Ward Room
Covering Chicago's nine political influencers

City on a Precipice

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Taxing commuters to pay for the city services they use? Raising taxes? Cutting services, including police and fire? All that's on the table as the city faces a $600 million deficit.

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City on a Precipice

Taxing commuters to pay for the city services they use? Raising taxes? Cutting services, including police and fire? All that's on the table as the city faces a $600 million deficit.
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What’s the financial outlook for the city of Chicago?
 
“Precarious would be the way we would describe it,” says Laurence Msall of The Civic Federation.

  “Challenging,” is the word that comes to Michael Pagano. He is Dean of Urban Planning at UIC.
 
Both are experts when it comes to the budget and the $600-million deficit facing the next mayor.
 
One thing is for certain: in the city of broad shoulders, options have narrowed.
 
And that raises this question: Is Chicago the new Cleveland?
 
In 1978, the city of Cleveland went into default.
 
With Cleveland’s budget woes mounting, its mayor sold some of the city’s assets to balance its budget.
 
Sound familiar?
 
In 2005 the Daley administration leased the Skyway for $1.8-billion.
 
In 2008 the Daley administration leased the city parking meters for $1.1-billion.
 
Total: $2.9 billion dollars.
 
To date, according to The Civic Federation, 80.7% of the money has already been spent.
 
Instead of using it as a rainy day fund, Msall says the money was used to balance the city budget.
 
“The city of Chicago used long term reserves so that it did not have to significantly reduce it’s spending,” he says.
 
Of the four major candidates running for mayor, only Carol Moseley Braun does not call this a financial crisis.
 
“I wouldn’t go so far as to call it a crisis, that panics people,” Moseley Braun said at a debate sponsored by The Chicago Tribune, WGN and The City Club.
 
The four major candidates, Braun, Rahm Emanuel, Gery Chico and Miguel del Valle have proposed cuts, but will cuts alone balance the budget?
 
“The city cannot continue to provide the level of services it does provide,” says Pagano, “with the revenue structure it now has.
     
Michael Pagano proposes something that is sure to drive nearly every commuter crazy: tax suburbanites who work in the city.
 
“They are not contributing their fair share,” he says.
 
In short that means those who live in the suburbs would, like city residents, pay to drive on the roads, use the water, flush the toilet and be guarded by police and fire.
 
Pagano thinks a regional taxation policy could work to everyone’s benefit. Still he knows it his idea would create a political firestorm.
 
“There will be political opposition,” he acknowledges but without additional revenue there would be failed services.
 
Laurence Msall isn’t keen on the idea. “You do not want to create incentives for businesses to not locate in the city of Chicago,” he says.
 
While Msall and Pagano disagree on that, they are lockstep in this: city services are going to be cut and no one---and even police and fire—ultimately---may be exempt.
 
“We have under Mayor Daley, held public safety off the table,” says Msall.  “Almost 75% of the operating budget relates on personnel to public safety.”
 
So the new mayor could very likely walk in the door calling for fewer garbage trucks and fewer services. “Live with it or let’s talk about it,” says Pagano.
 
Like many American cities, Chicago today stands at an economic crossroad.
 
“The city is clearly on a precipice and it is at a crossroads,” says Msall,  “in terms of what the future is going to be.
 

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