November 8, 2017
(CHICAGO) – In a report released today, the Civic Federation announced its support for the City of Chicago’s proposed FY2018 budget of approximately $8.6 billion. The FY2018 budget proposal continues to work toward stabilizing the City’s finances, puts its four pension funds on a path toward solvency and works to incorporate short-term capital expenses into the operating budget rather than funding them through borrowing. The full analysis is available at here.
“This year’s budget proposal is the product of a lot of heavy lifting, painful but necessary decisions and important investments made by Mayor Emanuel and the Chicago City Council over the past several years” said Civic Federation President Laurence Msall. “However, the City will face many more tough decisions in the coming years to fully stabilize its financial situation.”
With the FY2018 budget recommendation, Mayor Emanuel continues to propose reforms and efficiencies aimed at improving city operations and reducing growing expenditures including consolidation of functions across departments, energy savings and efficiencies and better management of healthcare costs. The proposed budget also reduces the City’s reliance on the costly practice of paying for short-term capital expenses through long-term borrowing.
In addition to the aforementioned items, the Civic Federation supports the City of Chicago’s elimination of unsustainable and costly scoop and toss financing from the budget and its prohibition in the City’s Debt Management Policy. However, the analysis notes that elimination of this practice one year ahead of the City’s self-imposed schedule was accomplished in part through issuance of a large scoop and toss at a high cost to taxpayers early in 2017. Still, reducing the City’s borrowing for operations is a positive development.
The Federation is concerned about a projected $630 million increase that will be required for Chicago’s pension funds once their statutorily-established five-year funding ramps expire and they are funded on an actuarial basis beginning in 2020 and 2022.
“Maintaining the City’s aggressive pension schedules beyond 2020 will likely require significant cuts or significant increases in property taxes or other fees,” said Msall.
The Federation has further concerns about the sustainability of large increases in police staffing, lack of full cost data for programs in the budget and $225 million in proceeds from the $1.2 billion January 2017 debt issuance set aside for legal settlements.
Among other recommendations, the Civic Federation urges the City to insist on sustainable collective bargaining provisions, re-evaluate the use of TIF funds, implement long-term financial plans for City operations and pensions and increase the accessibility, transparency and accountability of various City Hall proceedings.