Mayor Rahm Emanuel’s first annual budget proposal would initiate the blood-letting that could restore the city to financial health, but some of City Hall’s most sacred cows remained untouchable for now.
For Richard M. Daley’s 22 years as mayor, the police and fire department budgets swelled. Garbage crews whisked away whatever was left at the curb at great cost. And legions of blue-collar city workers — many of whom earned their places on the public payroll by working on campaigns for the Daley political machine — could look forward to annual pay raises and good benefits.
Spending perennially outstripped revenues, even before the recession aggravated the problem and made it obvious “that Chicagoans have more government than they can afford,” according to budget documents released by the Emanuel administration on Wednesday.
In unveiling his 2012 fiscal plan, Daley’s successor began to bring the size of city government in line with its means. Under Emanuel’s proposal, the corporate fund that covers day-to-day spending on government operations would shrink by 5.4 percent next year, to about $3.1 billion. That would be the most significant such decline in more than a decade, said Laurence Msall, president of the Civic Federation, a government fiscal watchdog group.
Reversing long-standing Daley dogma, Emanuel acknowledged that the police department’s ranks are not going to be as vast as had been promised for years. He also reiterated his call for a more cost-effective approach to waste pick-up and identified 500 employees who will be laid off.
Still, for as much as such moves cheered reformers – and for as much as Emanuel had promised an immediate “day of reckoning” – many of City Hall’s greatest fiscal challenges apparently must be allowed to fester at least a little longer.
“Mayor Emanuel’s proposal dramatically reduces the structural deficit, but it does not fully bring the city’s finances out of the woods,” Msall said. “There are severe challenges going forward.”
In his budget speech to aldermen Wednesday, Emanuel conceded that he had not yet attacked the largest issue affecting the city’s bottom line: the underfunded employee pension system.
“As tough as this budget is, it only addresses part of our deficit problem,” the mayor said. “Our pension obligations are clearly unsustainable. That’s why I will continue to work with leaders in Springfield to solve the pension crisis – sooner rather than later.”
Assuming aldermen support Emanuel’s budget proposal, the city will spend more than $475 million on pension contributions in 2012. That is what the city will be required to do by statute, but the Emanuel administration will not imminently accomplish any more than Daley had done toward denting Chicago’s unfunded pension liabilities.
The pension contributions again will combine with hundreds of millions of dollars in debt service to eat up the city’s entire property tax levy. Once again next year, not a penny of what Chicagoans fork over in property taxes will end up going toward funding the day-to-day running of their city government.
Personnel costs theoretically would decline because Emanuel wants to erase more than 2,000 vacant positions, including 1,252 police vacancies, from the budget. But for more than 90 percent of the remaining employees, union contracts signed by Daley dictate that the city must pay increased salaries as well as benefits. The police and fire departments together comprise most of the payroll.
“For decades, our public safety functions were walled off from budget cuts or other changes that would have made them more effective,” Emanuel said. “The reason was politics, plain and simple.”
Although the police department would face cuts, the fire department continues to enjoy privileged status in Emanuel’s budget plan. The fire department would lose only 49 of more than 5,100 budgeted positions, and its budget would increase by 8.2 percent, to more than $550 million, city documents show.
Truly attempting to trim personnel costs may have to wait until the union contracts for firefighters and other employees expire and the terms of their deals can be renegotiated.
Union leaders have rejected Emanuel’s calls to change overtime policies and other work rules that have been lucrative for workers. At the same time, labor and the new administration have found some common ground in cutting middle-management positions and initiating “managed competition” between unionized garbage crews and private waste-hauling contractors.
“We’re grateful, but I don’t think that means we’re going to give them bon bons across the bargaining table, and I don’t think that they expect that,” said Ald. Patrick O’Connor (40th Ward), who was appointed by Emanuel to head the committee that will oversee worker contracts. “We’re still going to be working on trying to get lean labor agreements that are going to save the city taxpayers some money.”
The police officer and firefighter contracts expire on June 30, 2012. Because personnel costs comprise the vast majority of the operating budget, what happens behind closed doors in contract negotiations next year could have a greater long-term impact on the city’s financial well-being than the council budget debates scheduled for the coming weeks.
Hunter Clauss contributed reporting.
