DETAILS MATTER by Bob Ginsburg
We need Post Covid Agenda to Rebuild Illinois from the Community Up. Repeating the same strategies that failed in the pandemic crisis does not make sense.
Welcome to Details Matter a Newsletter about urban development, public finance, Transportation, and politics in Chicago and Illinois. You can subscribe/unsubscribe at (https://robertginsburg.substack.com/welcome). Get previous issues which mostly focus on dealing with the fiscal crisis at (https://robertginsburg.substack.com/archive). PLEASE FORWARD if interested.
We need Post Covid Agenda to Rebuild Illinois from the Community Up. Repeating the same strategies that failed in the pandemic crisis does not make sense.
The last few weeks have seen a flurry of proposals on what Illinois needs to do to recover from the pandemic induced financial crisis. Many of these are from the business community opining on the need to fix the major producers of sales tax (e.g. Michigan Avenue and McCormick Place Convention Center) and economic output such as tourism and downtown. (For example Cahill on Business along with several other reporters, March 12; Danny Ecker in Crains, March 19,) World Business Chicago discussed the City’s Marketing strategy which talked about “authenticity” of Chicago and neighborhoods but focused on attracting tourism and businesses downtown (Fassnacht) . Other proposals focus on large problem areas such as transportation (Theo Anderson) though without any idea on how the City and CTA budgets would need to change to fund real transportation improvements. Even the call for radical innovation by the City Tech Collaborative (City Tech) make a general argument for big changes but is not designed to provide details on how to fund it or how institutionalize those changes.
It is good that there are all these discussion. Many of the proposals identify critically important pieces to any comprehensive strategy or plans. Of course the current budgets and structure of the Illinois economy rely on revenue from O´Hare, Midway, Michigan Ave and the McCormick Place Convention Center. What is missing is how to address the underlying problems exposed by the pandemic and the social protests. Nowhere in the mix of proposals to improve restaurants and McCormick Place and Michigan Ave and downtown tourism and suburban malls is a plan to fix the outdated and discriminatory public financing system and the underfunding of too many communities. Too much time and effort is being spent on whether Target should have a site on Michigan Ave rather than how to support and grow the economic engine on 26th Street or to fund public transit. Complaints about the deterioration of the CTA (Greg Hinz) focused on downtown traffic and not on the impact on destabilizing neighborhoods which, if left unchecked, will doom Chicago in the long run no matter how much money is poured into downtown.
The lack of an alternative community based strategy is a problem. It has to go beyond how the City and state will allocate the American Rescue Plan funding (which amounts to $7.5Billion for the State of Illinois, $1.8Billion for the City of Chicago and $800Million for Cook County). That funding will go to reimburse the City, County and State for expenses or shortfalls due to the pandemic rather than fund new initiatives. All the business and official plans focus on reviving or helping restore what we had before the pandemic. That economy failed during the pandemic so go back to only what we had will not address the problems we need to address in the future.
Even the Chicago Central Area Committee and the City Department of Planning and Development plan for post-COVID recovery (presentation to Chicago Plan Commission, March 18) which emphasized and discussed the need to have neighborhood investment, still focused first on maximizing the central area’s recovery as the focus through 2024. As usual, the Downtown business areas get funded first as the “anchor” for growth and opportunity within adjacent neighborhoods and throughout Chicago. The critically important Invest South/West plan is proceeding in fits and starts as every set of projects needs to cobble together funding from mostly philanthropic sources, one-time corporate contributions or limited federal and state funds. Planning and directing broad development plans requires far more consistent funding and resources than is currently available or conceivable. If one-time and inconsistent philanthropy and corporate contributions or “spillover” from downtown development (as has been pursued for the last 30 years) are the core funding, we will never create the kind of broad-based economy we need.
It is the embodiment of the adage, attributed to Albert Einstein - If you want different results than what you’re getting; you have to try different approaches. (I should note at this point that as far as I know Einstein never said or wrote that and that many sources attribute it to an October 1981 Knoxville, Tennessee newspaper article describing a meeting of Al-Anon - but I digress.) We need to keep growing downtown but we need to guarantee broad investments in communities and commercial areas outside the Central business Districts. We need to focus as much on fighting and funding solutions to the causes of problems as we do on fighting symptoms. Those investments need regular funding and need to be part of the formal budgets. Those communities and commercial areas need well-funded and reliable public transit to make sure residents can easily access jobs throughout the region; they need a regular influx of affordable housing rather than the ad hoc, haphazard trickle down pattern we have now; they need high quality public education and workforce training resources including affordable and accessible broadband access in or near their centers; and finally they need safe communities.
SO HOW SHOULD WE GO ABOUT THIS DIFFERENTLY?
First, I agree with Theo Anderson and others on a focus on mobility especially if we integrate mobility funding with spending and planning for affordable housing and access to local or sub-regional commercial areas (which will spur support for local, Black and Brown owned businesses.) Black households are three times less likely to own a car than white households, meaning they lack access to the infrastructure most heavily prioritized and funded nationwide. People of color also make up a majority of transit riders and have longer commutes. And the urban landscape is packed with examples of highways carving up Black communities, cutting off accessibility and spewing disproportionate amounts of pollution.
Aggressive investments in public transit and a plan for vastly improved connectivity, for example, would reduce inequality. Harvard scholar Rosabeth Moss Kanter (Move), notes in her 2015 book “Move”, that Chicago’s transit system ranks sixth overall. Yet Chicago ranks 56th in labor market access—with less than a fourth of residents able to get to work by public transit in less than 90 minutes. And let’s be clear: People without transportation options are stuck in more ways than one.
Reversing the most harmful of decades worth of decisions about how our City and State transportation system is designed will largely fall to new federal funding programs but the State has a $45B infrastructure plan that needs to be used to transform the past transportation plans. It requires turning buzzwords and pledges into real change that tackles systemic, ingrained ways of doing business. It also requires focused leadership at the City and State level. The Governor and IDOT need to designate an office to function as a Program Management Office to move the state and local funding to meet new goals. The City needs an infrastructure Deputy Mayor to require that CTA, CDOT, DPD and the Housing Department pool their funds, and coordinate and jointly plan to meet the goals. Some part of the State Infrastructure plan should be dedicated to core funding for Invest South/West as well as for key initiatives in other urban and rural areas of the state.
Second, The State budget and revenue needs to be reformed to reduce the reliance on property taxes and sales taxes by local governments for schools, infrastructure and pensions AND reduce the impact on lower earning residents. The Biden administration recognizes the need to help state and local governments through this financial crisis. The State needs to accept its responsibility to help local governments through this crisis and beyond. The Governor’s proposed budget includes a proposal to reduce the LGDF distributions by 10% and contributions to the Public Transportation Fund and the Downstate Public Transportation Fund by another 5% which would reduce funding to local governments and transit agencies by $204 Million in FY22.
Budgets are moral and political documents that should reflect our priorities. We have created governments because there are many things in modern societies that are more effective if funded and implemented as a whole. Governments were created to insure comparable and affordable opportunity to succeed. There are many ways to create a fair and balanced budget. I reprint the options I came up with last month but there are many possibilities.
-A major reorganization of public financing is harder to politically but is the only way forward. Such a reorganization would include several pieces:
(1) a substantial income tax surcharge or an income tax increase combined with a series fo refundable tax credits like the EITC and increases in the child tax credit and the personal exemptions. The credits and exemptions would be designed so that IL households with less than $150,000 in income would not see an income tax increase,
(2) An increase in the sales tax to the same services taxed in surrounding states,
(3) Addressing the crisis in municipal and County budgets by doubling of the Local Government Distributive Fund to 12% (which would provide an extra $1.5Billion to local governments) and require municipal and County governments (and perhaps not school districts) to make a mandatory reduction of local property taxes (as the requirement to getting access the increased LGDF funding.) Vermont recently proposed a tax revamp that included a similar set of tradeoffs. (https://ljfo.vermont.gov/committees-and-studies/tax-structure-commission)
-The Center on Tax and Budget Accountability issued a white paper on February 16 discussing progressive ways to increase the flat income tax to raise additional funds and address the structural deficit. ( https://www.ctbaonline.org/reports/increasing-income-tax-rate)
-A Crain’s Chicago Business op-ed recently suggested extending the sales tax to the services taxed in surrounding states. (https://www.chicagobusiness.com/joe-cahill-business/loophole-pritzker-wont-close)