Budgets are a reflection of our policy priorities - Metropolitan Planning Council

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Budgets are a reflection of our policy priorities

What Mayor Lightfoot’s 2020 Budget reveals about her commitments to an equitable, sustainable, and prosperous Chicago.

Wisconsin Technical Colleges, https://tinyurl.com/wvxg9yt

So what happens when a Mayor who ran on a progressive policy platform inherits a much-larger-than-anticipated budget shortfall?  The City of Chicago’s 2020 budget gives us one answer.

Balancing this year’s City of Chicago budget required that the Mayor close an $838 million budget gap without relying on big property tax hikes. Attempts to secure a graduated Real Estate Transfer Tax didn’t go as planned, and the jury is still out on $163 million in emergency services reimbursements.

Budgets are a reflection of priorities, so although the dust has just begun to settle on the final City budget, we think it’s an opportune time to ask: what does the Mayor’s initial budget tells us about her priorities? To answer that question, we went back and looked at MPC’s list of policy recommendations that we submitted to Mayoral Candidate Lightfoot way back in March. How did she prioritize those initiatives? And is more progress needed?

Note, we don’t delve too much into the revenue, financing or debt side of things here. Our colleagues at the Civic Federation provide greater detail on those. Rather, we focus on what the expenditure side tells us about what matters to Mayor Lightfoot and her administration.

Build a More Affordable Chicago

The City is facing a 120,000 unit shortfall in affordable housing. The City’s Dept. of Housing (overseen by MPC’s former VP Marisa Novara) is charged with closing that gap and ensuring the City’s housing needs are met.

To do that, the Dept. of Housing is going to need substantial financial resources to build new affordable units and preserve existing affordability. In our briefing book, we urged the new Mayor to commit $32.3 million in corporate funds (the City’s general operating revenue) to the Dept. of Housing. Although the 2020 budget didn’t quite get there, there was a significant increase in funding.

City of Chicago 2020 Budget Overview, p. 141

Two things are interesting here. First, there’s an increased commitment from corporate funds for affordable housing: from $4.3 million in 2019 to $15.3 million in 2020. $5 million of the increase will go to the city’s Low-Income Housing Trust Fund, an important source of financial assistance to residents making less than 30 percent of area median income to construct 520 additional affordable housing units. Another $5 million will be put into the Flexible Housing Pool, a program that provides necessary housing and supportive services to individuals experiencing homelessness. This boost will house more than 200 youth in need of housing.

Second, there’s a substantial increase (from $27.5 million in 2019 to $45.3 million in 2020) in funding from the Affordable Housing Opportunity Fund –the fund that developers can pay into instead of building affordable units onsite as required by the Affordable Requirements Ordinance. All but $1 million of that will be put into the Affordable Housing Density Program.

The big drawback to relying on the Affordable Housing Opportunity Fund is that it might dry up. Because the Fund is maintained by in-lieu payments, if the new housing construction market cools off, or if the Affordable Requirements Ordinance is substantially revised as a result of the recently convened task force (co-chaired by MPC Manager Juan Sebastian Arias!), there may be less available for transfer to the Dept. of Housing. There are pros and cons to that, but it does mean that corporate funding may be a better long-term funding source for the Department of Housing.

Although the corporate funding level isn’t as high as MPC would like, the financial commitment to the Dept. of Housing from funds that the City directly controls is substantial: $60.6 million, nearly double 2019’s commitment.  That’s good work in the context of an $838 million citywide budget shortfall.

Start Tackling Water Supply Issues

Chicago has two major water supply issues that it needs to address: lead in drinking water and drinking water affordability. Although there’s no direct statement in the budget of a lead service line replacement plan, there is some hint of a plan in the Dept. of Water Management’s budget:

City of Chicago 2020 Budget Overview, p. 88

Notice the big increase in funding to the Commissioner’s Office? Most of that comes from an anticipated $5 million Community Development Block Grant, a federal grant program that can be used to replace lead service lines. At the Dept. of Water Management budget hearing, Commissioner Randy Conner was asked what that $5 million grant was going to be used for. His answer: a lead service line replacement pilot.

If this is true (we’ve seen no press release yet), it would means progress on tackling lead in drinking water. We’d applaud that. That said, a $5 million pilot needs to be part of a much larger effort to replace lead pipes in Chicago and Illinois.

On the water affordability front, there’s more good news: the creation of Utility Billing Relief Program, intended to assist eligible homeowners pay for water and other utilities has brought much needed attention to water affordability challenges. The program shows promise in reducing barriers to accessing water. For more, see what MPC’s Director of Water Resources, Danielle Gallet, had to say in her recent blog post.

Address Transportation Infrastructure

Transportation is one area where the budget mostly prompts questions. The Dept. of Transportation saw modest staffing cuts across divisions, and, despite a projected revenue windfall from the motor fuel tax increase ($43.7 million). The budget also proposes a hiring freeze affecting 150-200 positons for cost-savings purposes. As revenue goes up, staffing goes down? Again, questions.

On a positive note, the Mayor’s proposed amendments to the Ground Transportation Tax is projected to reduce congestion downtown and create $40 million in new revenues. Most notably under the revised tax, single-occupant rides beginning or ending in the downtown area will have a $3-per-ride fee assessed. Analysis by the Center for Neighborhood Technology shows that the new fee structure would overwhelmingly impact affluent, single occupancy riders. See Director of Transportation, Audrey Wennink’s blog post on why we support this tax as a way to incentivize better transportation decisions.

Build Neighborhood Opportunity by Leveraging Downtown Development

The City needs to make sure that the gains of downtown economic development are experienced equitably, across neighborhoods. There’s evidence the Mayor is committing resources to that effort.

City of Chicago Budget Overview, p. 146

As you can see, the Dept. of Planning and Development saw substantial increases in funding for 2020, overwhelmingly attributable to an increased $27.4 million appropriation from the Neighborhood Opportunity Fund.

The Neighborhood Opportunity Fund, like its Affordable Housing counterpart, leverages private development to support broader policy aims – in this case, economic development in disinvested South and West side neighborhoods. The budget doesn’t provide details about how that money is being used (it will be placed into the Neighborhood Opportunity Program), so we’ll have to see how it gets deployed.

That said, we know that the Mayor has developed an economic investment program called “Invest South/West,” which seeks to leverage $30 million in Neighborhood Opportunity Fund money (and other resources) to coordinate investment in 10 Chicago neighborhoods. The $27.4 million additional appropriation here is awful close to $30 million, so it seems plausible at least that the Mayor intends this money as part of that (so-far mysterious) economic development program.

Start Comprehensive Planning at the Department of Planning and Development

As we’ve argued before, comprehensive planning is an important step for the City to take for a lot of reasons. Comprehensive planning – at both the design and implementation stages –is going to require a serious commitment to staff up at the Dept. of Planning and Development. Maurice Cox, the new Commissioner who hired 36 new planners in Detroit’s planning department, testified that Chicago’s Dept. of Planning and Development increased the number of planners on staff from 20 to 28, and the budget line items bear that out. That’s a good start toward building the capacity needed to plan for the city’s future.

Stop Inequitable Fines, Fees, and Ticketing

Thankfully, the Mayor is taking steps to wean the City from its addiction to fines and fees. In September, Chicago City Council approved a reform to stop the suspension of driver’s license for nonpayment of parking tickets, which we know disproportionally penalize poor and working class people of color. The Mayor’s budget reflects a modest, reduced reliance on fines, forfeitures, and fees to generate revenue (from $345 million in 2019 to $342.7 million in 2020).

Start Preparing Chicago for Climate Change

Introduced in February 2019, the Resilient Chicago plan for inclusive growth and a connected city remains to be implemented. Support from the Mayor’s office could look like hiring a Chief Resilience Officer tasked with working with multiple city departments. For this to happen, the city must dedicate adequate city staffing to move the plan forward.

The Mayor’s Budget Overview pledges support to an Office of Environment and Sustainability housed within the Office of the Mayor (see p. 61),  but the line-by-line doesn’t (as far as we can tell) propose dedicated funding for this office. In general, the Mayor proposed increased staffing in her Office for several program areas, and the Office of Environment and Sustainability might be baked into that staffing (although some proposed 2020 increases to the Mayor’s Office have since been rolled back in an amended budget ordinance).

Conclusion

Although we’ve mostly talked about positive notes above, there’s also a lot that still needs doing: the Mayor’s budget doesn’t explicitly commit resources to equitable transit-oriented development, bike and walk infrastructure, or sustainable stormwater management solutions. There is always more to be done on strategies to ease homelessness, to support neighborhood business growth and more. Still, there’s a lot of progress on some important issues, in the context of a major budget shortfall during Mayor Lightfoot’s first term. We’re hopeful that this budget signals the Mayor’s dedication to implementing the transparent, equitable policy platform she ran on – and that with more time and resources, that she can accomplish much of that agenda while ensuring the City is financially sound.

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