• Erin Hegarty
    SEP 27, 2021

    Aldermen probe sustainability of Lightfoot’s plan to use one-time funding to help residents struggling from pandemic

    City budget officials address questions from Ald. Daniel La Spata (1) during a Friday hearing on the proposed 2022 budget.

    Aldermen spent part of the City Council’s first hearing on Mayor Lori Lightfoot’s proposed 2022 budget on Friday raising concerns over the sustainability of new programs proposed to be funded with the one-time federal stimulus dollars, probing city finance officials over whether the city has enough employees to carry out the programs.  

    Lightfoot unveiled her Chicago Recovery Plan — packed with plans including a guaranteed income program and infusions of funding for violence prevention, affordable housing, public safety and mental health — last week during her budget address.  

    Related: Lightfoot reveals 'Chicago Recovery Plan' with guaranteed income plank as progressive groups take credit 

    The mayor’s third budget proposes to spend $16.7 billion in 2022, an increase from Lightfoot’s $12.8 billion spending plan. Spending plans for 2022 also include allocating the city’s $1.9 billion in federal American Rescue Plan dollars toward community investments progressive aldermen have called on for months. She also proposes to pull about $385 million from the federal package to make up for lost revenue to pay for basic city services in 2022. 

    RelatedAldermen hit back at plan to delay spending federal aid until fall: ‘these needs do not allow us to wait’   

    The city’s Budget Director Susie ParkChief Financial Officer Jennie Huang Bennett and Comptroller Reshma Soni faced a battery of questions from aldermen in the City Council chamber during this year’s first council hearing on Lightfoot’s spending plan. 

    Bennett told aldermen the budget would “build a bridge toward financial stability while the economy continues to recover.” 

    Budget officials told aldermen on Friday that most of the new programs funded with federal stimulus dollars are designed to be temporary. And once the federal dollars run dry for programs the city does want to continue, officials may look to “external” money and alternative city funding sources to keep them going. 

    “The majority of the Chicago Recovery Plan is one-time in nature,” Bennett told Ald. Jason Ervin (28). And for investments that are not infrastructure-related, “a number of the projects are intended to respond to COVID and the needs that have been presented by the pandemic and those are also largely one-time in nature,” Bennett said.  

    City officials also intend to track outcomes of programs funded through the Chicago Recovery Plan “so that to the extent that they reduce expenditures of the city or generate revenues for the city” or are “self-sustaining, that we have a good handle on that” and can look for long-term sources of revenue to keep them alive. 

    Reports on outcomes of the programs will be available annually, budget officials said.  

    As part of the city’s budget forecast, city officials released a range of scenarios ranging from best to worst depending on how the pandemic continues to affect the city’s revenues. 

    “If stuff starts looking funky, what do we cut or what do we not do in order to keep the basics?” Ervin asked.  

    Bennett said it comes down to “striking the right balance of financial stability and investments,” adding that the city benefits from the fact that the Chicago Recovery Plan spans three to five years “and so not all the money is being spent in the first year, and we’ll come to you in future years as part of future budgets to re-evaluate what the landscape looks like at the time.” 

    The American Rescue Plan Act gives local governments until 2024 to appropriate the federally backed funding and until 2026 to spend it. 

    Ald. Anthony Beale (9), a frequent critic of Lightfoot, asked budget officials about the city’s long-term plan for sustaining programs once money from the American Rescue Plan runs out, seizing on Bennett’s “one-time in nature” evaluation of most federally-backed spending. 

    “So you’re saying that going forward, all these new programs, once this [American Rescue Plan] money runs out, you’re not looking to sustain this going forward,” Beale said. 

    After Park told him the city received the first portion of money from the American Rescue Plan at the end of May, an incensed Beale said, “we could have helped a lot of people since May.”  

    Guaranteed income proposal 

    Lightfoot’s proposed guaranteed income program would be funded with federal stimulus dollars. The $31.5 million program would send $500 monthly payments to 5,000 families for 12 months, according to budget officials. 

    The direct cash assistance would be focused on “very low-income residents who have been economically hard-hit by the COVID-19 pandemic,” according to a statement from city budget officials, who have also touted the initiative as “the largest monthly cash assistance pilot of any city in the country.” 

    Bennett and Park did not divulge many additional details on how program participants would be selected, other than to say need would be partly based on the effects of the pandemic and employment. 

    Ald. Nicholas Sposato (38) said on Friday that he does not support the guaranteed income program and asked questions about who would receive the payments and whether each ward would get an equal amount for their constituents. 

    Sposato suggested recipients should be required to perform community service in order to “earn” the direct cash assistance. 

    Lightfoot’s ward-level ‘micro grant’ proposal met with skepticism 

    Aldermen also cast doubt on Lightfoot’s proposal to designate $10 million from the city’s Corporate Fund toward a “Human Infrastructure Fund” that would empower aldermen to issue up to $100,000 each in “micro grants” to organizations in their wards. The grants would complement the $1.5 million in “menu” money aldermen each get to spend annually on ward improvement projects.  

    “A good alderman has the pulse of the ward, knows the pain points of the residents, and we want to further equip each of you to help address your residents’ needs,” Lightfoot said during her budget address, playing to a pillar of aldermanic prerogative that aldermen know their wards best. 

    Still, aldermen were skeptical of how deciding winners and losers in their wards would play. 

    “We like being Santa Claus, but I never give away anything unless I can give it away to everybody,” Ald. Walter Burnett (27) said. “I lose people [by] giving to some and not giving to others.” 

    Multiple aldermen requested guidelines for spending the $100,000. Ald. Harry Osterman (48) asked that city officials advise aldermen on how to spend the money “in a way that will be ethical and appropriate.” 

    Ald. Andre Vasquez (40) aired concerns with the proposed grant program, saying it would be “rife for abuse when you’re giving that kind of fund to each ward” and could turn into a “slush fund.” 

    Additionally, $100,000 might seem like a lot of money, but rather than “handing out grants to a limited amount of people,” the city “might be better served if those funds went to ward office staffing to deal with COVID-related problems,” Vasquez said. 

    Ald. James Cappleman (46) said social service agencies are currently competing “against each other” for funding and that there is no incentive for them to coordinate with each other. 

    With the additional $100,000 in small grants, Cappleman said the organizations “will be coming to [aldermen], pleading for more funds." 

    Response to property tax increase 

    Lightfoot touted her budget last week as one “without any new taxes, no reduction in city services, and no layoffs.” The plan does include a $77 million hike in the city’s property tax levy. The increase comprises $23 million tied to an increase in the Consumer Price Index due to a measure approved last year as Lightfoot said it would add predictability into the city’s finances. 

    RelatedLightfoot pitches $272M TIF surplus, $77M tax levy hike, $385M from ARP to plug budget hole 

    Aldermen who voted against Lightfoot’s $94 million property tax hike last year pushed back on the need to increase the levy by another $77 million this year. 

    "We should be exploring other ways to get this increase out of this budget because obviously people are struggling right now,” said Ald. Matt O’Shea (19), who voted against the increase last year. 

    The growing property tax levy also accounts for $25 million to help the city pay down debt from last year’s $3.7 billion capital bond, which will fund the city’s five-year “Chicago Works” infrastructure plan. It also includes $28.6 million expected from expired tax-increment financing districts and new development, and approximately another $20 million to account for an increase in the Consumer Price Index per a new provision pushed through by Lightfoot last year. 

    RelatedStreet makeovers, building upgrades set to accelerate in first phase of 5-year capital plan 

    Ald. Harry Osterman (48), who also voted against the increase last year, noted the ordinance allows the city to increase the property tax levy with inflation but asked, “given the financial conditions of where we are as a city, the question is, should we do that?” 

    Bennett said the increases tied to the cost of living provide “a measure of predictability and stability to taxpayers.” 

    “At least as we increase property taxes to match inflation, it is something that people can expect,” Bennett said.

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