Organization finds lack of detail disappointing on extraordinary $1.7 billion debt refinancing
CHICAGO – The Civic Federation today released its analysis of the City of Chicago’s proposed $9.8 billion FY2021 budget. The Federation offers its qualified support for the proposal as a reasonable spending plan amid an unprecedented public health and financial emergency. The full report is available at civicfed.org/ChicagoFY2021.
With a limited number of options to address the once-in-a-century fiscal and economic catastrophe caused by the coronavirus pandemic, the City continues to prioritize management efficiencies and reforms and has generated creative ways to save taxpayers money in the short-term. However, an extraordinary $1.7 billion debt refinancing, in particular, has the potential to cost taxpayers more in the long-term, and the City has not made public enough information to independently verify their contention of net present value savings on the whole transaction.
“By and large, the Civic Federation supports the goals of Mayor Lightfoot and her team in preparing this budget, including relative restraint with property taxes, reduction in personnel expenses and working to increase public participation in the budgeting process,” said Federation President Laurence Msall. “Our support remains qualified because, disappointingly, the public has not been provided with nearly enough detail to independently evaluate the enormous proposed debt refinancing.”
For the benefit of the public, the Civic Federation recommends that the City publicly share its assumptions and planning scenarios in order to verify its contention that the proposed scoop and toss debt refinancing will not overburden future taxpayers. Members of the City Council are well positioned to request such data and should do so if additional detail has not been publicly presented before the budget vote.
As detailed in the report, the Civic Federation continues to support calls for the federal government to provide additional revenue assistance to all state and local governments. While the federal government is the only body with the capacity to make the necessary countercyclical investments needed to help these governments stabilize their finances, it remains unclear when or if additional assistance will materialize.
“We applaud City officials for working to complete this budget without relying on dubious federal support,” said Msall. “However, Chicago was much less prepared entering this crisis than many other governments. When we are able to fully open the economy again, the City must take meaningful steps to shore up its finances once-and-for-all so that it is not caught flat-footed in advance of future crises.”
Civic Federation recommendations for City officials include seeking budgetary savings through collective bargaining agreement provisions, developing a formal long-term financial plan, exploring pension consolidation and re-evaluating the use of TIF funds, among others.