Group: Next mayor should consider privatizing everything
By fran spielman City Hall Reporterfspielman@suntimes.com February 13, 2011 8:32PM
Updated: September 24, 2012 6:25AM
Chicago’s new mayor should consider privatizing everything from the city’s water system, garbage collection and curbside recycling to building management and the 311 non-emergency center to resolve a structural deficit that literally has the city on the brink of bankruptcy, according to the Civic Federation.
In a 35-page report on city finances it hopes will serve as a blueprint for Mayor Daley’s replacement, the Civic Federation is also recommending reduced pension benefits for existing city employees, pension contributions tied to fund conditions and consolidation of the four city employee pension funds.
Pension issues have touched off a firestorm of controversy in the mayor’s race.
Last summer, Daley said he would seek to privatize the Taste of Chicago, other lakefront festivals and an array of government staples — from animal care to fleet management and curbside recycling — to help erase a record $654.7 million shortfall.
The festival deal fell apart after the lone bidder proposed a Taste admission fee. The Daley administration issued a request-for-proposals for curbside recycling, but has yet to award a contract.
The privatization proposed by the Civic Federation goes far beyond anything that either Daley or mayoral candidates have suggested.
Short of police and fire protection, Civic Federation President Laurence Msall literally wants every service the city provides to be put on the table — either for privatization or elimination altogether.
“The city is in perilous financial shape. We want city officials to recognize how close we are to bankruptcy, which would be a horrific condition,” Msall said.
“It’s going to require very difficult choices that have not been made to date. It’s going to require a financial reality check for the City Council and the next mayor, he said. “There are no easy political answers. There are no more assets that can be sold.”
Daley’s final budget was balanced without raising taxes with a trick-bag of one-shot revenues that includes depleting all but $76 million of the 75-year, $1.15 billion lease that privatized Chicago parking meters.
By the end of 2011, only $576 million in revenues will be left from $2.98 billion generated from long-term leases. Nearly 80 percent of the money was spent in just six years, the report said.
The Civic Federation noted that only $96.9 million or 14.8 percent of the 2011 budget gap was closed with spending cuts.
In the nine years ending in 2009, the city’s debt rose by a staggering 122 percent — to $6.9 billion. That’s $2,371 for every person living in Chicago.
After detailing the policies that got Chicago into this financial mess, the Civic Federation is also recommending that the next mayor: develop a long-term financial plan in the first year to “engage stakeholders in the difficult choices”: adopt an “asset lease reserves withdrawal policy” to protect remaining reserves when the economy rebounds; build up its perilously low corporate fund reserves, and pursue creation of a separate retiree health care trust fund, noting that an agreement that covers the issue expires in 2013.
For years, there has been talk of privatizing all or parts of Chicago’s water system, including the Jardine and South filtration plants, city pumping stations, water billing functions or just the sewer system.
Last summer, newly appointed Water Management Commissioner Tom Powers insisted that Daley had “no plans” to privatize any part of the department at the center of the Hired Truck and city hiring scandals.
The idea sounds intriguing, but it’s also fraught with political danger. It’s one thing to privatize the Skyway and street parking, which play to more limited audiences. But everybody uses Lake Michigan water purified and pumped through Water Management Department facilities.
Does Chicago really want to put that service in the hands of a private company that might cut corners to improve its bottom line? One City Hall observer called it “a gamble I wouldn’t take.”
Another complication is the condition of the city’s water mains. Like the Midway Airport deal that collapsed for lack of financing, a private contractor likely would be required to offer jobs to city workers. Would they pay top dollar, only to inherit employees implicated in the Hired Truck and city hiring scandals?