Lightfoot’s election-year budget aims to boost spending on police and progressive measures without raising property taxes
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Mayor Lori Lightfoot’s 2023 budget includes an increase in funding for the Chicago Police Department, boosted spending for abortion services and no property tax hike — all moves aimed at avoiding negative attention and addressing voter concerns leading into next year’s election.
The mayor cast her $16.4 billion spending plan — the fourth and final one she will present City Council before the February elections — as a “stability budget” aimed at reducing debt and shoring up historically underfunded pensions. It also boosts already high spending on police at a time when Chicago residents are concerned about violent crime.
“Over the last three-and-a-half years, our city, our government and our people have faced unprecedented challenges. Our entire way of life has changed and we are still finding our way to our new normal,” Lightfoot said. “As we continue to put the pandemic in the rearview mirror, our city is as strong and resilient as ever before and our future is very bright.”
Lightfoot’s budget is aimed toward ensuring a smooth passage and as little political turmoil as possible. To that end, Lightfoot abandoned a $42.7 million property tax hike tied to inflation she promised to pursue earlier this summer. The decision to drop the tax hike follows political convention that urges politicians to avoid higher taxes during election years and clears the way for a much easier budget process, though Lightfoot may still face pressure from progressive aldermen and others who want to appear independent of the mayor as they head into the 2023 elections.
Under Lightfoot’s spending plan, the city would provide $3.1 million for reproductive health care, an additional $10 million for homelessness and related services, and $13.5 million for public safety.
The city’s police budget would rise to $1.94 billion from $1.88 billion this year.
Lightfoot also touted what she said is better financial planning as the city increased its annual pension contributions by $1 billion over the past three years and increased its funding ratios. Chicago also reduced its total outstanding debt by $377 million, she said, through more active cash flow management.
One of the biggest “new investments” Lightfoot outlined in her speech is a new pension policy, which the mayor described as “prepaying future pension obligations.” She proposes spending $242 million in additional contributions to all four of the city’s pension funds, ending the practice of “essentially making the minimum monthly payment on our pension credit card,” she said in prepared remarks.
The payment “will prevent the pension funds from having to sell assets in this very difficult market,” she said in her remarks. Assuming current market performance continues, the payment would shave $2 billion off of future pension contributions. Overall, pension payments will cost $2.7 billion in the 2023 budget, up from $2.3 billion last year.
This is the first year the city will begin using casino revenues to supplement pension payments: The city’s chosen casino operator, Bally’s, has given the city an upfront $40 million payment that will go toward pension contributions as it works to open a temporary and permanent casino. Otherwise, pensions are largely paid through property tax revenues. In 2023, $1.4 billion in property tax revenues will go toward pensions.
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In 2021, Lightfoot pushed the City Council to agree to link annual property tax increases to the consumer price index, arguing that it would spare residents the Chicago political yo-yo of mayors jacking up taxes right after getting elected and then refusing to raise them at all when the next election looms and they don’t want to anger voters.
The inflation-linked property tax increase for the 2023 budget was set to be about $85.5 million as inflation jumped well above the 5% ceiling on Lightfoot’s plan tying taxes to the annual increase in the Consumer Price Index. But Lightfoot in August announced she would lower that to 2.5% with Chicagoans struggling to make ends meet.
Lightfoot’s administration last week said revenue for 2022 will come in $134 million above what was projected, “due to improving revenue projections and expected cost savings,” giving the mayor cover to drop her property tax hike.
Amusement taxes are coming in stronger than expected as concerts and other live events move toward pre-pandemic levels. Transaction taxes for property sales are also higher than anticipated, according to the city. So is the amount of money coming in from the state for personal income taxes and corporate income taxes in lieu of property tax.
Initial projections by city officials estimated the 2023 gap would be $867 million. In May, however, Lightfoot budget director Susie Park said finance officials had cut that number by more than $500 million. The city used various funds, including federal COVID-19 relief dollars, “structural solutions” and increased revenues to narrow the gap to about $306 million, Park said.
The sunny year-end numbers for 2021 were finalized in the city’s annual comprehensive financial report released in late July. The city ended 2021 with a total fund balance of $679.1 million, more than double what it was the year before. Expenses were $107.2 million lower than expected, thanks to COVID grants that could be transferred and “overall operational efficiencies,” the report said.
This year’s budget calls for the largest TIF surplus in the past 10 budgets: $395 million. Of that, the city’s corporate fund will receive $98.3 million, while $218.4 million will go to Chicago Public Schools.
The mayor declared a $304 million TIF surplus in her 2021 budget as well.
Last year, Lightfoot announced the city’s shortfall would be $733 million, dubbing her proposed spending plan for 2022 as the city’s COVID-19 “recovery budget.” That shortfall represented 5.7% of the previous year’s total budget. Throughout last year’s forecast speech, Lightfoot highlighted a more promising business environment and the beginning of a bounce-back in key city revenues.
Lightfoot closed that gap — and part of the previous year’s gap — with a portion of the $1.9 billion in COVID-19 federal relief money Chicago received, a one-time source of revenue.
The $3.1 million Lightfoot pledged for “reproductive and sexual health access and education” includes abortion care access and builds on the $500,000 she pledged earlier this year when the U.S. Supreme Court overturned Roe v. Wade, ending constitutional protections for abortion.
“Chicago stands as a safe haven for those seeking care across the county. And our status requires resources,” Lightfoot said in her budget remarks. “This investment is the result of consultations with reproductive health providers across the City and the increased needs that they are facing on a daily basis.”
On policing, Lightfoot’s budget includes more than $100 million “for additional public safety investments,” according to her remarks, including the replacement of police vehicles and helicopters, “new technologies for police officers” and $36 million to fulfill obligations of the federal consent decree.
The Chicago Police Department has two helicopters that “are currently operational,” according to its website, and are designed to help ground units.
The department’s head count is not slated to increase much in Lightfoot’s proposal. This year’s budget allowed for 14,102 full-time positions; the recommendation for next year is 14,132.
Police Department spending has been a key sticking point in previous budgets, with some of Chicago’s most progressive aldermen pushing for the city to steer more dollars toward violence prevention and non-police response to crises.
Lightfoot faced criticism from some conservative aldermen in 2020 after she made small cuts to the Police Department’s budget.
Advocates to increase funding for those experiencing homelessness rallied and testified ahead of Lightfoot’s budget address, describing the estimated 65,000 Chicagoans experiencing homelessness as equal to the city’s “51st Ward.”
Led by the Chicago Coalition for the Homeless, advocates are pressing council to pass the so-called Bring Chicago Home proposal to provide housing and wraparound services to an estimated 12,000 people over the next 10 years. The group is hoping to fund services through an increase in a tax on real estate sales, something the mayor has supported in the past, but has not pursued in recent years.
Lightfoot’s 2023 budget proposal includes “over $200 million in investments for homeless prevention,” according to her remarks, to fund increased shelter capacity and rapid rehousing.
The budget has provoked some of Lightfoot’s most contentious fights with aldermen. Lightfoot’s first spending plan passed the City Council 39-11, with much of the opposition coming from progressive aldermen who argued it doesn’t go far enough toward addressing the mayor’s campaign promises on issues including the reopening of mental health clinics.
Lightfoot responded by launching a website that shamed Chicago aldermen who voted against her first budget, which she said was a civic tool for the public despite criticism that it was petty and bullying.
In 2020, Lightfoot struggled to generate support for her budget, which was opposed by some aldermen because it made modest cuts to the police budget and by others who objected to a $94 million property tax hike. The mayor threatened not to help aldermen with projects in their wards if they voted against the budget, telling them, “Don’t come to me for s---” if they don’t support her budget.
The mayor had a far easier time getting last year’s budget through council in large part because it was buoyed by an influx of $1.9 billion in federal COVID-19 relief funds. That allowed her to spend significantly on anti-violence programs, affordable housing and mental health initiatives and other community projects lots of aldermen like.
The city’s gross property tax levy has grown an average of $78 million per year since Lightfoot’s first budget, from $1.53 billion in her 2020 budget to $1.71 billion this year. The city has historically opted to let the levy rise to capture new properties that are built and as tax increment financing, or TIF, districts expire. Over the length of former Mayor Rahm Emanuel’s time in office, the levy rose by an average of $80 million. That includes the massive multiyear property tax hike he pushed through in 2015.
This year’s budget is unlikely to provoke as drawn out a battle as the 2020 spending plan. Budget committee chair Ald. Pat Dowell, 3rd, told reporters after the mayor’s speech that Lightfoot has a “fairly easy budget” to sell to City Council, citing the removal of the property tax increase as well as investments in homelessness and public safety.
Dowell also said she approved of the mayor’s plan to pay $242 million extra toward pension obligations — despite possible “tension” from some aldermen who may want to use it for social services.
“This advanced pension payment is a novel idea and makes sense,” Dowell said. “You should always try, when you have your own credit cards, to pay down a little quicker or put down more than the minimum.”
Lightfoot’s budget also garnered a nod from Laurence Msall, president of the Civic Federation, who said the lack of levy hikes and extra investment in police were “very exciting.” He did warn that some of programs funded by federal American Rescue Plan Act dollars will have to be cut if no alternative revenue streams are identified, but overall, the city’s recovery exceeded expectations and allowed for the proposed “wise investment” of making additional pension payments.
“A lot of our major concerns seem to be addressed very positively in this budget,” Msall said. “The economy has come back stronger than anyone would have predicted. … The trend is stronger revenue growth than even the expenditure growth of the city.”
Frequent Lightfoot critic and 2023 mayoral candidate Ald. Raymond Lopez, 15th, brushed off the investments, saying that none of the city’s recent increases in so-called anti-violence programming have successfully curbed crime. Chicago saw a historic spike in violence following the onset of the COVID-19 pandemic, but the first half of 2022 saw a modest drop in shootings and homicides.
“This is $16 billion in fiction that we heard today,” Lopez said. “It’s meant to be inspiring on the cusp of her hopeful reelection, but there are many things in this budget that are just wrong. And it’s a continuation of bloated smoke-and-mirrors budgeting that we’ve seen over the last two-and-a-half years.”
Another mayoral hopeful, 4th Ward Ald. Sophia King, had a more tempered outlook and praised the proposed increased pension commitment as well as the plans to establish an environmental justice office. King did not say one way or the other where she landed on the overall budget but said “the devil is always in the details.”
Ald. Jeanette Taylor, 20th, said services for the homeless are a top priority in this budget, and said the mayor should live up to her 2019 campaign promise to increase the real estate transfer tax to fund services for the homeless.
“Just do it. We got a big homeless problem, if nothing else. I don’t care about trees, I ain’t worried about public safety if I ain’t got a roof over my head. That’s where I am,” Taylor told the Tribune.
After the speech, Lightfoot addressed the Tribune’s editorial board, where she was asked if the one-year pause on inflation-adjusted property tax hikes was tied to smoothing her re-election bid.
“Is this just an election year gimmick? No. It’s not,” Lightfoot said. “It’s what I firmly believe that we have to do to make sure that we reverse decades of political decisions instead of fiscally prudent decisions.”
By contrast, Ald. Roderick Sawyer, 6th, who is also running for mayor, criticized Lightfoot for delaying the property tax increase, saying that the move was a political move aimed at avoiding a hard choice. Referring to the tax increase, Sawyer said “occasional, responsible, modest increases in property taxes is a fiscally responsible thing to do. And I don’t want to start backing off of things that we promised to do in order to create holidays that got us in this situation in the first place.”
