The Johnson Administration played chicken . . . and lost
Raising property taxes will be the least painful option
It was a simple game of political chicken and in this case the Johnson Administration lost. The mayor and his team crafted a budget that deliberately left a gaping $150 million hole. They acknowledged on several occasions they expected the State of Illinois would back-fill the hole and that would mean the City would have the estimated $300 million necessary to address the growing migrant crisis.
The move by Team Johnson was baffling as the state’s top two Democrats said a few times there was no major funding moving from Springfield to Chicago to assist with the asylum-seekers issue.
Welch understandably is protecting his members who are up for re-election next year. This is a time for them to avoid any sort of controversies when possible.
In a move that reeked of hubris and political naivete, coupled with a classic case of budget bungling which this administration has come to be known for, Johnson took the confounding position that the state indeed would come through. Pritzker countered in a news conference that the State of Illinois would continue to provide “wraparound” services, but the check the mayor was hoping for is a no-go.
The declaration leaves City Hall with an extremely limited selection of options-none of which are pleasant. Johnson, foolishly, is wedded to campaign promise of not raising property taxes. It sounds good on the campaign trail, but with the half-billion-dollar budget deficit Chicago is wallowing in, it is an idea that should have never been offered. It is understandable why he did it. A promise like that is rooted in a plan to be elected but with no idea how to govern.
Johnson also has repeatedly failed to go with the obvious choice of cost-cutting to raise the needed $150 million. His finance team knew when they finished the budget assignment there was a strong possibility that hole was going to remain; and he did not insist, nor did they provide an alternative strategy to get the money. A 5 percent cut to every department’s budget-including the mayor’s-would yield more than enough.
The shortsightedness is tough to believe
While the mayor stubbornly clings to his commitment not to raise property taxes, he is missing the reality that that move is the least damaging to Chicago’s future. The immediate fix for the hole the budget has is to take that amount from the City’s reserve fund-which stands at about $414 million. A withdrawal of $150 million cuts that by a third.
More importantly a reduced reserve fund causes potential investors of city bonds to demand higher interest payments. We all know in order to pay bondholders the money comes from taxes. That is a simple translation the administration seems to be overlooking- the more money paid out in interest to bondholders, the less money there is for providing city services. It just boils down to when taxpayers shovel out the money, but there is no way around it.
