A guide to who holds the power and purse strings when it comes to Chicago’s money.

By Grace Del Vecchio, Kelly Garcia, Corli Jay and F. Amanda Tugade, City Bureau

This story was originally published by City Bureau on October 16, 2020

City Bureau presents a guide to who makes money move in the city's annual budget process.

What is Chicago’s annual budget process?

The budget process takes place from July to December with a new budget enacted on Jan. 1 of each year. Starting in July, city departments work with the Office of Budget and Management on their financial needs for the next year’s budget. By September, the mayor’s budget forecast is shared with City Council and the public.

In mid-October, the mayor must propose a budget to City Council which will then host lengthy hearings, including at least one public hearing (this year, it’s on Nov. 16) where Chicagoans can make public comment. Aldermen typically vote on a spending plan in November and by law they must pass a budget by Dec. 31.

What are the different parts of the budget? 

When City Council votes on the annual budget, they are approving the spending plan for all six parts in the budget, also known as funds: corporate, enterprise, grant, special revenue, pension and debt service. The budget is not one big piggy bank; each fund allots dollars to specific services and programs in the city.

The corporate fund, or the general operating fund, makes up a bulk of the budget and supports a range of public safety, public health and city services. This includes the Chicago police and fire departments, trash and recycling pickups, and street repairs. The Chicago Police Board and the Civilian Office of Police Accountability also fall under this category. For larger, long-term capital improvement projects, like curb and gutter repairs, the city leans on its debt service funds, which includes general obligation and revenue bonds and loans.

With the enterprise funds, the city is able to operate, maintain and invest in capital projects for its water and sewer systems and two major airports, O’Hare and Midway. These funds are “self-supporting,” which means revenues come from charges and user fees. For example, residents and businesses pay for water service charges, and airlines fund the airports’ operations through landing fees and terminal rent.

The city has received grant funds from federal, state and local governments, as well as private organizations, to help support programs for youth, seniors, community development and many more. In 2020 projections, the city anticipated $1.76 billion in grant funds, which would’ve made up 14% of the total budget.

The best way to understand special revenue funds is to look more closely at certain taxes. Fees collected from vehicle stickers, impoundment or towing are another source of the city’s revenue. With vehicle stickers costing around $90, the city sought to earn $129 million in revenue this year from that tax alone. Residents also pay a $5 surcharge on their monthly cell phone bill to help fully fund the Office of Emergency Management and Communications (the city’s 911 service line).

Pension funds round out the rest of the budget and pay pensions for city workers such as police officers and firemen. These funds – which are divided into four separate pension accounts – include retirement, death and disability benefits for city employees and their beneficiaries.

How many aldermen need to vote ‘yes’ to pass the budget?

At least 26 must vote ‘yes’ to pass the budget. Last year, 11 of the 50 aldermen rejected Mayor Lightfoot’s $11.65 billion budget; six Democratic Socialist aldermen said they would vote no due to “an over-reliance on property taxes, an ‘overfunding’ of police and the new minimum wage that leaves out tipped workers, such as restaurant servers,” according to a WBEZ report. Their dissenting votes were considered bold since mayoral budgets often receive a “nearly unanimous” rubber stamp approval in City Council.

In 2012, reporter Mick Dumke wrote in the Chicago Reader that no more than three aldermen voted against a mayor’s budget proposal between 1990 to 2013. “The most opposition came in 1991, Daley's third year on the job, when 18 aldermen said no to the mayor's 1992 budget,” Dumke wrote.

How much power do the aldermen have compared with the mayor in the budget process?

In theory, Chicago’s City Council has a “weak mayor” since the aldermen have some legislative powers, including voting on the annual budget. In practice, City Council has historically operated with a “strong mayor” where the mayor acts like a chief executive officer, including exercising the right to veto. “Structure makes the mayor weak, politics make the mayor strong,” Larry Bennett, emeritus professor of political science at DePaul University, told City Bureau in 2019.

In recent years, aldermen have been widely criticized for not showing up to required meetings and hearings, including budget hearings. Back-to-back budget hearings are scheduled to “scrutinize each department’s budget” soon after the mayor reveals a budget plan on Oct. 21, taking place over a span of almost two weeks, before aldermen vote.

“Many aldermen believe the biggest problem in Chicago government is its deeply flawed budget process, in which the mayoral administration crafts and presents a budget that aldermen have a couple of weeks to look over before deciding whether to vote for it. Most aren’t able to study more than a few portions of it, even if they’re willing,” wrote Dumke in a 2009 Chicago Reader article.

How does Chicago’s one-year budget process compare to other cities which may have a multi-year process?

Chicago operates on an annual budget cycle, allocating money for one year. While this is common in other large American cities such as Philadelphia, New York City and Los Angeles, some cities such as Oakland and Richmond allocate money for a period of two years.

Biennial budgeting can provide a city with a greater, wider understanding of how debt, inflation, pensions and more will impact the city in the future and complement long-term strategic plans.

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A new West Loop office building (l.) and a River North hotel were approved by the city's Plan Commission Thursday.
COURTESY DEPARTMENT OF PLANNING AND DEVELOPMENT

A West Loop office building is planned for a vacant lot while a River North hotel will take the place of a parking lot.

CHICAGO — Surface parking lots in River North and West Loop soon could be transformed into a hotel and office building, respectively, under plans approved Thursday by the city’s Plan Commission.

A 15-story office building is slated to replace a parking lot in the middle of the block at 609 W. Randolph St. in West Loop. The office tower will sit next to an existing, historically protected building that was to be redeveloped under the project’s original plans.

Plan Commission approves a 15-story office complex with first-floor retail at 601 W. Randolph St. in the #WestLoop. The $25 million project will create about 250 construction jobs and require a @ChicagoNOF system payment of $1.03 million. pic.twitter.com/rh9rubHv2Z

— Chicago DPD (@ChicagoDPD) October 15, 2020

Developer Vista Property Group originally sought to demolish the building at 601 W. Randolph and incorporate its facade into a new structure.

But the existing building is rated “orange” in the city’s historical survey, meaning it contains “potentially” historic attributes. After city officials bristled at the plan to redevelop the building, Vista Property altered its proposal.

The plan commissioners endorsed Thursday calls for a 211-foot office building with a ground-floor lobby and retail space.

The top floor will have an outdoor area for office tenants and a portion of the upper floors will extend over the existing building at 601 W. Randolph, renderings show. The office building’s brick facade will seek to blend in with the historic structure next door.

River North

In River North, a nine-story hotel will take the place of a parking lot at 862-868 N. Orleans St.

The 66-room Stob Hotel will include rooms with balconies, ground-floor space for a restaurant, rooftop space for a restaurant or bar and a rooftop deck for travelers, according to the development team with Praia Management Group.

The hotel project has been in the works for over a year, the development team said. The project is a promising sign despite the hotel industry’s struggles during the coronavirus pandemic, Ald. Walter Burnett (27th) said.

“This project is going to be great for our community,” he said at the commission meeting. “This is telling us things are still happening in the city of Chicago.”

Plan Commission approves a nine-story development at 862 N. Orleans St. with 66 hotel rooms and first-floor retail space. The $18.5 million Near North project requires a @ChicagoNOF system payment of $360,000, and it will create 75 construction jobs and 25 permanent jobs. pic.twitter.com/1eivYcwzWc

— Chicago DPD (@ChicagoDPD) October 15, 2020

Lincoln Park

Two North Side residential developments were also approved by the Plan Commission on Thursday, bringing more than 150 combined apartments to Lincoln Park and Edgewater.

In Lincoln Park, JDL Development is planning to build a seven-story mixed-use building at 1623 N. Halsted St. with 79 units and ground-floor commercial space.

Plan Commission approves a seven-story, 79-unit development at 1623 N. Halsted in #LincolnPark. Two affordable units will be provided within two miles, and the developer will pay $794K into the affordable housing fund. The transit-oriented plan will contain no parking spaces. pic.twitter.com/1z3bMoaQWR

— Chicago DPD (@ChicagoDPD) October 15, 2020

The structure will replace four existing buildings on Halsted just north of the Brown Line tracks. The proposal was scaled down at least twice since it was first proposed last year, Ald. Brian Hopkins (2nd) said.

“It was a very lengthy process but it was a collaborative process every step of the way,” he said. “This is a win all the way around.”

The proposal also called for hotel use at the site. That’s because a long-term stay company had expressed interest in leasing some of the units in the building, JDL Principal Jim Letchinger said Thursday.

Long-term stay companies, which are growing in popularity in Chicago, pay hotel taxes. Letchinger said such use in the building is now unlikely given the economic climate for hotels.

Edgewater

In Edgewater, developer Cedar Street was given the go-ahead to turn a parking lot at 5440 N. Sheridan Rd. into a courtyard-style development with 78 units.

The Sheridan Road property has long been eyed for redevelopment. Previous proposals included a 16-story, 174-unit senior living center and a 190-unit condo building.

Cedar Street originally sought to build a seven-story, 99-unit structure at the site. Through the community approval process, the project was pared down to five stories and 78 units.

The building’s Sheridan-facing facade will house townhomes, including six duplex units, to give the property a more residential scale, developer Mark Heffron of Cedar Street said.

The City Council approved a zoning change earlier this year (O2020-784) allowing the project to move forward, but its proximity to Lake Michigan means the plan commission must also approve its Lakefront Protection Ordinance application for the site.

Plan Commission approves a five-story, 78-unit courtyard building at 5440 N. Sheridan Road. The #Edgewater proposal will include 27 parking spaces. Plan Commission approval is required due to its location in the lakefront protection district. pic.twitter.com/Dgr3q38hgb

— Chicago DPD (@ChicagoDPD) October 15, 2020

Other items approved by the Plan Commission include:

• • A proposal by developer Michael Hamblet for a three-story addition to an existing five-story office at 50 E. Huron St., in order to add a medical office on site. The building was the former home of the American Library Association and will be redeveloped into a physical rehab facility. The developer will also build a 24-stall underground parking garage.

 

• •  A proposal by CSX Transportation to rezone its approximately 968,000-square-foot rail storage yard between 59^th Street and 63^rd Street near Western Avenue. The change would allow the freight company to add new capacity, landscaping and a new entrance from 63^rd Street.

 

• • A proposal by Skyfall Partners LLC to allow vehicle leasing at the Lyft Collision Center at 1020. N. Elston Ave. in Goose Island.

 

• • A proposal by JDL Development to add a veterinary clinic among allowed uses in its 27-story, mixed-use Eight Eleven Uptown development at the corner of Montrose and Clarendon avenues in Uptown. The item was originally scheduled to be approved by the commission last month, but it was deferred. The 373-unit project was completed in 2018, and the veterinary clinic has already opened.

 

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