CHICAGO (CBS) — Facing a budget deficit of up to $1 billion, Mayor Lori Lightfoot is set to begin outlining her plan to dig out of the massive hole at her “state of the city” address Thursday night.
Experts said Lightfoot will have no choice but to use a mix of spending cuts and new taxes and fees, possibly even a property tax hike.READ MORE: Chicago Weather: Winter Weather Advisory Issued For Illinois, Winter Storm Watch For Parts Of Indiana
As CBS 2’s Jim Williams reported, it was 101 days ago, to be precise, when Lightfoot became Chicago’s mayor and described the city’s bleak budget hole.
She warned in her inaugural address of “an outsized structural deficit, a persistent and growing pension debt and other costs that threatens our financial stability.”
Lighftoot inherited a budget deficit reported to be between $700 million and $1 billion. Now she has to figure out how to raise enough revenue and make enough cuts to balance the budget.
“It’s a doable lift, it’s just not going to be politically easy. She’s addressing it in her first year in office, her first 100 days. So you’ve got to give her credit for that,” said Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability.
“You’ve got to deal with the structure for the repayment of the debt to the pension systems,” Martire said. “Last year, the city had to pay its pensions $1.3 billion. Only 25% of that was the actual cost of funding the pensions. The rest was paying back debt.”
Martire recommended refinancing some of the city’s existing debt service to get a lower interest rate, just like refinancing a mortgage.
He also said the mayor could work with state lawmakers to junk the city’s back-loaded payment plan.
University of Illinois at Chicago professor Dick Simpson, a former alderman, said the city needs some help from federal and state lawmakers, but he said they can’t solve the city’s problems for Lightfoot.
“We need to have a better redistribution of the money from Washington, help with the pension crisis from Springfield, and then we have to pay for the rest ourselves. We can’t depend on them to get us out of it, but they could certainly help more than they’re doing,” he said.
Simpson, who endorsed Lighftoot for mayor, said it’s always best for mayors to make hard decisions early on in their term.READ MORE: Bradley Police Officer Tyler Bailey Shot In The Line Of Duty Moved From ICU To Standard Care According To Statement From Family
At least half of the deficit can be made up with spending cuts, but the rest will have to be made up with new taxes and fees.
The mayor could turn to the city’s biggest revenue source for help, by raising property taxes, but Martire called that “the least favorite tax of every human being alive.”
Former Mayor Rahm Emanuel already pushed through a massive property tax hike in 2015, so dipping into that well again risks infuriating taxpayers.
Lightfoot has said she can’t rule out another property tax increase, but she’d rather find another way to fix the budget.
“Going to property taxes is something that I want to try to avoid, but I can’t in good conscience at this point take that off the table,” she told CBS 2’s Irika Sargent earlier this week.
On Inauguration Day, Mayor Lightfoot also vowed to make fighting violent crime a priority.
“There is no higher calling that restoring safety and peace in our neighborhoods,” Lightfoot said in her inaugural speech.
But as she also told Sargent that does not mean hiring more officers, but effectively using the 13,000 officers on the job now.
“Making sure we’ve got the right resources at the neighborhood level so district commanders have the resources they need to be successful in fighting crime” is the plan, Lightfoot said.
With a good financial plan in place, how long could all this take?
“Three to four years. There should be a plan to eliminate the structural deficit,” Martire said.MORE NEWS: Cook County Reopens Third Vaccination Site In A Week In Effort To Get More Residents Vaccinated
The mayor will present her “state of the city” address at 6 p.m. Thursday at the Harold Washington Library Center.