Shrinking Government, Not Further Taxes, Should Be Priority for Chicago Mayor

Chicago should conduct financial and performance audits

It was only one week ago Chicago awoke to the unwelcome news the city’s pension obligations had swelled an additional $1.8 billion. The second consecutive year Chicago’s pensions have risen five percent, today pension debt across four funds representing police, firefighters, municipal employees, and laborers has reached a staggering $37.2 billion.

Though the greatest stress imposed on Chicago’s budget is pensions, Chicago’s budgetary woes are manifold and began far before Mayor Brandon Johnson took office. The difficulty with the city’s finances can be traced back to 2000, at the midway point in then-Mayor Richard M. Daley's term. In the hot pursuit of money, Daley sold off city assets — parking meters, downtown garages and the Skyway Toll Plaza — in a fire sale to narrow yawning holes in the city budget. Daley also engaged in rash borrowing practices, which built up piles of debt. When the debt matured, Daley simply entered into new agreements with creditors while dismissing risks associated with rolling over debt.

Though Chicago’s economy performed relatively well under both Daley and Rahm Emanuel, Mr. Emanuel found himself trapped in a fiscal mess and in 2015 pushed through the largest property tax hike — $700 million — in the city’s history. Two years later, Emanuel issued half a billion dollars in bonds to, again, meet pension obligations. Though Emanuel’s final budget did not include any tax increases, he left office in 2019 leaving a trail of six-consecutive years of raising taxes and fees on Chicago residents and the city’s bond status rated as junk by analysts.

By the time Lori Lightfoot entered office in 2019, she sought to close a $838 million budget shortfall through increases to property and gas taxes, and hikes to food and drinks in restaurants, and by raising the cloud tax to 7.25 percent. For the remainder of her one term, Lightfoot’s budgets included increases to property taxes, boosting fines and fees, and efforts to refinance and restructure existing debt.

Today, Chicago’s finances are at a crisis level. Unsurprisingly, the future appears grim, as the last decade has witnessed an outmigration of residents and businesses from Chicago. An exodus which is estimated to cost Chicago $9.9 billion in tax revenue, many of the residents and businesses which do flee Chicago cite concerns over the city’s confiscatory taxes, hopelessly failing schools, declining property value, and violent crime.

As ever, Chicago’s budget problems are not the result of a shortage of revenue, but rather spending. An issue of which he shows no interest in changing, Mayor Brandon Johnson has taken up his predecessors’ profligate ways with the city’s purse since entering office. Though the mayor’s first budget passed in late 2023 without a property tax increase, Johnson was dealt a blow by voters when his Mansion Tax referendum, Bring Chicago Home (BCH), failed at the ballot box in March.

Despite Johnson humiliated by the defeat of BCH, the mayor was unrelenting and circumvented voters with a $1.25 billion borrowing plan to achieve many of the policy goals he originally sought through BCH. Johnson, however, is now seeking even more revenue. Although Chicago’s ability to collect further taxes has strict limits, a plan cooked up by Alderman William Hall (6) seeks to lay further taxes on commodities or services. Hall’s sweeping plan would place taxes on vacant lots, legalize and tax slot machines, billboard advertisements on the Chicago Riverwalk, and professional services. Hall’s proposal also revives Mayor Johnson’s proposed “head tax” and would replace a repealed statewide one percent tax on groceries. Hall’s motion to raise more revenue would also tax wireless plans, alcohol, checking bags, and enterprise zones. Under Hall’s rationale, many of his proposed taxes are applied in many other cities and are almost certainly supported by Mayor Johnson.

Chicago cannot bear any further taxes

The City of Chicago does not need more tax revenue. Rather, the Windy City needs to impose fiscal discipline upon itself. Instead of begging for quick cash from Springfield or besetting taxpayers for further revenue, it is incumbent on Chicago to carry out meticulous financial and performative audits throughout city government. The need for Chicago to conduct such a methodical survey was impeccably articulated by Alderman Brendan Reilly (42) in June. Addressing Chicago City Comptroller Chasse Rehwinkel and city officials in measured, substantive, and thoughtful terms, Reilly suggested the efficacy of examining Chicago’s sclerotic bureaucracy.

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A task which should be carried without delay, under a performance audit of the internal processes of Chicago’s sprawling, unresponsive, convoluted bureaucracy, auditors would evaluate employees, procedures, and outcomes of government programs. An appraisal of this nature would determine whether stated goals and objectives are being met, how efficiently resources are utilized, and if programs are in line with applicable laws and regulations.

In an exhaustive examination of city financial procedures, auditors would scrupulously survey balance sheets, income statements, and cash flow statements to assess the overall financial management practices of government departments. A full financial audit would uphold the integrity of Chicago’s financial information, offering a clear insight into their financial health and stability of city departments.

Since much of Chicago’s bureaucracy is an uneconomical, uncoordinated, unholy mess, it fails to accomplish much of public value. With few residents needing convincing city government is too big and its bureaucracy tangled and oppressive, an in-depth audit would be a noble gesture to fulfill the elusive goal of transparency.

Since Chicago and its political establishment cannot be trusted to perform a thorough and dispassionate audit of itself, any conscientious examination of finances and performance must be accomplished by an outside audit and consulting firm. Only through an impartial financial examination can errors, irregularities, or non-compliance with accounting standards be located. Likewise, through a performance audit Chicago could learn how to improve program performance and operations, reduce costs, and facilitate decision making to help Chicago’s poorly managed bureaucracy contribute to the improvement of government operations and the overall effectiveness of public services.

While campaigning for mayor, Brandon Johnson deftly avoided the subject of good governance. Since becoming mayor, Johnson’s newborn administration has set about raising taxes and expanding the size of government. With lethargy a feature of Chicago government, Mayor Johnson would be best served to authorize a financial and performance audit of the whole of city government instead of priming for yet another round of excessive taxes on residents. Financial and performance audits could unearth excess, poor governance, and corruption and lead to the dismantlement or streamlining of bureaucracies 50 years out of date. Above all, it could lead to some savings and restoring some public trust in government’s ability to manage public money.