Sobering Reality: Sports Betting, Legalized Pot Won't Eliminate Chicago Budget Deficit

CHICAGO — Chicago Mayor Lori Lightfoot, who swept into office five months ago on a promise of wholesale reform, presented a sobering reality Thursday — the city faces a massive budget shortfall and major tax increases may be necessary.

Lightfoot said the nation’s third largest city will have an $838 million budget deficit for the fiscal year that begins Jan. 1, adding that her predecessor, Rahm Emanuel, did not leave a credible plan to deal with the mess.

“And if it means that I sacrifice myself politically, so be it in pursuit of the right thing,” she said in her first State of the City address.

Lightfoot, the city’s first black female and lesbian mayor, didn’t say exactly how the deficit will be filled and said she wants to avoid property tax increases in a budget plan she’ll unveil in October. The deficit has ballooned in part because of rising pension costs for city workers and interest on debt.

A former head of the board that oversees Chicago police, Lightfoot came to prominence as tension between police and residents exploded in protests following the 2014 fatal shooting of 17-year-old Laquan McDonald by a white police officer. The officer was sentenced earlier this year to fewer than seven years in prison for second-degree murder.

Never before elected to public office, Lightfoot defeated the leader of the Democratic Party in Cook County in April with a promise to end political corruption and be a voice for low-income and people of color.

But the city’s dire financial state could endanger her efforts to revitalize underprivileged neighborhoods where jobs are scarce and violence is persistent.

Lightfoot said she has begun efforts to deal with the deficit by changing the way the city conducts its business. She said she has identified savings and efficiencies including the elimination of $1.4 billion in short term borrowing and unauthorized overtime and absenteeism by city employees. She also noted the city’s workers compensation program has been taken out of the hands of an alderman facing federal corruption charges and is now under professional management.

She also imposed a city hiring freeze last week across all departments, including police.

Lightfoot said that her two guiding principles in trying to resolve the financial mess would be to avoid raising revenue on the backs of those least able to pay and to do nothing that would drive businesses out of Chicago.

Instead, she said the city should get increased revenue when Illinois legalizes recreational marijuana next year and from a Chicago gambling casino approved by the Illinois Legislature. But she noted a study has shown a casino wouldn’t be viable in the city because of high taxes imposed by the state, adding if the problem isn’t solved “we will be forced to make painful choices on finding other revenue sources.”

“As your mayor, I cannot in good faith promise you that I will take any option off the table to tackle this crisis, whether it’s through budget reductions or by raising revenue,” she said.

Lightfoot also faces major problems with persistent street violence and the possibility of a strike by the powerful teacher’s union.

While the number of homicides has fallen 21 percent in the first six months of the year and shooting incidents fell below 1,000 for the first time in four years during the period, violence remains a major problem in some of the poorest neighborhoods.

School is about to start next week and teachers are without a contract. The Chicago Teachers Union has rejected a 16 percent raise over five years offered by the city and recommended by an independent fact finder and the union has laid the groundwork for a strike.

Since taking office, the former federal prosecutor has concentrated on cleaning up corruption at City Hall. She has signed an executive order aimed at limiting aldermen’s power and passed an ethics reform package that includes expanded oversight powers, stricter rules on lobbying and heftier fines for ethics violations.

She has also started overhauling the city’s fees and fines system that she says hurt many Chicagoans and has created the Office of Racial Justice and Equity.

A solution to the city’s financial problems will require sacrifices from everyone, said Laurence Msall, president of the Civic Federation.

“Organized labor is going to have to contribute, city taxpayers are going to have to contribute, businesses are contributing and will need to continue to contribute.”