DETAILS MATTER by Bob Ginsburg August 27, 2021

Budget Season in Illinois: Hiding the Bad News With “Happy Talk”. Why we rarely get to the discussion of new programs and long-term changes.

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Budget Season in Illinois:  Hiding the Bad News With “Happy Talk”.  Why we rarely get to the discussion of new programs and long-term changes.

“The devil is in the details’

About two weeks ago, the City of Chicago released the preliminary budget forecast for the Corporate Fund. The $4Billion Corporate Fund has accounted for 35% of the total City budget in in past years.  However, the Corporate fund has much of the discretionary funding and is unfortunately, the focus of much of the City Council debate.  It is curious that $8 Billion in revenue and expenditures is considered too complicated and pre-set.  Given that nearly $3 Billion or more are grants including ARP, it is unfortunate the City did not provide much information on them.

In addition, last week the City of Chicago announced 4 new trophy projects in the Invest South/West program that are supposed to catalyze new development in those neighborhoods. There was no discussion of improving transit access (frequency, reliability, or expanded service), no mention of expanded local schools to keep education local and affordable, no mention of better local food options, and finally, no mention of local health care.  Those neighborhoods are filled with one-off projects.  By the time the trophy projects are completed and any the City begins any meaningful discussions of what is needed for a stable community, the current residents will likely be long gone.

Finally, there were articles on how the CTA had enough federal funds to cover the next couple of years of reduced ridership. The big “IF” is whether ridership returns to 2019 levels or remains at 80% or less.  If it remains low, the 2024 budget will be in crisis. Michael Fassnacht, Chair of World Business Chicago predicted a permanent change in commuting patterns could lead to a drop 200,000 fewer downtown workers. Two days later, Kraft Heinz (along with United Airlines) said they would formalize a hybrid work schedule starting in January 2022 with two days of remote work. (Kraft) Needless to say, this will change CTA and downtown shopping futures.   This was not accompanies by any public announcement of efforts or plans from the Mayor’s office or CTA on how they intend to attract old and new riders or how they are beginning to plan for different futures. 

So given that news, I peeled back the limited information in the 2022 Corporate Fund Budget Forecast to see what was indicated about the long term forecast or plans for the City.  To no surprise, it was not in the budget.  The larger question is why government is unable to even discuss the long term issues let alone address the need for long term initiatives. One of the supposed advantages (though unrealized for much of my political lifetime) of the public sector over the private sector is that it is not bound by short term profit needs and can plan and carry out projects years in the future.  The interstate highway system (despite its limitations) could not have been designed and implemented by the private sector over the 30 years of its initial construction.  Obviously, the answer is not simple but one aspect we can easily see in any budget today is the level and type of public employment.

CONTINUING DECLINE IN CITY EMPLOYMENT

The table below shows the number of “FTEs” in the budget for 2019, 2020 and 2021 and the actual number of employees as of July 30, 2021.  Given that the City eliminated 1,900 budgeted but unfilled positions as part of the 2021 budget (out of approximately 3,300 unfilled but budgeted positions as announced in September 2020) this represents the future trend of the City. 

WHY THIS MATTERS?

As public employment shrinks and becomes less stable, especially at the skilled and management levels, two trends dominate. First is “Government By Consultant” and the second is the inability to create implement plans and projects that take a number of years to complete given the over-riding short term election priorities.  The inability to do long term planning (coupled with the loss of institutional memory and skills) makes one-off or “trophy” projects the norm.  The change in government staffing and funding can be seen in the resources in the Law Department and Procurement devoted to contractual services as shown in the table below.

Modern governments should function by having a core of competent and motivated public servants which make government work. One of the state’s primary functions is the building and maintenance of infrastructure. In a modern society infrastructure is more than just roads and bridges but also communication (e.g. broadband), education and training, and, at the state and federal levels, stable support for long development of new ideas and technologies before they are practicable. That is the framework and tools needed by individuals and businesses to thrive. 

Meeting that function requires stable revenue and an experienced group of employees that can develop and oversee creation, planning and delivery of programs as well as other staff to deliver basic services (health care, housing, public safety, maintaining streets and sewers, running buses, trains and airports.)  Without that knowledge and experience base, government has to contract out for more and more services even to deliver basic or core services.  Just look at the on-going problem  at the Cook County Hospital system to hire more nurses rather than pay more for contractors. The Chicago Department of Transportation has one set of contracts to do planning, another to do design, another to do construction (which has been done by the private sector for 80 years) and another contract to oversee the construction.  40 years ago only the construction was dominated by outside contractors.

Under Richard Nixon, the first step to undermine the ability of government to function was the creation of Block Grants (e.g. CDBG) which diverted money to suburbs and away from urban centers.  This was coupled with an explicit goal to shrink the real level of funding over time (compared to costs and inflation).  The effort accelerated with Ronald Reagan.  The reason that the Heritage Foundation transition program for Ronald Reagan in 1981  made its two top principles to first cut both the absolute funding of government and the ability to provide long term funding and secondly, to make government employment less stable and desirable.  Every Republican administration from Reagan on cut or reduced scientific or technical boards and staff, reduced data collection and analysis. As the amount of information and technology grew, the ability of government managers to understand and use it decreased.  Thus, the FAA eventually totally outsourced “independent” review of new planes to supposedly independent groups within the companies building the planes. (Boeing).  The critical Air Traffic control network computer system has not been updated in 50+ years as they needed one set of outside consultants to design the concept and another to build the system and another to oversee implementation.  Transportation Departments often function the same way now.  Consultants have no incentive to take the long view as long as they get paid on an annual cost plus basis.  Costs for any project can only go up. 

HOW TO START DOING THINGS DIFFERENTLY?

This is a larger issue and not easily resolved. At first, we need to get funding out quickly to start building things while at the same time begin investing in new agency staffing to oversee and complete projects. However, we cannot get bogged down in staffing delays nor expect to go back to staffing levels of the 50s and 60s. . We also cannot afford the slow rollout and inconclusive public perception of projects under Obama’s ARRA.  However, the first step is recognizing the problem.