Mayor Lori Lightfoot’s 2022 spending plan is upon us, with a heap of federal COVID-19 recovery money and a property tax increase propping up what she proclaimed “the most progressive and forward-looking budget in our city’s history.”
While one alderman thinks Lightfoot “has the luck of the Irish on her side,” it remains to be seen whether her ambitious plan is sustainable, and if so, at what financial and political cost.
Faced with yawning pandemic-related holes in the city’s revenue, Lightfoot opted to use part of the $1.9 billion Chicago got from the feds to pay back a $465 million pandemic bank loan, while also increasing funding for programs favored by activists such as mental health services, affordable housing and anti-violence efforts.
Mayor Lori Lightfoot, shown Dec. 20, increased funding for programs such as mental health services, affordable housing and anti-violence efforts. (E. Jason Wambsgans / Chicago Tribune)
And she created a $31 million program set to start in 2022 to pay 5,000 low-income families $500 per month for a year.
The $16.7 billion overall budget includes a relatively modest $76.5 million property tax bump, making it an easy package for many aldermen to support. It passed the City Council by a comfortable 35-15 margin.
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But Ald. Walter Burnett Jr. voiced the concerns of many looking ahead to late 2022, when council members and the mayor will be months away from city elections and the federal spigot might not be pouring so freely.
“If we didn’t have money from the federal government, we would be in trouble right now,” Burnett said during an autumn hearing on the mayor’s budget proposal before the vote. “So we have to think about the future. Next year this time, I don’t want to be voting on no tax increases.”
In reality, a sizable tax hike is already built into the spending plan for 2023 — a City Hall election year in which Lightfoot is expected to seek a second term. The tax increase will kick in automatically, but whether that will automatically blunt any political fallout is less clear.
Ald. Walter Burnett Jr. talks with Mayor Lori Lightfoot during a Chicago City Council session in 2019. (Antonio Perez / Chicago Tribune)
The 2022 budget is the first for which an automatic annual tax hike kicked in, under a Lightfoot initiative that ties the increases to the rate of inflation.
For this year, the inflation-linked increase will be $22.9 million, thanks to a 1.4% change in the national urban consumer price index, which the Lightfoot administration opted to use to calculate the tax instead of the CPI for the Chicago area.
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Due to the recent big jump in inflation, however, the cost-of-living increase that automatically sets the property tax bump for 2023 is likely to be around 5%.
A change like that would hit property owners considerably harder than this year’s rise. But the council won’t need to publicly debate the politically dangerous specifics because the language tying the tax increase to the Consumer Price Index will already be part of the budget.
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Lightfoot will also benefit in 2022 from marijuana tax proceeds, Burnett pointed out, and she could start to see tax money coming before the end of the year from a temporary city casino while a winning bidder builds a permanent location.
Plus, the alderman predicted sales tax proceeds will increase as more of Chicago’s economy reopens.
Cresco Labs CEO Charlie Bachtell at the grand opening of the cannabis company's flagship Sunnyside recreational marijuana store, a block south of Wrigley Field in Chicago on Nov. 15. Taxes from cannabis have become an important source of city revenue. (E. Jason Wambsgans / Chicago Tribune)
“I think she has the luck of the Irish on her side right now” on revenue, Burnett said.
And the mayor better hope that luck holds, he added. Because if she tries to get aldermen to pass an additional property tax hike to close a budget deficit just before the 2023 election, “she won’t have the votes” to do it, he said.
The city also hopes to enter 2023 with about $150 million in federal COVID funds in hand. The Lightfoot administration set that aside as a bulwark against further restrictions and economic hardships due to a COVID-19 surge such as the city is currently experiencing.
With Chicago cases spiking to their highest levels in a year and the highly contagious omicron variant taking over, the mayor might not have the luxury of sitting on that federal money until 2023.
Civic Federation President Laurence Msall pointed to the obvious pandemic uncertainty while voicing cautious optimism, saying “there’s nothing that looks like a crisis” in the mayor’s budget plan.
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Lightfoot “made no guarantees” the increased funding for many social programs like the income pilot for low-income Chicago families would continue once the American Recovery Act money from the federal government dries up, Msall noted.
And the mayor took important steps to move toward actuarial funding of the deeply underwater public pensions, he said.
But with COVID-19 showing no signs of abating, and Lightfoot days before Christmas raising the possibility of another shutdown if omicron continues to spread unchecked, “the financial challenges would be real if the economy doesn’t bounce back,” Msall said.
The mayor would face a different set of political challenges if she stops paying for some of the more progressive programs.
Her easy 2022 budget win was bolstered by several left-leaning aldermen who saw their priorities reflected in the package, and recognized an opportunity to claim some credit for getting Lightfoot to adopt them.
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Progressive Ald. Carlos Ramirez-Rosa, 35th, said he’s pleased some of the federally backed projects activists pushed for have funding for up to three years, while others are infrastructure-type outlays for things such as affordable housing that won’t need to be renewed once the money’s gone.
Ald. Carlos Ramirez-Rosa, shown at a rally last summer, said he hopes to use the opportunity to look what programs are working and find ways to continue funding them once federal COVID-19 relief money runs out. (Jose M. Osorio / Chicago Tribune)
“Then we can look at what programs work, and try to build those that do into the city corporate fund so they can be funded going forward,” Ramirez-Rosa said.
“Other cities have done it this way, and I think for the mayor to get her budget passed, a good way to do that is to rely on progressive support to get it through the council. So I think progressives have a lot of leverage to make sure our values are reflected in the spending plan going forward.”
jebyrne@chicagotribune.com
Twitter @_johnbyrne
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