Mayor Lori Lightfoot on Wednesday laid out a $733 million budget shortfall, less than last year’s but still a deficit that presents a challenge as the city works to recover from the pandemic’s financial toll.

       But Lightfoot’s 2022 spending plan will likely not include a property tax increase, aside from a roughly $20 million hike tied to the consumer price index, and the city plans to fill its budget hole by refinancing outstanding debt and using one-time money from the federal American Rescue Plan.

       Lightfoot unveiled the shortfall during a budget speech at the Chicago Cultural Center, where she cast the city’s fiscal outlook in an optimistic tone, calling it the city’s “recovery budget,” a contrast with the 2021 spending plan she called her “pandemic budget.”

       “During budget season last year, we were able to see a pinprick of light at the end of the tunnel,” Lightfoot said. “Now, though we haven’t fully left that tunnel, we can see and feel the warmth of the light on the other end of it.”

       Mayor Lori Lightfoot speaks during a City Council meeting at City Hall in Chicago on July 21, 2021. (Jose M. Osorio / Chicago Tribune)

       Lightfoot highlighted dozens of companies opening up shop in Chicago, as well as rebounding hotel and convention business, as good signs for the city’s future.

       [Most read] Lightfoot praises slain Chicago police Officer Ella French, criticizes media reporting on her relationship with city cops ？

       “Businesses are validating why a bet on Chicago is the right bet,” Lightfoot said.

       Without a significant property tax hike, Lightfoot may face an easier time passing her budget this year than last. But the mayor will likely face increased pressure from aldermen and activists who want her to spend all of the nearly $2 billion the city is receiving from President Joe Biden’s American Rescue Plan package to fill the hole and fund favored programs.

       City officials plan to use $782 million from the rescue plan as revenue replacement, but Lightfoot made clear she doesn’t intend to use all those funds on the budget.

       “To spend every penny of these ARP funds without any regard for the long-term fiscal consequences would be utterly irresponsible, ineffective, and leave us with nothing to support ourselves, God forbid another crisis strikes our city,” Lightfoot said.

       The mayor also vowed to increase the Chicago Police Department’s budget, which has been a frequent target for critics. Lightfoot said there’s “no question” that the police budget will increase.

       [Most read] CDC urges pregnant women to get COVID-19 vaccine as delta surges ？

       “We have to,” she said, as Chicago deals with high levels of violent crime.

       As the city faces the budget shortfall, it will look to deal with increasing pension costs. For the first time in the city’s history, all four city pension funds will be paid on an actuarially determined basis, Lightfoot noted.

       First-term democratic socialist Ald. Rossana Rodriguez Sanchez, 33rd, criticized the plan to boost police funding.

       “This has been the story for decades and decades. This is a big part of what has us in this place,” Rodriguez Sanchez said. “If all you fund is punishment and violence, that’s what you will continue to create.”

       Next year’s shortfall is smaller than previous budget deficits under Lightfoot.

       [Most read] CPS parents want remote learning option, aren’t ready to send kids back for in-person school with delta variant surging ？

       After announcing in a televised August 2019 speech that Mayor Rahm Emanuel had saddled her with an $838 million deficit for 2020, Lightfoot said that she dealt with it by making structural changes such as cutting government costs through so-called zero-based budgeting and eliminating vacant positions.

       Sign up for The Spin to get the top stories in politics delivered to your inbox weekday afternoons.

       The mayor also turned to several one-time fixes to close the gap rather than calling for large-scale revenue increases such as property tax hikes that would have hit broad swaths of Chicagoans and been politically difficult for the mayor.

       Many aldermen were happy there was no big property tax jump for 2020, and passed her package 39-11. But some of them wondered privately why she didn’t leverage her popularity coming off her election win to ram through a hike then rather than waiting until later in her term.

       Last year, Lightfoot scored a relatively narrow but important victory as the City Council adopted her $12.8 billion budget for 2021 that relies on a property tax hike and controversial debt refinancing to help close a $1.2 billion deficit in what she called her “pandemic budget.”

       [Most read] Severe thunderstorm warnings over for now but more could come tonight. More than 100,000 still without power, ComEd says. ？

       Much of that spending gap was the result of COVID-19 shuttering the economy.

       Aldermen voted 28-22 in support of Lightfoot’s $94 million property tax increase. The mayor’s full budget also passed 29-21.

       That budget also included a provision to raise property taxes annually by an amount tied to the consumer price index. It raised gas taxes by 3 cents and relied on an increase in fines and fees collection, including a plan to boost revenue by ticketing residents who are caught going 6 mph over the limit by speed cameras.

       In addition, Lightfoot asked to refinance $501 million in city debt for the 2021 budget, which would provide a jolt of new revenue next year but likely cost taxpayers more down the road. Similar borrowing tactics under Mayors Richard M. Daley and Rahm Emanuel drew deep criticism.

       Behind the scenes, Lightfoot worked hard to generate support for her budget. In a meeting with the Black Caucus, Lightfoot told aldermen that those who don’t support her budget shouldn’t expect their wards to be prioritized and added, “Don’t come to me for s--- for the next three years” if they didn’t support her spending plan.

       gpratt@chicagotribune.com

       Mayor Lori Lightfoot announces $733 million budget shortfall amid struggle to recover from pandemic, says city is ‘fiscally bouncing back from this crisis’

       51m

       To combat pandemic learning loss, new Project Rainbow brings free early childhood programs to homes, phones in Cook County

       3h

       Breaking News Lightfoot praises slain Chicago police Officer Ella French, criticizes media reporting on her relationship with city cops

       34m

       Coronavirus CDC urges pregnant women to get COVID-19 vaccine as delta surges

       2h

       Breaking News CPS parents want remote learning option, aren’t ready to send kids back for in-person school with delta variant surging

       2h