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When Alex Holt assumed her duties as Rahm Emanuel’s new budget director, she faced what she calls a “structural deficit”. That refers to a built-in, never-ending and rapidly escalating difference between the City’s revenue and expenditures. And this wasn’t simply an issue of an economic downturn pinching City operations. In fact, Chicago’s expenditures had exceeded its income since 2001 – eleven years ago. And as we all now know, between 2007 and 2011, the budget was balanced each year with the use of “one-time asset reserves”. That’s budget talk for selling off assets (think the parking meter deal) that bring in money only once. Then the asset’s gone.
So, as Holt explains on this week’s show, her budget office set about closing a $654 million gap in the corporate fund with a mix of new revenues and cuts. The new revenues (such as hikes in water fees, etc.) accounted for about $75 million, and the rest came from restructuring, cuts, elimination or curtailment of services and the like. (By the way, Alex Holt argues that, at 1/3 cent per gallon, Chicagoans were paying some of the lowest water rates anywhere. Now it’s 2/3 cent per gallon.)
But the big issue is pensions.
Employees have been paying in exactly what they were supposed to pay, she says, and so have the taxpayers. “But those amounts of money have not been sufficient to pay out the benefits that have been guaranteed to those employees.”
So that’s why there’s an impending $20 billion unfunded liability in the pension system. And it has to be addressed by reducing benefits or sending taxpayers a huge bill.
By law, the taxpayer contribution goes up to 1.2 billion in 2015. “Our taxpayers can’t support that. They pay 470 million dollars now. In 2015 they’re going to have to come up with an extra 700 million dollars, and that’s not something that’s sustainable,” Holt says.
“When you take things like compounding cost-of-living adjustments which have outstripped inflation by 30% over that past ten years…those pension benefits are being paid by a return from the fund – the fund has invested the money, you’re getting a return – you’re paying out more than that fund can even generate as a return.”
So Mayor Emanuel has proposed a ten-year moratorium on the compounding cost-of-living increase, and discussions are underway about delaying the retirement age and increasing employee contributions – all debates that are taking place at almost every local and state government.
Holt talks about garbage collection and the recent switch to a “grid” system. Chicago’s garbage collection, she argues, costs $100 a ton more than in comparable large cities with unionized labor forces. So it’s less about the cost of labor and more about operational efficiencies. Instead of fifty individual ward collection systems, collections will be made according to a grid overlaid across the city map. And sanitation workers will be cross-trained, so as seasonal requirements change, so will their tasks.
And as for the Infrastructure Trust – it’s simply another tool for financing reconstruction, she argues, and it has nothing to do with selling off assets.
It’s our Rahm Emanuel First Anniversary discussion today, although, truthfully, a proper evaluation of his first year should be withheld until Tuesday, so it can include a post-mortem on the NATO conference.
But we press on anyway, with a stellar panel. Tim Jones (Bloomberg News) is upbeat about Emanuel’s first year, expressing appreciation for the mayor’s fundraising prowess. “It’s a continuation of the campaign. I don’t think the campaign has stopped,” he says.
Kristen Mack has followed Rahm Emanuel from the very beginning, covering those frigid el-station appearances and the never-ending residency hearings. She says there were no poster boards displaying his checked-off accomplishments for the first anniversary, as there were at 30 and 60 days. This time, she says, he’s watching as reporters do their own analysis – but reminding them that he feel he’s “given Chicago its swagger back – its confidence back. “
The BGA’s Andy Shaw has a unique perspective, having covered the entire Richard M. Daley administration as a TV reporter. During Emanuel’s year, he’s been building the BGA as not only a watchdog organization but also a journalism shop. So in a sense he’s still reporting. He, too is largely upbeat about Emanuel, giving high marks for his energy and willingness to try new approaches. But he says the public isn’t buying all the hype. “I think there’s a lot of cynicism. People understand that no amount of energy and pizazz is going to solve these intractable problems.”
And there’s a point of agreement among all three guests. Emanuel’s first year was largely very lucky. Despite the rising murder rate, no huge scandals or unmanageable political issues arose. Even the weather was pleasant. But next year’s going to be tough, with a potential teachers’ strike, difficult police and fire negotiations, staggering pension burdens and all the rest.
So next year’s evaluation might paint a more realistic picture.
“For years and years and years, benefits were being increased but contributions were not.” That’s the simplest, easiest-to-understand summary of our current pension mess, as articulated by Jason Grotto, the Tribune reporter who researched and co-authored several recent stories on the pension messes in Illinois and Chicago.
This week we saw Mayor Emanuel in Springfield asking for legislation that would suspend for ten years the cost-of-living increases all City retirees currently receive. That has infuriated retirees, who say that they worked for perhaps thirty years as a sanitation worker, a police officer or firefighter, dutifully paying their fair share into the system and knowing they wouldn’t get Social Security. But Grotto says the workers also had a voice in the process. Union leadership had a seat at the table, he says, and they knew what was happening. But the labor leadership never pushed to get the pensions fully funded, he asserts. Now, there has to be shared, and fairly draconian, sacrifice.
We’re also joined by Tribune Editorial Board member Kristen McQueary, who addresses the news that the Laborers’ union representing, among others, Streets and San workers, has agreed to significant contractual changes such as lower starting pay and cross-training for multiple jobs. ”In the private sector we’re cross-trained, we’re asked to do lots of different duties, so going after some of these work rules that prohibited Streets and San from assigning people to different roles makes sense.”
There’s also discussion about “legislating while lobbying”, with some stark examples of suburban elected officials who supplement their income by lobbying other legislative bodies, and how it’s all perfectly legal in Illinois. In fact we’re one of the few states that allow legislators to lobby.
All that and a few thoughts on Pat Quinn 2.0, the governor who believes he was “put on earth” to solve the pension mess.
In an interview w/ Channel 7 this week, Mayor Daley casually mentions that he has re-thought the longer school day. Without a plan for increased instruction, he says he’s not so sure the longer hours are worth it. It seemed a bit like a swipe at Rahm Emanuel — maybe Daley’s first in such a public way. We suggest that it could be a rebuke, but it also could be Daley’s way of sending Rahm a message, that he believes public sentiment is moving away from the “full school day”, and he’s offering Emanuel cover.
The guests were polite, but seemed extremely under-whelmed with the concept. In fact, Sam Hudzik (Political Reporter/WBEZ-FM) and Mark Brown (Columnist/Chicago Sun-Times) don’t think Daley’s statement will amount to much of a setback for Emanuel at all. At this point, they say, it doesn’t seem to matter all that much what Daley says.
Also up for discussion: some of the more arcane aspects of lucrative pension deals … the appointment of U.S. Attorney Dan K. Webb to lead an independent review of the David Koschman case…. and the cautionary tale of state representative Derrick Smith.
Mayor Emanuel’s Infrastructure Trust passed the City Council on Tuesday with only 7 dissenting votes. And if you’re 25 today, you’ll be 126 when this complicated deal expires. As proposed by the mayor, and enthusiastically endorsed by alderpersons as philosophically different as Mell and Moore, this deal might rebuild crumbling infrastructure and transform physical Chicago. It might. But it might not. Details are so sparse, and oversight of the process is so sketchy, that nobody – including those enthusiastic aldermen – really knows what the Trust actually is. What it isn’t, Mayor Emanuel assures us, is another parking meter selloff.
Hal Dardick, City Hall reporter for the Tribune, and Dan Mihalopoulos, who recently joined the Sun-Times, offer their deep understanding of this story.
And Dan tells us about his recent story about the consortium of private interests that leased the Millennium Park and Grant Park garages for about half a billion dollars during the Daley years. Turns out one of the provisions of that deal forbade any private operator from opening a public garage pretty much anywhere east of State Street, so there wouldn’t be competition. But the Aqua Tower opened its new spaces a block away and a buck cheaper, so the consortium has sued the City for $200 million. As Hal points out, this is the downside of profit-oriented corporations taking over public assets. They want to make money, as you might guess.
Also on the show, a tip of the hat to Elizabeth Brackett for her informative Chicago Tonight interview with Jim Kirk, the just-installed Executive Editor of the Sun Times. It’s an optimistic, positive conversation that gives one confidence in the company’s future. It’s worth watching.
Well, were you driving at 36 mph any time today in Chicago? It’s official – Rahm Emanuel’s gonna be watching you, and he’s about ready to ding you $35 bucks for the privilege. In the name of protecting children, the City of Chicago is about to blanket much of the City with cameras that will mail you a ticket ($100 if you’re 11mph over), and most of the aldermen at yesterday’s Council meeting spoke emotionally about how much better our city will be when the cameras protect us.
Then there’s the Infrastructure Trust, which got deferred for a few days.
Charlie Meyerson, Chicago Bureau Chief at FM News 101.1, has some reasons for skepticism. “It’s this question the mayor just refuses to answer,” he says. “We’re gonna get the money, we’re gonna use it to retrofit Chicago buildings…but the mayor has portrayed this as a big idea…but then you ask him, what else? I asked him again yesterday… and he says ‘we’ll see how it goes’ “.
Maybe next week we’ll know more about this concept that would shift a large amount of infrastructure spending from the City Council to a new non-profit panel.
Cheryl Corley (NPR) talks about her recent experiences covering the Trayvon Martin and Tulsa serial killer cases. She says Chicago’s recent spike in violence and murder travels with her. “I talked to people there, and people asked me – where are you from, and I’d say Chicago – and they’re like -’well, what are you doing down here?’ “
The largest municipal election in the country is coming down to its final week, and voting begins next Thursday – right here in Chicago. You didn’t know? Well, it’s the 11th Local School Council election, in which thousands of seats are up for grabs on the councils that govern more than 400 Chicago Public schools. The problem is that this election, the first under our new Mayor and schools CEO, just doesn’t seem to be a priority for them. In fact, panelist Don Moore, who, along with his organization Designs for Change was one of the activists who fought for the LSCs back in 1989, tells us that “there have been a whole series of obstructions” by CPS of the effort to recruit LSC candidates.
Lorraine Forte, (Catalyst-Chicago) Editor and Thom Clark (Community Media Workshop Prez) add that a combination of a slow financial retreat by the philanthropic community and a complete blackout of coverage from the media (with the exception of a Sun-Times editorial and some gallant coverage by Center Square Journal), along with a lack of interest from the central office, has cast a pall of “benign neglect” over the whole process. And, adds Forte, “It’s always easier from the District’s perspective to go in and say OK, we’re gonna get a new principal and fire all the teachers, because that’s more easily controlled as opposed to’ OK, we’re gonna support this grassroots effort”
The Center Square Journal saga, by the way, is especially interesting. CSJ’s efforts to get from CPS a list of candidates running for LSCs in its area elicited a response that they’d have to FOIA the info from CPS. A FOIA to find out who the candidates are?
There’s plenty of discussion about the recent “compromise” on the length of the school day, and the uncanny similarity to Mayor Emanuel’s “compromise” on the fine for getting caught in one of his SpeedCams. Now it’ll only cost you $35.
Mayor Daley will be deposed in the Burge trial. We talk briefly about what the delay has cost in taxpayer dollars.
And a hand-wringing discussion about the recent changes at the Sun-Times. Everyone at the table proclaims admiration for the paper, and for the excellent record its reporting staff has earned over the years. But the attempts give the paper a more down-market appeal is baffling. (Shortly after we finished taping, we learned that editor Don Hayner has retired.)
And Thom was given almost fifteen seconds to plug chicagostories.org ,a very worthwhile CMW project. It’ll help the thousands of reporters coming to Chicago for the NATO summit to “discover the real Chicago”.
In Chicago, culture can be a very political thing. Mayor Emanuel is deeply involved with the city’s culture, showing up regularly at plays, concerts and recitals. But there are fears that, in this period of deep budget cutting, a lot of the cherished city-sponsored cultural events and venues may be suffering. The merging of the Department of Cultural Affairs with the Department of Special Events and the apparent reduction of programming at the Cultural Center are two of the topics we kick around on today’s show.
Nick Rabkin is currently working with the City on a massive survey to ascertain the public’s perception of culture in Chicago – what we have, what we need, and what the City’s involvement should be.
Alison Cuddy is WBEZ’s culture expert. As a host, reporter and editor, she’s covered all manner of arts and culture for the station, and has been actively following the politics of culture.
It’s a big-picture discussion this week about Chicago’s economy and environment .
Mayor Emanuel’s announcement today of a seven-billion dollar infrastructure program for the city has long-term implications for transportation, water quality and sewage. But as David Roeder of the Sun-Times points out, there are concerns that this massive pot of money might “go off the books” and not be subject to the oversight of the City Council and such legal provisions as the Open Meetings Act and the Purchasing Act. It could be managed in a way not too different from the TIF program, but with hugely larger numbers.
But Henry Henderson, Midwest Director for the Natural Resources Defense Council, points out that Rahm Emanuel has always had a strong interest in finding ways to finance big projects over the long term. That protects large, beneficial projects from waves of political whim that undercut multi-year developments.
We’ve been gripped, Henderson says, with “a sickness, that somehow government is the enemy of the people”. ”The fact is”, he says, “we would have no transportation, we would have no water system…(none) of these things that are critical to our health, safety, welfare and economy” without government involvement and funding.
We also discuss the announced closings of the Fisk, Crawford and State Line coal power plants, which Henderson says were “subsidized by peoples’ lungs”, and have come to the end of their lives partly because “the alleged cheap coal is not cheap”.
Roeder gives us a summary of Chicago’s current economic picture, and it’s surprisingly positive. Office space rental downtown is picking up, especially in the up-market sector, housing sales are moving upward, especially in neighborhoods that are well-served by public transportation, and there’s a booming business building new apartment buildings, because “developers have found that now that people can’t qualify for mortgages and the ‘liar loans’ are out the window, they can still afford the rent”. And, as always, Chicago has the biggest intermodal transportation hub in the western hemisphere, a strong airport and, despite funding problems, a vibrant transit system.
But here’s the cautionary tale. Henderson, who fought for years to close the coal plants, holds them in high esteem, because they were, at the turn of the 20th century, revolutionary technology. Chicago and the midwest were the silicon valley of their day.
These legacies, Henderson says, “should spur us forward, as opposed to slumping down in a protectionist swoon and sucking our thumbs.”
Chicago Newsroom is produced as a community service at Chicago's community television station, CAN TV. CAN TV gives every Chicagoan a voice on cable television.
