The Big Budget Bamboozle | Essay | Chicago Reader

The Big Budget Bamboozle 

With an election coming up, the mayor takes his magic show on the road.

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On August 23 at 7 PM, Mayor Daley marched into the gymnasium of Falconer Elementary School, took a seat at the center of a long table, and officially brought this year's budget hearings to the northwest side.

The forum at Falconer was billed as Daley's opportunity to hear what average taxpayers have to say about the state of the city. Afterward, Daley and his chief lieutenants would presumably retreat to their City Hall drawing boards to craft a final budget tailored to the mood of the people.

Guess again. As many aldermen will privately tell you, the hearing at Falconer (like two other meetings held on the west and south sides) was a dog and pony show. For all intents and purposes the $5.4 billion budget, scheduled for release in October, is set in stone but for some last-minute tweaks as the mayor decides which fees and tax hikes will yield the least amount of political resistance.

Still, as shows go it's an impressive one. To the mayor's right sat police superintendent Phil Cline, to his left budget director Paul Volpe. Stretched along the table, like the disciples at the Last Supper, were Daley's cabinet members--45 department heads, plus assorted representatives from the library, schools, parks, and CTA. Among the big shots were CTA president Frank Kruesi, library commissioner Mary Dempsey, fire department commissioner Raymond Orozco, parks superintendent Timothy Mitchell, and planning commissioner Lori Healey.

To start Daley offered a recitation of his administration's accomplishments--schools built, streets paved, garbage collected, cops put on the street, etc--and a promise to keep taxes low. "Chicago finances are in solid shape, and the city continues to find new ways to save money," he said. "By holding down expenses, the city has been able to keep the increase in city property taxes well below the rate of inflation. . . . We've handled our finances in a very conservative way, always looking to manage government better so we free up funds to reinvest in our people and neighborhoods."

That sounds nice, but it's not exactly accurate. First of all, it's hardly the case that taxes have been held near the rate of inflation (now at about 2.4 percent), as home owners can see simply by looking at their property tax bills. In 2001, for instance, the portion of my property taxes that went to the city was $634. This year it was $1,172, an 85 percent increase.

Nor have city finances been handled conservatively. Quite the contrary, over the last three years the mayor has quietly diverted almost $1 billion in property taxes into the funds of more than 140 tax increment financing districts. It's an audacious program that allows the city to divert tax revenue into money pots that are largely unmonitored and undocumented.

The mayor isn't really searching for new ways to save the city money, either. Instead his budget crunchers are constantly devising new schemes to put off addressing the budget deficit. This time around the city's planning to make business licensees pay for two-year licenses in order to bring about $10 million more into the city coffers. Of course, that means come next year the city will have to find a way to make up for the fees paid in advance.

Still, this year's budget statement and presentation were no more dishonest than usual. As many aldermen will tell you, only suckers take the budget literally. It's based on projections of future revenue balanced against expected future expenditures. At the start of a new budget season, Volpe and his aides figure out how much last year's revenue projections were off. The difference between projected and actual city spending--the "shortfall"--must be closed by layoffs, service cuts, or new fees, fines, and/or taxes in the coming budget.

It's hardly an exact science. The city doesn't know precisely how much it will raise from, say, business licenses or cigarette taxes or any of its other revenue sources. Presumably the higher the tax, the more money it will rake in. But if people stop shopping in Chicago or staying in its hotels because of rising fees and taxes, the increase will be offset. Based as it is on guesswork, the budget can be adjusted to meet the mayor's political needs.

The preliminary budget that Daley introduced last week is true to form for an election year. It's crafted in order to defuse tax-and-spending issues in the coming campaign, which means it makes optimistic projections about future revenue growth. "You don't want to run for reelection on the platform of 'I'm cutting your services and raising your taxes,'" points out a northwest-side alderman who doesn't want to be named.

Generally mayors, like governors and presidents, hold off on making bad projections until after an election. Last year's budget was gloomier, calculating a deficit of about $94 million. In 2004, Daley said, the budget shortfall was about $108 million, which forced the city to raise the sales tax and the hotel-motel tax as well as taxes on liquor, cigarettes, and tickets for concerts and sporting events.

This year the mayor has better news. According to Daley, the city faces a $64.5 million shortfall--the lowest in five years. That sounds like a lot of money, but Daley says it can be eliminated by some as-yet-undetermined hikes in fees and fines, on top of the doubled business license fee. "Day by day, we're on top of local and national trends that affect our revenues," Daley said. "And as we look to the future, we are confident we can continue to find new and better ways to manage government. While we can never rule anything out, raising any fee or tax remains the last resort." Translation: some fee and tax hikes are coming, but they shouldn't be too dire.

Daley closed his comments at Falconer with a sop to the beleaguered residential property taxpayer and a pitch for the people to lobby their state legislators to pass the so-called 7 percent cap. That's the bill that attempts to limit the amount of property taxes home owners pay by restricting increases in assessments to no more than 7 percent a year. What Daley didn't say is that tax reform legislation died in the house last spring, in part because he did little to spur its passage. He was conveniently out of the country when it came up for a vote, and many legislators and activists tell me he wasn't a factor in the debate.

Having finished his remarks, Daley gave the floor to the people, and one by one they stepped forward to speak their piece. There's a set routine for these hearings. People who want to speak have to sign up beforehand. Once filled out, speakers' cards are collected by Volpe, who directs people to the microphone at the center of the room when it's their turn. There they stand, directly in front of Daley. When blasted he frowns, when praised he smiles. Occasionally he asks a question or cracks a joke. The department heads say nothing.

And so it went. The mayor and his aides sat for more than three hours, stifling yawns, drinking water from plastic bottles, and trying their hardest to look interested in the endless accounts of potholes, speed bumps, uneven garbage collection, gangs in the parks, and problems with community policing. When residents are done speaking they're led into the hallway, where various aides and factotums take names and phone numbers and promise to do what they can.

"It's not a bad thing," says the northwest-side alderman. "The people get their chance to tell the mayor what they think to his face. It gives them a forum to unload or kiss his ass. But it has nothing to do with the budget."

Art accompanying story in printed newspaper (not available in this archive): photos/Yvette Marie Dostatni.

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