Chicago City Wire

Chicago City Wire

Wednesday, January 29, 2020

Chicago GOP leader says bankruptcy may be city's best solution for massive debt


By Adam Hochron | Sep 30, 2019

Chicago Mayor Lori Lightfoot

Just five months into her term, Chicago Mayor Lori Lightfoot is already facing the prospect of finding a solution for a massive budget deficit. 

Facing a deficit of more than $800 million, Lightfoot has floated several ideas including raising property taxes, while some on the other side of the aisle say the city should follow Detroit's example and declare bankruptcy. 

As the chairman of the Chicago Republican Party, Chris Cleveland said the idea of raising property taxes is a non-starter for city residents who he said are already paying higher taxes than many can afford. He also said any increase in property taxes could pose a challenge to the city’s finances as it could continue a growing trend of people leaving the city and the state for more affordable locations.

Chris Cleveland, chairman of the Chicago Republican Party

Lightfoot’s idea of raising property taxes was one of several suggestions she made during a recent appearance at a conference for municipal bond investors. Crain's Chicago Business reported that at the meeting Lightfoot suggested raising the city’s real estate transfer tax on higher-end properties and raising the levy placed on ride-sharing services like Uber and Lyft, while still leaving open the possibility of raising property taxes.

While Lightfoot may not have caused the massive hole in the city’s budget, Cleveland placed the blame squarely at the feet of her Democratic predecessors.

"The Democrats are clearly to blame for this," Cleveland told Chicago City Wire. "They’ve been in charge of Chicago for 80-plus years now. They dug this hole. It’s because they think you can tax and spend without limit and now they’ve found that they hit the limit.”

Cleveland said the answer to the problems the city faces is not more taxation, but rather to cut spending. He said the biggest problem is the city’s pension program.

“[The problem is the] excessively generous compensation to public employees,” Cleveland said. “If they don’t tackle that problem, the city is going to collapse financially.”

Rather than trying to steer the city away from bankruptcy, Cleveland said it could be a good thing. By declaring bankruptcy, he said, the city would be able to go through the court system to renegotiate contracts that are rapidly depleting the city’s coffers.

“The mayor is still enjoying a honeymoon," Cleveland said. "More power to her, but she’s got to get serious about spending.”

One area where Cleveland said people on both sides of the aisle agree is looking at the city’s Tax Increment Financing (TIF) program.

"It's a slush fund for the government to distribute money to favored developers and projects," Cleveland said. "It's corrupt at its very core.”

Cleveland said that by redistributing those funds, the city could find some much-needed revenue to help solve its considerable problems. More information about the city’s TIF program can be found on its website.

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