Rosenfield: Rahm Emanuel needs a plan to get Chicago budget back on track

If you know much about Chicago or the one-hit wonder band Aliotta Haynes Jeremiah, you'll realize there ain't no road like Lake Shore Drive. But pretty soon, we'll all be getting taxed when headin' into town.

As it turns out, the apocalyptic Lake Shore Drive toll is not headed Chicago's way. Neither is the alderman-supported "commuter tax." And even more good news: The "Rahm tax" on luxury goods is also likely off the table.

Therefore, Chicago still faces a $653.7 million budget shortfall. While we've grown accustomed to budget shortfalls reaching into the trillions, the gap facing Rahm Emanuel's administration is serious.

"The problem is so severe," said Inspector General Joseph Ferguson to the Chicago Tribune, "that to honestly and fully address the budget imbalance will almost certainly require difficult choices that reduce the services the city delivers, increase taxes and fees on city residents or, more likely, a combination of both."

Only last October, Ferguson's office published a report suggesting a variety of ways to close the budget gap. Quickly, his proposals were shot down. Instead of diligently closing the gap, Mayor Richard M. Daley and the alderman continued to rely on gimmicks and one-time asset sales such as the parking meter privatization fiasco, in which fees were raised and the city was short-changed.

As the Chicago Tribune reported at the time, Daley's budget verged on disaster. However, he is not entirely to blame, and Chicago is not alone in facing budgetary problems. According to a report by the National League of Cities, 2011 is the fifth straight year of revenue declines for American cities with an estimated decrease of 2.3 percent in 2011.

A few Great Lakes and 521 miles away, Toronto is facing similar trouble. But because Ontario's cities cannot borrow to run day-to-day operations, the cuts and taxes facing Toronto are terrifying. (They range from reducing business hours of many libraries to laying off 7,000 employees.) After services were downloaded from the provincial to city level "without offsetting revenues," the deficit exploded, according to Royson James of The Star.  

Chicagoans may think themselves immune to such threats, but the reality is otherwise. Only 30 years ago, "federal funds made up 15 percent of municipal spending," while today they amount to less than five percent, said Michael Pagano, the dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, in an interview with Reuters. Further cuts in federal and state funding could be disastrous for American cities.

The 2009 stimulus plan indirectly increased municipal funding, and the president's recently proposed jobs bill could do the same by increasing state funding that would trickle down to the city level.

Toronto and Chicago were warned about their budgets, and now both must confront reality. To prevent a Toronto-style meltdown, Emanuel must take the recommendations of Ferguson seriously and move quickly but diligently.

Already, he's off to a good start. Acting on Daley administration bids, Emanuel rapidly introduced competition into trash collection, and he seems poised to move to the grid system of garbage collection for a $29.6 million per year saving. Now, the difficult decisions come: whose jobs to cut and which services to reduce.

Luckily for Chicago, Ferguson's 63 proposals give Emanuel a variety of options. However, the mayor should focus on logical—though often unpopular—bureaucratic cuts and logistical changes, not massive service cuts or fee hikes. Moving to a grid system, reducing the number of firefighter and police supervisors and forcing all city employees to work 40 hours a week would be an effective start.

Unless the jobs bill passes Congress and American cities see a surge in funding, Chicago's budget gap will need to be closed from the inside. By combining intelligent cuts and considering some fee hikes, Emanuel may have just what it takes to get Chicago back on track.

Scott Rosenfield is a Medill junior. He can be reached at scottrosenfield@mac.com.