CITY OF CHICAGO FY2020 PROPOSED BUDGET: Analysis and Recommendations November 13, 2019 Table of Contents EXECUTIVE SUMMARY ......................................................................................................................................... 1 CIVIC FEDERATION POSITION ........................................................................................................................... 4 ISSUES THE CIVIC FEDERATION SUPPORTS ................................................................................................................ 5 Emphasizing Management Efficiencies and Reforms........................................................................................... 6 Funding More Settlements and Judgments from the Corporate Fund ................................................................. 6 Funding Police and Fire Pensions on an Actuarially Calculated Basis .............................................................. 6 Encouraging Public Participation in the Budget Process by Conducting a Public Survey and Holding Multiple Stand-Alone Town Hall Meetings ........................................................................................................................ 7 Improving Transparency and Accountability by Live Streaming City Council Committee Meetings .................. 7 Improving the Effectiveness of the Council Office of Financial Analysis ............................................................ 7 Seeking Reimbursement from Chicago Public Schools to Cover a Portion of the Contribution to the Municipal Employees’ Annuity and Benefit Fund ................................................................................................................. 8 Increasing the Portion of the Property Tax Levy for Library Services to Expand Hours and Eliminate Corporate Fund Subsidy ...................................................................................................................................... 8 Increasing Targeted Taxes and Fees for Additional Revenue .............................................................................. 8 CIVIC FEDERATION CONCERNS .................................................................................................................................. 9 Use of One-Time and Less Certain Gap Closing Measures ................................................................................. 9 Pension Contribution Spike in 2022 for Municipal and Laborers’ Funds ......................................................... 11 Ongoing Fiscal Imbalance ................................................................................................................................. 12 High Bonded Debt Burden ................................................................................................................................. 13 Lack of Cost of Services Data ............................................................................................................................ 13 Uncertainty With Regard to Outcome of Collective Bargaining Agreements .................................................... 14 Planned Reliance on Gaming Revenues in Future Years ................................................................................... 15 Potential for a Large Property Tax Increase or Major Cuts if Certain Revenue Sources Do Not Come Through as Planned .......................................................................................................................................................... 15 CIVIC FEDERATION RECOMMENDATIONS ................................................................................................................ 16 Work With the Governor’s Pension Consolidation Task Force to Explore Consolidation of Chicago’s Four Pension Funds .................................................................................................................................................... 16 Reasonable and Sustainable Collective Bargaining Agreement Provisions ...................................................... 17 Develop a Formal Long-Term Financial Plan for City Operations and Pension Funds ................................... 17 Include Finance General Costs in City Department Budgets ............................................................................ 18 Maximize Transparency of the Sales Tax Securitization Corporation ............................................................... 19 Re-Evaluate the Use of TIF Funds ..................................................................................................................... 19 Annually Reassess the Garbage Collection Fee ................................................................................................. 20 ACKNOWLEDGEMENTS ...................................................................................................................................... 21 FY2020 CORPORATE FUND BUDGET DEFICIT AND GAP CLOSING MEASURES ................................. 22 GAP-CLOSING MEASURES AND ADDITIONAL INVESTMENTS ................................................................................... 22 HISTORICAL TREND OF PROJECTED BUDGET GAPS ................................................................................................. 24 APPROPRIATIONS ................................................................................................................................................. 25 APPROPRIATION TRENDS BY FUND FOR ALL LOCAL FUNDS .................................................................................... 25 CORPORATE FUND APPROPRIATIONS BY DEPARTMENT ........................................................................................... 27 CORPORATE FUND APPROPRIATION TRENDS BY OBJECT ......................................................................................... 28 ALL FUNDS APPROPRIATION TRENDS BY PROGRAM AREA ...................................................................................... 30 RESOURCES ............................................................................................................................................................. 32 PROJECTED FY2020 RESOURCES FOR ALL LOCAL FUNDS ....................................................................................... 32 ALL LOCAL FUNDS TRENDS .................................................................................................................................... 34 CORPORATE FUND RESOURCES TRENDS .................................................................................................................. 37 PROPERTY TAX LEVY .............................................................................................................................................. 39 PROPERTY TAX REVENUES ...................................................................................................................................... 39 Additional Property Tax Revenues ..................................................................................................................... 41 City Colleges ...................................................................................................................................................... 42 Chicago Public Schools ..................................................................................................................................... 42 Tax Increment Financing Districts .................................................................................................................... 44 TRANSPARENCY AND ACCOUNTABILITY ISSUES ...................................................................................................... 45 PUBLIC SAFETY ..................................................................................................................................................... 46 TOTAL PUBLIC SAFETY APPROPRIATIONS BY FUND ................................................................................................ 48 PUBLIC SAFETY APPROPRIATIONS IN THE CORPORATE FUND .................................................................................. 48 PUBLIC SAFETY PERSONNEL FULL-TIME EQUIVALENT POSITIONS .......................................................................... 50 PERSONNEL ............................................................................................................................................................. 51 ALL LOCAL FUNDS PERSONNEL SERVICES AND FULL-TIME EQUIVALENT POSITIONS ............................................. 52 CORPORATE FUND PERSONNEL SERVICES TRENDS ................................................................................................. 55 RESERVE FUNDS .................................................................................................................................................... 56 FUND BALANCE DEFINITIONS AND COMPONENTS ................................................................................................... 56 GFOA Best Practices ......................................................................................................................................... 57 CITY OF CHICAGO UNRESTRICTED FUND BALANCE ................................................................................................ 58 CITY OF CHICAGO BUDGET STABILIZATION FUNDS ................................................................................................. 59 Evaluation of Budget Stabilization Funds 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