing the size of the City Council to 25 from 50, more in line with the number of council members per capita for other large cities in the United States.
Calls from City Workers
19th Ward Alderman Matt O’Shea said he has received “lots of calls” since Emanuel became mayor, especially from city workers living in his neighborhoods.
“I’ve personally received calls from constituents saying, ‘Hey, I’m on the chopping block,'” O’Shea told reporters after a recent council meeting. “We need to cut costs, but we need to save jobs. I’m confident we can cut the fat while saving jobs.”
City hall recently sent layoff notices to 625 government workers whose union leaders declined to renegotiate parts of their contract, and Emanuel has said he wants to bring “managed competition” to city government to allow private businesses to bid to provide certain services.
John W. Skorburg ([email protected]) is a visiting lecturer in economics at the University of Illinois at Chicago and associate editor of Budget & Tax News.