Mayor Daley defends decision to raid city's reserves
Mayor Daley’s decision to raid $420 million from mid- and long-term reserves is like robbing from a retirement fund to pay your mortgage and buy groceries — and even Christmas gifts.
He’s not only siphoning $370 million in parking meter money and $50 million from the Chicago Skyway lease to fund day-to-day operations and hold the line on taxes, fines and fees in 2010.
He’s using $35 million of that money to provide property tax relief — by doling out $200 grants to homeowners hardest hit by the phase out of the seven percent cap on property tax assessments.
After introducing his $6.14 billion budget and delivering his budget address to the City Council today, Daley defended his decision to risk the city’s bond rating by raiding reserves he once called untouchable.
“It’s called rainy day funds. It’s called economic sadness. That’s what you have and that’s what it was prepared for. . . . Leasing public assets for a rainy, rainy day. And this is a flood day and a flood year,” Daley told the Chicago Sun-Times editorial board, using the same language he once used to declare those funds off-limits.
“If I didn’t have this creative, innovative management style about leasing public assets, we would not be talking about that. You’d be talking about raising taxes . . . because it’s such a deep recession. . . . It’s gonna be longer than people expect. I’ve talked to business leaders all over. They’re not creating jobs.”
But if Daley truly believes his gloomy prediction that the recession will drag on for years, what does he plan to do to balance the 2011 budget, which is expected to be his platform to run for re-election?
“That will be my worry next year — and I’ll be in here explaining my position in next year’s budget. . . . I’m only focussed on this year’s budget — not next year’s. . . . You have to get through this year,” the mayor said, cutting off the conversation.
In exchange for a combined $3 billion, private contractors got the right to pocket Chicago Skyway tolls for the next 99 years and parking meter revenues for the next 75 years.
If the City Council goes along with the mayor’s plan, those reserves will be down to just $730 million.
Ald. Joe Moore (49th) was one of the few aldermen to openly criticize the mayor’s risky move. Painful as it may be, Moore would have entertained spending cuts or a tax increase.
“They’re all very, very tough alternatives. But do we spend away our assets . . . jeopardizing our bond rating, jeopardizing the future health of this city?” he said.
“Everything should be on the table. What I’m not comfortable with is mortgaging our children’s future. . . . What’s gonna happen in 2011, 2012, when we have the same revenue shortfall and yet, all our quick-fixes are done?”
Still, most aldermen tired of walking the tax plank welcomed Daley’s decision to steer clear of increasing taxes or fees on voters still fuming about the steep schedule of rate hikes tied to the parking meter deal.
Over the last two years alone, the mayor has raised taxes, fines and fees by a whopping $329 million, including the largest property tax increase in Chicago history.
“If it wasn’t for those [reserve] funds, we’d be in a boat without a paddle right now,” said Finance Committee Chairman Edward M. Burke (14th).
Budget Committee Chairman Carrie Austin (34th), who will preside over City Council budget hearings, was asked whether a tax increase could get 26 votes with an angry electorate and the 2011 election right around the corner.
“Absolutely not — and I would be one of those who would not sign onto it,” she said.