Not all local budgets play by the rules
By Greg Hinz
Ah, fall! Time for some fun and games: a run for a score here, a misdirection play over there, Hail Marys, an occasional fumble and (if the offense stalls) kicking it way, way down the road, er, field.
I’m not talking about the Bears and the eternal question about our beloved team: Will the offense show up this week? Rather, I’m talking about the kind of games they play in government.
It’s budget time from City Hall to Springfield and back. As the last leaves blow away, our elected officials are pushing their own form of hot air—pronouncements about how they’ll balance the books and pay the bills without outraging the collective pocketbook.
So far this season, three big proposed spending plans for fiscal 2013 have emerged. One, from Cook County Board President Toni Preckwinkle, is pretty solid; it scores. The second, from the Chicago Board of Education, falls into the fumble category. The third, from Mayor Rahm Emanuel, isn’t quite as good as the county’s, but it’s a lot better than the education board’s.
Let me start with the agency that dropped the ball.
The new Chicago Public Schools budget completely uses up the system’s savings—every penny in the bank. But because of the teachers’ raise and the decision to hire teachers to extend the school day, the system needs even more cash that it doesn’t have. So, the board said it would sell some surplus property and reduce bureaucracy a bit. (Why is it that, every year, however much they slash the bureaucracy, there’s always more to slash next year?) But it mostly decided to “capitalize interest” and engage in “debt restructuring.”
Translation of that misdirection: Capitalize interest means borrowing the interest to pay off debt, rather than taking it out of current income, as you’re supposed to do. And “debt restructuring” in this case means lengthening the number of years that debt will extend, forcing costs up. Taxpayers are about to get whacked like a bunch of wide receivers.
At the other end, Ms. Preckwinkle’s budget does some awfully nice stuff. Predecessor Todd Stroger’s penny-on-the-dollar sales-tax hike is vanishing, spending and payroll are lower than last year, reserve funds are way up and the tax hikes on gambling, cigarettes and out-of-county purchases are more pesky than harmful.
But Ms. Preckwinkle is going long on one hope: the $98 million a year she hopes to get from an early waiver under Obamacare so the county could be reimbursed for charity care that it already provides but isn’t paid for. Given how politics works—”Hi, Barack! It’s Toni!”—Ms. Preckwinkle probably will get the waiver. But if Mitt Romney and the Republicans sweep the field on Nov. 6, Ms. Preckwinkle will have to come up with a new game plan fast.
Mr. Emanuel’s budget builds largely on the tough spending decisions he made a year ago, which is good. The cuts will repeat—they’re “structural,” as the budget folks say. But a fair chunk of what the mayor did to balance his new budget is the fiscal equivalent of a razzle-dazzle option: one-time revenue from sources such as refinancing debt, raiding the tax-increment financing cookie jar and getting corporate sponsors to put their names on city buildings.
Beyond that, Mr. Emanuel threw a Hail Mary on pension reform for city workers, especially police and firefighters. If Springfield doesn’t deliver during the Legislature’s lame-duck session in January, Rahmbo will be up a crick without a bazooka.
Interestingly, Ms. Preckwinkle has the same pension problem as Mr. Emanuel, although to a lesser degree. But she seems to be letting him do the heavy lifting while she tries to resolve things amicably with the unions. Good luck, Madam President!
Even better, the Chicago Transit Authority has yet to roll out its budget. Ready for the bob-and-weave fare-hike lateral, folks?