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Preckwinkle budget speech: Keep pop tax or make deep spending cuts

Thursday, October 05, 2017
Chicago Tribune
by Hal Dardick

Cook County Board President Toni Preckwinkle on Thursday plans to unveil a 2018 spending plan with a clear message: Keep the controversial soda tax or slash spending by 11 percent on criminal justice and public health.

The budget proposal she’ll present to sharply divided commissioners amid a loud and sustained backlash counts on the county collecting $200 million next year from the penny-an-ounce tax, top financial aides told the Chicago Tribune on Wednesday.

Preckwinkle will not provide an alternate spending plan in the event the pop tax is repealed next week, county officials said. Instead, she intends to leave the decision on what gets cut and how deeply to commissioners and separately elected countywide officials, even as she continues to warn in public that such spending reductions would mean laying off doctors and nurses, prosecutors, public defenders, sheriff’s officers and jail guards.

The $5.4 billion budget proposal represents “what I see as the best course toward a healthier, safer and more efficient Cook County,” Preckwinkle said in a statement. “This budget reflects my vision for a fiscally and morally responsible government, one that provides quality health care to all, regardless of need, and promotes equity through a fairer criminal justice system and economic development initiatives throughout the region.”

Preckwinkle moved up her annual budget speech by about a week from when it’s typically delivered, and the timing is no coincidence. The address comes just five days before commissioners are scheduled to vote on whether to get rid of the pop tax. The idea is to make them think twice before voting for repeal Tuesday.

“It’s a balanced budget as long as there’s a soda pop tax,” said Commissioner Larry Suffredin, an Evanston Democrat who backs the tax, after he and colleagues were briefed separately on the spending plan. “She’s delivering this at a time when the pop tax is still the law. I think she’s hoping that will play a role in having people think before they vote.”

And so Preckwinkle’s address amounts to a public statement as commissioners and lobbyists engage in what Suffredin described as behind-the-scenes “hand-to-hand combat” over the repeal effort.

Asked Wednesday at an unrelated event what would happen if the pop tax money were not available, Preckwinkle turned to her frequent contention that the county would have to “make significant cuts in public health and public safety, because that’s where 87 percent of our money goes.”

The county’s vast public health system includes Stroger Hospital and several other facilities. The criminal justice system includes the courts, jail and sheriff’s office.

Saying that significant cuts in those areas would result from the repeal is a “sky is falling kind of scenario . . . that should not be,” said Commissioner Richard Boykin, a Democrat from Oak Park and outspoken opponent of the pop tax. “We must be willing to do the hard work of figuring out how do we right-size agencies, how do we adequately cut positions.”

“We’re moving, I think, along the track of how do we make the right kind of cuts in a collaborative manner, without devastating the mission of county government to provide for the most vulnerable, the poorest of the poor,” he added.

Ammar Rizki, the county’s acting chief financial officer, told commissioners late Friday that without the pop tax money, the county would have to reduce spending by 11 percent from 2017 levels.

To many commissioners, that seemed high because it amounts to only 5.8 percent of this year’s planned $3.5 billion day-to-day operating budget. But county officials said much of that spending relies on dedicated revenue streams that can only be spent on specific costs, like health care paid for with Medicaid funding through the Affordable Care Act. Excluding those costs and others that can’t be avoided, like pension and debt payments, leaves only about a $2 billion pot where cuts can be made, they said.

Preckwinkle’s proposed budget calls for spending about $4 billion on day-to-day operations, an increase of about $539 million from this year. All but $76 million of that increase is the result of higher anticipated costs at the Health and Hospitals System, which expects to enroll in its managed care system as many as 85,000 new patients from a struggling not-for-profit health system that’s leaving the Illinois Medicaid marketplace.

The spending increase also is driven by higher wage and benefit costs embedded in union agreements negotiated by the Preckwinkle administration and approved by the County Board. Those costs are rising even after the planned elimination of 254 vacant positions designed to save about $18 million. The county also faces higher debt payments put in motion before Preckwinkle took office and expects to pay more to settle lawsuits. In addition, Preckwinkle has decided to pay for new equipment like computers without borrowing.

Overall spending — including grant and special purpose programs funded with dedicated revenue streams, construction costs and equipment purchases — would increase to nearly $5.36 billion from $4.9 billion this year.

While the health system merger costs are expected to be covered with new Medicaid revenue, other rising costs would be covered with county taxes and fees, including sales tax revenue that’s expected to decline as more people shift to online shopping. A new state fee on collecting sales taxes is expected to reduce county revenue by about $15 million.

The difficult and risky budget situation represents a setback for Preckwinkle, who was hoping to deliver a good-news spending proposal this year ahead of next year’s elections. Preckwinkle plans to run for a third and final term, and the seats of all 17 commissioners also are on the ballot.

Instead, the pop tax that was approved 11 months ago — but didn’t go into effect until Aug. 2 after a lawsuit delay — is causing political paroxysms for the eight commissioners who voted for it, plus a newly appointed commissioner who initially said he backed the tax and is now undecided. It’s also a rallying cry for the eight commissioners who voted against it last November, when Preckwinkle got to break a rare tie vote.

Between the Can the Tax Coalition, funded by the American Beverage Association, and former New York Mayor Michael Bloomberg, a billionaire public health advocate, more than $13 million has been poured into TV and radio ads for and against the tax in the lead-up to the repeal vote. That spending doesn’t include the costs of mailers to potential voters and Can the Tax’s on-the-ground effort to sway public opinion.

Both sides are gearing up to possibly spend millions of dollars more on County Board campaigns next year, with Can the Tax targeting pop tax backers for defeat and a Bloomberg aide saying the media empire owner will spend “whatever it takes” to re-elect the commissioners who voted for it.

Pop tax opponents say Preckwinkle can find ways to cut $200 million in spending, and that county residents are tax-weary, particularly after commissioners increased the sales tax by 1 percentage point in 2015. The bulk of that money went to bolster the significantly underfunded county worker pension system, with most of the rest being used to stop shifting gas tax revenue away from road and bridge projects.

“We’re going to have start making tough decisions like our residents and taxpayers of the county have been making for the last decade and find out where we’re going to need to tighten our belt to balance our budget,” said Commissioner Timothy Schneider, a Bartlett Republican who is chairman of the Illinois Republican Party and co-sponsor of the repeal ordinance.

But Preckwinkle points to $35.5 million in proposed cuts in her 2018 budget, and notes that since 2011, she’s cut the county workforce by about 10 percent and overall debt by 11 percent. She’s also worked with other officials to cut the county jail population by about 25 percent and the population at the Juvenile Temporary detention Center by nearly 50 percent, even as she’s stopped borrowing to pay for equipment and legal settlements.

One commissioner standing by Preckwinkle is Stanley Moore, a Chicago Democrat who has been targeted in the Can the Tax repeal effort.

“I think that the revenue need is real,” said Moore, who added that the pop tax was better than an increase in the property tax, which already is very high in the south suburbs he represents. “I chose the lesser of two evils, and now I’m getting beat up for it.”

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