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Editorial: Preckwinkle balances the county’s COVID budget. Next up, Lightfoot.
Monday, October 19, 2020 Chicago Tribune by EDITORIAL BOARD
As rivalries go, Chicago’s liveliest may be White Sox vs. Cubs. But if you’re a concerned taxpayer then don’t overlook the dueling budget announcements of Cook County President Toni Preckwinkle and Chicago Mayor Lori Lightfoot. Who’s got the smaller deficit, the bigger rainy day fund, the fewer tax increases, the better handle on COVID-19's catastrophic impact?
October is when city and county leaders present their next-year budget proposals. Cue the “Rocky” theme song (for nerds).
Last year, Preckwinkle unveiled a second consecutive annual spending plan with no general tax increases. That budget basically was in balance. We were impressed enough at the time to ask if she had any advice for the new mayor, who took office confronting a $1 billion shortfall. We want all Illinois government entities to manage their budgets responsibly and share best practices.
On Thursday, Preckwinkle spoke with us via Zoom about the county’s 2021 budget, and it’s another impressive spreadsheet from the Cook County’s chief executive and her staff. Even with the coronavirus wreaking economic havoc — and with some help from the federal government — Preckwinkle foresees a balanced budget, no increase in the property tax levy and just $2 million in increased fines and fees while making actuarily-required payments into the county’s pension fund to get it on track for 100% funding by 2047.
Preckwinkle says she’ll get there in part by trimming operations (eliminating 659 open positions and some nursing jobs) and dipping into the county’s $400 million reserve, or rainy day fund. Back in June, Preckwinkle warned that the county’s budget gap for its general and health funds could be $410 million. Closing that gap is excellent news, then, for taxpayers. And three cheers for government rainy day funds, wherever they exist (scandalously, the state of Illinois has practically nothing stashed away).
Now about the city ...
Lightfoot is scheduled to present her budget on Oct. 21. It will be a difficult political moment. The city has an estimated $800 million shortfall for 2020 and another $1.2 billion budget deficit for 2021 due in part to the catastrophic impact of the coronavirus shutdown. Lightfoot doesn’t want to raise property taxes or eliminate government jobs — she says the prospect keeps her awake at night — but it’s hard to see how she avoids tough medicine.
The Tribune has reported that City Hall is considering $200 million in job cuts through a combination of layoffs and furloughs. No one wants people to lose jobs, but the city must live within its means and cannot borrow money, including through risky pension obligation bonds, to compensate for lost tax revenue from the pandemic. Spending and borrowing is how Chicago (and Illinois) got into its mess. As we said in September, city services will need to be eliminated, trimmed or outsourced. It’s the only way.
Chicago does have a significant emergency fund of about $900 million. If Preckwinkle tapped hers, shouldn’t Lightfoot do the same? City Hall sounds reluctant so far because no one can predict when the COVID-19 crisis will end. “It’s basically the one thing we have to prevent against what happens if COVID lasts for an additional year,” Jennie Huang Bennett, Chicago’s chief financial officer, told the City Council Finance Committee. Those reserves also are crucial to the city for maintaining an investment-grade bond rating.
But if there’s a way to release some of that cash, the city should try. It’s the people’s money. Why reach deeper into their pockets when a stash exists for precisely this reason — an emergency?
Rainy day funds
Good accounting stewardship means keeping a rainy day fund that could sustain an organization, or a government, for three to four months. Illinois hasn’t had that in decades. At last check, its emergency fund had about $58,000 in it, enough to run the state for about 30 seconds; comparatively, the state of Indiana with a smaller overall budget keeps more than $2 billion on hand.
We asked Preckwinkle about the decision to take $76.8 million from its reserves. She didn’t gloat. There’s no gloating during a pandemic. COVID-19, she said, is “the epitome of the rainy day. Given that we worked hard over the decade to build up reserves, we used some of them for this rainy day. We continue to maintain a balance which we think will be looked upon favorably by the rating agencies.”
The city and county are in different situations. Preckwinkle, who has been in office since 2010, has had a decade to steadily reduce the county’s deficits and build up a reserve. Lightfoot has the steeper challenge. She inherited a budget hole and has been forced to confront major revenue losses because of a pandemic. The city has experienced civil unrest that spiked police overtime costs. And the ever-present squeeze of underfunded pensions is not relaxing any time soon. Chicago is reeling.
Preckwinkle impressed us with her budget proposal. Mayor, you’re up next.
Editorials reflect the opinion of the Chicago Tribune Editorial Board.
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The Tribune Editorial Board advocates for the equality of the individual, for personal responsibility, for a limited government role in the lives of the governed. The Tribune advocates for personal liberty, opportunity and enterprise, for free markets, free will and freedom of expression. Our editorials seek to help readers make sound decisions.