Mayor not yet ready to show her hand about shortfall she inherited from Emanuel
Mayor Lori Lightfoot is buying more time before showing her hand about the budget shortfall she inherited from Rahm Emanuel.
Lightfoot issued a new executive order on Tuesday pushing back the deadline for releasing Chicago’s preliminary budget until Aug. 31. The old deadline was midnight Wednesday.
In a statement, Budget Director Susie Park cited the “shorter transition period” following the April 2 runoff, saying Lightfoot needs “additional time to analyze year-end totals, program costs and other factors impacting the economy.”
It’s not surprising Lightfoot would want to hold her cards until after the 100-day mark.
Revealing the budget is part of a high-stakes game of political poker that will give beleaguered Chicago taxpayers some idea of the pain they face. But Lightfoot needs to play it carefully; she’ll be stuck with those cards for the rest of her term.
If the new mayor is determined to inflate the shortfall to lay the groundwork for a slew of post-election tax increases, she could lump the structural deficit together with debt service, pension payments, yet-to-be-negotiated pay raises for police officers, firefighters and teachers, and a parade of wrongful conviction lawsuits already filed or coming down the pike.
But that kitchen-sink approach would send red flags to Wall Street ratings agencies.
She can get away with blaming Emanuel once. She won’t be able to get away with it after that. And if she counts 250 legal cases in the pipeline as part of the budget shortfall, she’ll be stuck with those ground rules.
Emanuel raised the bar, turning the once sketchy preliminary budget into an “Annual Financial Analysis” that included projections for the next three years based on “worst-case,” baseline and “bestcase” economic scenarios.
Politically, Lightfoot also has raised the bar, claiming the shortfall she inherited is “north of” the revised $740 million acknowledged by Emanuel’s Chief Financial Officer Carole Brown.
Lightfoot has refused to get more specific beyond saying there’s “no question” she’ll be forced to raise taxes and is seriously considering seeking state authorization to raise the real estate transfer tax and impose a sales tax on professional services.
The Civic Federation reported earlier this year that Lightfoot was staring down the barrel of an immediate $277 million spike in pension payments — payments that will rise by $1 billion in 2023.
The corporate fund has a twoyear gap of at least $613.9 million — even before factoring in police and fire contracts, retroactive pay raises for the rank-and-file police officers and the 18-month jump in salaries for 1,000 newly hired officers.
Concerned Lightfoot may be setting him up to be the financial fall guy, Emanuel directed Brown to revise the first-year deficit upward by acknowledging the four city employee pension funds had fallen short of the assumed 7% return on investments.
Lightfoot scoffed at the higher figure and said it was “worse than that.”
A veteran alderman, who asked not to be named, predicted Lightfoot would ultimately “overstate the budget shortfall to justify” an onslaught of budget cuts and tax hikes.
“It can’t be as bad as she’s going to say. Rahm was locking himself into those numbers” before choosing not to seek a third term, the operative said.
“Probably both of them were [exaggerating]. And somewhere in the middle is the truth.”