City Council Approves Lightfoot's $12.8 Billion Budget, $94 Million Property Tax Hike, But Critics Say 'Don't Give Me Crumbs And Tell Me It's Cake'
CHICAGO (CBS) -- In one of the closest budget votes in decades, the City Council on Tuesday approved Mayor Lori Lightfoot's $12.8 billion spending plan for 2021, including a $94 million property tax hike.
Aldermen voted 29-21 to approve the mayor's spending plan, and 28-22 to back the property tax hike. It was the tightest margin of approval for any city budget in at least 30 years, which was evident as tempers flared among some aldermen who voted no.
"Don't give me crumbs and tell me it's cake. We're in a global pandemic, and there's no way in the world that we should be balancing this budget on the backs of taxpayers," said Ald. Jeanette Taylor (20th).
The mayor said she was "not at all concerned" about the narrow margin of victory, or what it might mean for what's ahead for her and the City Council.
"I govern to 26 [votes]. A rubber-stamp City Council does a disservice not only to the members, but also to the people," she said.
As she has spent the last several weeks wrangling votes, Lightfoot repeatedly has said she was left with no easy choices to balance the budget after the pandemic blew a massive hole in tax revenues, causing a $1.2 billion shortfall for 2021.
After Tuesday's vote to approve her budget plan, Lightfoot thanked those who supported it for "understanding the need to act now, not kick the can down the road, and do the right thing not just for you, not just for your ward, but for your city."
"This was a very difficult budget, probably the most challenging in the history of our city, and we've got many challenges and many roads ahead that we need to walk down the path together," she said. "This is not the end, this is the start of a series of things that we must get done on behalf of the people in 2021 and beyond."
Ald. Pat Dowell (3rd), who chairs the City Council Budget Committee, said "nothing about this year has been easy," and the budget process was no exception. However, she said the 2021 budget plan protects vital city services during the pandemic.
"Together we have to sacrifice to protect those most in need. That is what this budget does. Despite the pandemic's devastating effect on city revenue collection, this budget not only protects but also allocates additional funding to such critical services such as homelessness prevention and outreach, mental health services, violence prevention, a public safety co-responder model, workforce training, economic development, affordable housing, and so much more."
Ald. David Moore (17th) said the city budget plan is not ideal, and said he would have wanted an even higher property tax increase to address the city's structural deficit, but he said "this is a good budget to pass," because "we all had to give a little and get a little in order to get where we are today."
Ald. Susan Sadlowski Garza (10th) said this year's budget process was different from any other year, saying it "was truly collaborative and transparent," and praising Lightfoot for working with the City Council's Black Caucus, Latino Caucus, and Progressive Caucus to address some of their concerns.
"I know that … it was also frustrating and messy at times, but a truly democratic inclusive process is messy. It's emotional and it's stressful, but the end product of the process like this is a budget that reflects the priorities and the values of our communities, and that should always be our goal," she said.
Ald. Gilbert Villegas (36th), the mayor's City Council floor leader, who helped her line up the votes to approve the budget, said he understands why some aldermen are voting no, acknowledging it's far from perfect, but he said he supports the spending plan because "we cannot allow perfect to be the enemy here."
"Imperfections are not inadequacies. They are reminders that we're all in this together. Together we will pass this budget and take a step towards a better future for all Chicagoans," he said.
Villegas also predicted the 2022 budget would be "a monster," and urged his colleagues to begin convening budget meetings in the first quarter of 2021 to start tackling the problem early.
The aldermen who voted against the mayor's budget plan included: Daniel La Spata (1st), Brian Hopkins (2nd), Anthony Beale (9th), Patrick Daley Thompson (11th), Marty Quinn (13th), Edward Burke (14th), Raymond Lopez (15th), Matt O'Shea (19th), Jeanette Taylor (20th), Silvana Tabares (23rd), Byron Sigcho-Lopez (25th), Ricardo Maldonado (26th), Rossana Rodriguez Sanchez (33rd), Carlos Ramirez-Rosa (35th), Anthony Napolitano (41st), Brendan Reilly (42nd), Tom Tunney (44th), James Gardiner (45th), Matt Martin (47th), Harry Osterman (48th), and Debra Silverstein (50th).
Those same aldermen also voted against the property tax hike. Ald. Shirley Coleman (16th) was the only alderman to vote for the mayor's spending plan, but against the property tax hike.
Coleman said the property tax hike was a deal-breaker for her, because residents in the Englewood neighborhood which she represents already are struggling to pay their bills.
Taylor said she was "baffled" at how aldermen could support raising the city's property tax levy during a pandemic. The mayor's office has estimated the $94 million property tax hike will amount to a $56 increase in the annual property tax bill for the owner of a home valued at $250,000, but Taylor said even that is too much for low-income residents.
"Fifty-six dollars to an elder in my ward, that's her medicine for the month. Fifty-six dollars is food for a family in my ward a month. We're talking about where the median income is $25,000, and this is what we do to folks in a global pandemic?" she said. "The question I need to ask you all is, did we do everything in our power to make sure that we balance this budget without doing on the backs of low-income and working families? And my answer is no. My answer is completely no."
Ald. Raymond Lopez (15th), one of Lightfoot's most vocal critics on the City Council, criticized the mayor and aldermen who supported the budget for putting an additional burden on taxpayers while having the luxury of knowing their own salaries are guaranteed through 2023.
"Most Chicagoans do not have that security. They are struggling right now to make ends meet with what little they have. They simply cannot force money into their bank accounts to make ends meet. Families make sacrifices to get through hard times, we have not,"
Lopez also criticized the budget plan for creating hundreds of millions of dollars of new debt for future generations of city taxpayers by refinancing $1.7 billion in existing debt.
"Support for this budget truly shows how disconnected its supporters are from the reality and fear gripping our fellow Chicagoans. Parents are standing in unemployment lines, virtually. Grandparents are literally in food pantry lines. COVID-19 has our neighbors gasping for air in hospitals, and children are worried about their future. Where is our empathy?" he said.
Ald. Anthony Beale (9th) who also has repeatedly clashed with Lightfoot since she took office, blasted the mayor's refinancing plan as "largest scoop and toss in the city of Chicago's history," referring to a budget tactic criticized by fiscal watchdogs as an expensive gimmick that only pushes the city's debt load further down the road while increasing interest payments.
"This is what I call scoop and toss on steroids. We are borrowing and refinancing $1.7 billion to kick the barrel down the road; not the can, but we are kicking the barrel down the road," he said. "Ladies and gentlemen, we are becoming the next Detroit here in the city of Chicago."
Ald. Rossana Rodriguez Sanchez (33rd) said she could not support a budget that not only raises the city's property tax levy next year, but calls for annual property tax hikes going forward tied to the cost of living. Aldermen must approve those changes each year.
"We are voting on a budget that raises property taxes on working people and families for decades to come, people who were already on the verge of displacement before this pandemic, and who are now worrying about how they will be able to recover from this moment," she said.
Ald. Roberto Maldonado (26th) also said he can't support a property tax hike because too many people in his ward already are being forced out of their homes due to gentrification.
"I have always said that I cannot vote for a property tax increase as a sitting alderman," Maldonado said.
Ald. Byron Sigcho-Lopez (25th) called the mayor's budget plan one that "is rooted in regressive taxation."
"Let's be real, this puts an even greater burden on the Black and Brown homeowners that I represent," he said.
Ald. Matt Martin (47th) said he could not support the mayor's plan for annual property tax hikes going forward tied to the consumer price index without first looking at more progressive revenue options.
"We can't shy away from the set of difficult options in front of us, but I have very deep reservations about locking in our reliance on property taxes in such a dramatic way without first having a more public conversation regarding realistic plans for closing Chicago's structural deficit," he said.
Unlike last year, when Lightfoot launched a website to criticize aldermen who opposed her budget, prompting accusations of bullying, this year the mayor actually thanked those who voted against her spending plan.
"I also want to thank those who did not vote for the budget. We have to move forward together," she said after Tuesday's vote. "We have to make sure that we continue to look for ways to find common ground, even with those that we disagree with."
"We will continue to have open ears, open heart, and open dialogue as we move forward," she added.
Lightfoot's two most recent predecessors, Rahm Emanuel and Richard M. Daley, enjoyed unanimous or near-unanimous approval of the vast majority of their budget plans. Even when Emanuel proposed a record $588 million property tax hike in 2015, only 15 aldermen voted no, a wider margin than Lightfoot had for a much smaller property tax increase.
Lightfoot has said she doesn't care about the margin of victory for her agenda, and isn't willing to horse trade for votes.
However, she made a number of concessions to get her budget plan through City Council, including cancelling plans for 350 layoffs by borrowing against future marijuana tax revenue, adding $10 million more in funds for violence prevention programs, expanded plans for a pilot program for a co-responder model for mental heath emergencies, and backed off plans to link the budget to a move to eliminate so-called "carve-outs" in the Welcoming City Ordinance.
After the budget was passed, Lightfoot defended the compromises she made as a necessary part of the budget process.
"I don't buy votes, and I never will, but the democratic process is about compromise. It's about listening to each other, having people come forward with ideas, pulling those ideas apart to see if they make sense in the context of a larger frame, and that's precisely what we did with this budget," she said. "It was a lot of back and forth, a lot of listening, a lot of – I think – historic partnership and collaboration among a variety of different City Council members."
Sadlowski Garza called the original proposal for 350 layoffs "a line in the sand that I would never cross," and praised the mayor for working with aldermen to avert the layoffs, as well as scale back plans for furlough days for non-union city employees. The mayor originally proposed five mandatory furlough days for all non-union employees making at least $50,000 a year, but the budget now will require the furlough days only for non-union city workers earning $100,000 or more a year.
Ald. Maria Hadden (49th), who was among a handful of aldermen who voted in favor of the mayor's budget plan, a year after opposing her 2020 spending plan, praised her colleagues for joining forces to get increased funding for violence prevention programs, to protect city jobs, and to create a non-law-enforcement model for responding to mental health crisis calls.
"The Progressive, Black, and Latino caucuses came together in an unprecedented way on a number of issues, and together fought for increased funding for some of our key priorities," she said.
However, Hadden said the budget plan also falls short of truly representing the city's values, but she said she would support it because of the mayor's commitment to fund a pilot program to have mental health professionals respond to emergency calls about mental health crises, opening the door for progress toward taking that burden off the shoulders of police officers.
The mayor faced significant pushback from many aldermen, especially from the Progressive Reform Caucus, for not considering a handful of budget amendments offered in an effort to eliminate the property tax hike.
Progressive aldermen had proposed a per-employee tax on large logistics companies like Amazon, Walmart, and Target; transferring $5.25 million out of the Chicago Police Department to pay for a pilot program for mental health professionals rather than police officers to respond to mental health emergency calls; forcing CPD to shut down its infamous Homan Square facility; shutting down a handful of special taxing districts early; and legalizing and regulating video gambling terminals in Chicago. However, all of those proposals were left to languish without a vote.
"There were plenty of solutions put forward that would have helped us increase funding for violence prevention, for example. We put forward solutions that would have increased mental health services by five times the very modest $1 million increase in this proposed budget," Sigcho-Lopez said. "Let's put that into perspective. The mayor is giving a bigger increase to her own budget office than she's giving to the entire city's mental health services budget. Have we really exhausted all options?"
However, Lightfoot said those amendments were introduced too late in the budget process to be properly vetted.
"Something coming that late did not get committee consideration, and obviously didn't affect the budget itself, but I've been very clear myself – I haven't had had time to study that ordinance – but head taxes are regressive," the mayor said. "They're not, in my view, the best way to generate revenue, and I would be surprised if this particular ordinance has some new wrinkle to it that would make me think that this kind of head tax is better than any other."
Ald. Walter Burnett (27th) praised the mayor for listening to critics on the City Council, and trying to come up with compromises on several issues, even if they fell short of what some aldermen were seeking.
"Each time someone has pushed you real hard, you went back to the drawing board, and you came back with something to try to help us. Now I know the easy thing for all of us to do is do nothing. The easy thing for everyone to do is to go against," Burnett said. "But the fact of the matter is, at the end of the day, we have to have a balanced budget."
In addition to the property tax hike, Lightfoot's budget plan also includes a laundry list of new revenues from various increases or changes to existing taxes:
- Increasing the city's gasoline tax from 5 cents per gallon to 8 cents per gallon, generating an estimated $10 million in revenue.
- Raising the city's tax on cloud computing services from 7.25% to 9%, bringing in an additional $15 million in revenue.
- Ending the practice of sending rideshare fees to subsidize the CTA, and keeping the $16 million in revenue within the city budget.
- Eliminating a 50% tax credit offered to rideshare drivers to make trips to "underserved areas," which the mayor's budget team said does not actually create an incentive to provide those trips, and benefits only the companies themselves. The move will save the city $6 million.
- Adding 750 more parking meters to bring in another $2 million in revenue.
- Tying commercial refuse container fees to annual increases in the cost of living to create $270,000 in additional revenue.
- Increasing harbor permit fees and fines for $15,000 in new revenue.
The budget also includes a plan to begin issuing $35 speed camera tickets to drivers caught going 6 mph to 9 mph over the limit. First-time infractions would result in a warning; subsequent violations would result in a $35 ticket. Some aldermen had argued the city should instead install more speed cameras to catch more drivers going 10 mph or more over the limit. Drivers caught on speed cameras going 10 mph over the limit already were subject to $35 tickets, with those going 11 mph or more over the limit facing $100 fines.
Lightfoot's budget plan also saves $106 million by eliminating 1,921 vacant positions, including 614 vacancies at the Chicago Police Department.
The budget plan also relies on saving $501 million next year by refinancing existing city debt by issuing $1.7 billion in general obligation and sales tax securitization bonds to take advantage of lower interest rates. In addition to the $501 million in savings for 2021, the refinancing plan is expected to generate $450 million in savings for 2020 and help close an $800 million budget gap for the current year.
Lightfoot also is declaring a $350 million in tax increment financing programs to help close the gap for 2021. The TIF surplus would provide $76 million for the city's corporate fund and $167 million for the Chicago Public Schools, but at the same time, Lightfoot is calling on CPS to reimburse the city for $40 million in school pension contributions the city typically makes for the district.
The city also will use $30 million dollars from the its rainy day fund to help balance the budget. Some aldermen had wanted to use more of the city's $900 million in available reserves, but the mayor's budget team said doing so would not be wise while the pandemic is still raging.
Chicago Federation of Labor president Bob Reiter said the mayor's budget plan protects vital city services and workers, while making the difficult choices needed to stabilize the city's finances.
"This pandemic budget is not easy, but nothing is easy right now," he said.
The Chicago Federation of Labor had negotiated a deal with the Lightfoot administration to eliminate her original plan to layoff 350 city employees to save $15 million. Instead, the city will borrow against future marijuana tax revenue to spare the need for any layoffs in 2021.
"From 911 operators to public health experts to Streets and Sanitation employees, City of Chicago workers have been absolutely heroic during this crisis. We owe all of these brave workers a debt of gratitude that we may never pay back," Reiter said. "Without these workers, Chicago falls apart, period."
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