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Civic Federation Supports Proposed FY2017 Chicago Budget

Posted on October 31, 2016

(CHICAGO) – In a report released today, the Civic Federation announced its support for the City of Chicago’s proposed FY2017 budget of approximately $8.2 billion because it continues to work toward addressing the City’s unfunded pension liabilities and makes significant improvements over past financial practices. The full 97-page analysis is available here.

“This budget is relatively good news for the taxpayers of Chicago, because it continues the progress made by the Mayor and his team in recent years, without any additional increases in general taxes,” said Civic Federation President Laurence Msall. “The City has shown great progress in reducing the structural deficit, putting all four pension funds on a path back toward solvency and working toward eliminating risky financial practices.”

Despite setbacks due to recent court rulings, all four City funds now have proposed dedicated funding sources. As part of the FY2016 budget process, Mayor Emanuel and aldermen made the painful but necessary decision to increase property taxes by $544.2 million over four years to stabilize the Police and Fire funds. A 911 surcharge passed in 2014 will go to the Laborers’ fund and a new phased-in water and sewer tax will go to the Municipal Employee’s fund. However, reforms for the latter two funds must be passed by the Illinois General Assembly and signed into law by Governor Rauner. The Federation has concerns about the uncertainty surrounding any action from Springfield.

As mentioned in the full report, Mayor Emanuel has committed to ending the use of “scoop and toss” debt refinancing by 2019. The FY2017 budget also continues to incorporate large expenses such as judgments and settlements into its operating budget rather than borrowing for those expenses. Both measures are supported by the Federation, as are the City’s plan to implement a $.07 tax on paper and plastic shopping bags and proposed changes to loading-zone policies and parking meter charges.

Added Msall, “While Chicago is in much better financial shape than it was just five years ago, we are not out of the woods yet. There is still significant work to be done.”

Among the Civic Federation’s concerns are the future costs and sustainability of the significant increase in police staffing included in the FY2017 budget, the City’s continued structural deficit, the lack of detail about a long-term pension funding plan, the City’s relatively high debt burden and funding uncertainty due to the State budget impasse and the proposed lockbox constitutional amendment.

The Federation recommends that the City reevaluate its use of TIF funds, implement a long-term financial plan for City operations and its pension funds, reexamine the property tax rebate program, live-stream City Council committee meetings and hold more budget hearings for increased public participation.

Please click here to view the full analysis.