What the 2014 Budget Means for the South Side

Aldermen grapple with regressive taxes, hiring freezes in the latest city budget


“Let us remember how far we’ve come,” Mayor Emanuel thundered during his unveiling of the 2014 budget on October 23. He beamed with obvious warmth at the aldermen collected beneath him as he informed them that he had once again managed to shrink a yawning budget deficit without raising property or income taxes. 

Miniaturization was the watchword of this entire budget. Even though it has been half a decade since the Great Recession began, the holy grail of fiscal austerity and shrunken government as a means to stave off economic crises remains alive and kicking. Mayor Emanuel, decked out in a bright red tie, lavished praise on his administration’s ability to cut “the wasteful and duplicative practices of the past.” It was an obsession with size that permeated the entirety of his address.

His commitment to shrunken deficits is more than empty rhetoric, and his administration’s weight-loss regime has borne fruit for him and his budget director Alexandra Holt. The structural deficit is set to be slashed to $339 million for 2014, a drastic change from the $790 million that was projected three years ago. Underpinning this headline number is a coherent ideology, where his ideal government is, as he describes, “smaller, simpler, and stronger.”

To achieve this slimmer budget deficit, his government will institute a series of relatively minor tax hikes in 2014. Notably, Chicago’s smokers will be placed under greater strain, with a ten percent increase in the city tax levied per pack of cigarettes, garnering the city $1.43 per pack of twenty. The Emanuel administration projects that this increase will raise $10 million, the majority of which would be funneled towards providing Medicaid coverage for the more than fifty-thousand CPS students who rely upon it for their healthcare.

While aldermen were quick to paint this as a positive step for both public health and public coffers, some of those who represent South Side constituencies worried that this tax increase would have the unintended consequence of sparking more violence on their streets. Alderman Leslie Hairston of the 5th Ward was especially vehement in her denunciation of the “disproportionate impact” that an increased cigarette tax would have in communities of color.

“This will have the impact of creating a very large black market in a lot of minority neighborhoods,” she said. “The loose sale of single cigarettes increases loitering, and people involved in illegal activities will loiter more on the streets. That’s a gang problem that arises from that increased visibility.”

Alderman Roderick Sawyer of the 6th Ward echoed Alderman Hairston’s caution over the cigarette tax, but took pains to not inject race into the debate. “I’m not talking about race, I’m talking about lower-income people in general. This is hitting the poorest, the hardest,” he said.

Instead, he called upon the mayor to find a more equitable way to raise revenues. “I want to make sure that the burden is spread across all income tax levels,” he said, decrying the cigarette tax as a way to plug the city’s deficit. “This is a regressive tax.”

Still, racial inequalities came to the forefront during debate over the mayor’s push to reduce personnel numbers in numerous city departments, with 1,500 city positions having already been eliminated in his first two years in office. The 34th Ward’s Alderman Carrie Austin, chairman of the Budget Committee, is a prominent critic of removing well-paying middle-class jobs from low-income neighborhoods like hers, noting in a recent interview that deficit reduction cannot be built upon “the backs of people who are adding to our economy.”

Stagnant or even declining numbers of city jobs exacerbate existing problems in unequal hiring practices in many public departments. During a hearing on November 7, Thomas Powers, head of the city’s Water Management Department, came under particular scrutiny from members of the council’s Black Caucus for the department’s stark racial imbalance. Only six percent of its 1,511 salaried employees are black, well shy of the 32.9 percent black share of the entire city’s population.

However, Powers declined to commit to any concrete steps to make his department more representative.  He directed the debate toward purely procedural grounds, insisting that all employment decisions made by the department were constrained by a definite, but unexplained, hiring process.

The department is no stranger to suspicion from black aldermen. Late in 2012, Mayor Emanuel decided to lay off thirty-four Water Management workers and outsource their jobs to call center contractors employed by Japanese firm NTT Data. Most of the thirty-four happened to be black Chicagoans hailing from the South and West sides, a fact that raised the ire of Alderman Sawyer, who complained last year that laying off city workers from neighborhoods that were especially reliant upon government jobs had a huge negative effect. “If you fire [city workers], there’s a ripple effect,” he told an audience at a South Shore budget meeting. “Businesses get hurt. Families get hurt.”

Given that the water department is the third-largest department in the entire city, the vagueness surrounding its racial inequities worries many. And there’s no upcoming sign of a great change: the mayor’s budget will have the water department slash seven positions in 2014, a downsizing that is replicated in almost every citywide department. This will likely have the effect of locking in the existing racial proportion of city workers in departments like Water Management, maintaining the imbalance until city coffers recover their vitality once again.

Such a prospect seems extremely remote. On some days during these two weeks of budget debates, it felt as if lawmakers could speak of nothing but the statewide pension crisis that will descend upon the city in 2015. Then, Chicago will be required by state statute to pay $600 million to fill police and fire pension coffers that are currently teetering on the edge of insolvency.

Mayor Emanuel described the effect this expenditure would have in apocalyptic terms. “Without balanced reform, meeting our current pension obligations would require us to nearly double the city’s property tax, a move that would send residents and businesses streaming out of Chicago,” he said.

If things remain as they currently are, the pension crisis will have the effect of increasing the city’s deficit beyond $1 billion in 2016, potentially undercutting the significance of the cuts Emanuel has made during his time in office.

However, it is a situation that the mayor has very little control over. He is reliant upon both houses of the state to pass a bill that frees the city from its pension obligations, and there is no sign that any such legislation will gain enough support from statewide lawmakers any time soon.

The first week of November marked the very last legislative session of the year, and legislators in both houses decided to defer the passage of a bill until 2014, ostensibly for the gathering of additional expert input. Democratic representatives are under pressure from union leaders who seek to preserve the pension liabilities of their own, and neither Speaker Michael Madigan nor Senate President John Cullerton is able to find the votes necessary to pass a bill that defies a simple party-line vote.

Chicago’s 2014 budget is a transitory one, and the city is collectively holding its breath to see if Mayor Emanuel’s dire promise of a Chicago that is drained of its middle-class residents will materialize if Springfield fails to reform an underfunded pension system.

All the same, the minor tweaks to both spending and taxation that Mayor Emanuel has put in place for this year do not encourage optimism that this budget is one that will benefit residents of the South Side. The debate, as argued, is now about how cuts should happen, rather than whether a smaller city government is justified in the first place—comfortable ground for Mayor Emanuel.

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