DETAILS MATTER by Bob Ginsburg July 14, 2022
The challenge for BOTH the short term AND in the future – changing budgets to move beyond “department silos”.
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.
The challenge for BOTH the short term AND in the future – changing budgets to move beyond “department silos”.
It has been quite eventful nationally and locally since my last newsletter. When taken together – the shootings, the Supreme Court beginning to fulfill the libertarian/evangelical right wish list, the inability of Congress to develop and pass meaningful legislation – one clear take home message (among many) is the shrinking federal role in implementing new policy. We should use this as an opportunity to seriously think about new approaches with the city and county budgets just a few months away and the state budget to follow a few months later.
In Chicago, there has been much wailing and gnashing of teeth (clearly appropriate) about elections, recent and upcoming. However, it was far more revealing (to me) to see the reaction to Aldi closing its grocery store in Auburn-Gresham, creating yet another food desert. Whole Foods had done the same in Englewood a couple of months before, with a similar reaction. Of course, Whole Foods hedged its bets, and at the same time it announced the Englewood closing it was revealed, according to Crain’s Chicago Business (April 29, 2022), that it was seeking permission to open new stores on the north side. I expect to see Aldi with a similar announcement soon. On the other hand, Block Club reported that CTA (in an “invisible service cut”) is only running 50-55% of its scheduled trains (Block Club) on the Blue Line in response to declining ridership – further exacerbating employment challenges for low-income residents and people of color on the south, southwest and west sides, who now represent the majority of pandemic riders on the CTA today. The causes of these “crises” are not unrelated.
The official responses to the closing of food stores and the de facto and unannounced CTA ridership cuts were not surprising. The stories were mostly about corporate greed and lack of concern about these communities, and the failure of CTA management to let the public and elected officials know what was going on. There was almost no mention of the underlying policy failures and the lack of investment by both CTA and the city that brought the stores there in the first place and led to their closures after just a few years. The lack of much more than a pretense of comprehensive development (housing, schools, public safety, frequent/reliable transportation) around the stores pretty much guaranteed their closure sooner rather than later. The CTA’s 30-year pattern of ignoring those communities, along with its limited response to ridership changes wrought by the pandemic, guaranteed there would be little collateral development. There was no real strategy to boost residents, jobs or access to jobs in those communities. It is telling that Crain’s reported that one of the major purposes of Mayor Lightfoot’s trip to Paris (Crain’s) involved discussions on ways to increase transit ridership. But CTA is not present on the Paris trip, nor has there been any public discussion of leveraging CTA’s recent federal funding to adjust CTA service and plans to spur local development.
The stores only opened with government guarantees or commitments that supported their profit margins. In the end, Neither the government subsidies and support were sufficient to maintain the stores margins (at the level the parent companies and Wall Street wanted), nor did the communities have the resources to provide enough business to maintain those profit margins. The underlying strategy for supporting these stores as “catalysts” to broader community development and other businesses was flawed and did not work. It is not surprising that Aldi and Whole Foods closed as the direct and indirect government support tapered off.
At the moment, we do have the tools and financial resources (thanks to increased sales and property tax revenues and federal recovery funds) to identify and fund more comprehensive redevelopment plans – ones that concurrently support commercial centers, support residents so they can afford to stay in and maintain their homes and access jobs in other areas, and ensure there are reasonably well-funded and staffed schools to support families. Instead, we are still discussing affordable housing separately from schools and separately from transportation. Instead the public discourse seems to be stuck in a cycle of short-term, isolated thinking.
Money and Ideas are not the problem – we are not clear what pieces will be funded, when they will be funded, AND how they fit together
When these “catalyzing” projects for rebuilding disinvested communities are proposed, there are few details on the supporting community infrastructure needed to make them viable. In large private sector projects (such as the controversial Lincoln Yards development) all components are much clearer and specific – Lincoln Yards would not have been considered viable without all the transportation and the variety of commercial amenities included upfront. Yet we accept incomplete public sector strategies and proposals after 40-plus years of disinvestment. To be clear, there is no shortage of good individual projects (such as the Invest South/West projects) but we only implement them “sequentially” and with unclear promises of collateral development such as “future improvements to CTA third rail infrastructure on the Green Line.”
We are at a unique point where better funding is temporarily available – at least from the federal level -– with the American Recovery Act and the Infrastructure Investment and Jobs Act (IIJA). Starting this year, Illinois will receive nearly $18 billion in federal infrastructure funds, on top of the $45 billion the state already committed to repair roads, bridges, rails and more — a collective windfall for infrastructure that this area has not witnessed at any other point in its history. We have $300-$400 million each year in unallocated and unobligated TIF funds which we turn over to general operating rather than directing it to investments.
We have lost a lot of our ability to conceive of and implement big policies and programs after 40 years of disinvestment in government. Today, neither the federal government nor any state would entertain a project as big as the 1933 Tennessee Valley Authority. The private sector conceives of big public projects that depend on significant public funding (see Lincoln Yards, “the 78”, Central Station.) Yet, while the State of Illinois passed a $43 billion infrastructure package a couple years ago we still don’t know where most of it will go or how it will address our problems of unequal development. To be honest, the delays just increase the cost of changes, and thus we get less for our investments than other countries, and far less than what we need. We do need high speed rail in this country yet the cost is getting prohibitive, with the cost in LA exceeding $500 million per mile while in Spain it is “only” $140 million. (infrastructure) Recently a former congressional staffer noted in a hearing that they were told that “losses” from the Paycheck Protection Program and small business loans in the American Recovery Act exceeded $85 Billion! A large chunk of that was due to understaffed agencies overwhelmed by the size of the programs.
Yet after years without results (and without more organizing and effective election campaigns), we have no effective response to the libertarians and right-wing populists that just want to take the government out of it all together and leave it to the corporations, as they assert that government is incompetent and corrupt.
SO WHAT WOULD A DIFFERENT APPROACH CONSIST OF?
The first step is to acknowledge the problem:
After 30-plus years the underinvested communities are still underinvested. Unemployment is still too high. Food deserts have been joined by transit deserts and health care deserts. The housing crisis has only gotten worse despite record home sales in parts of the city. We need better ways to connect people to jobs, services, etc., which will make housing more affordable. Yet 45% of US residents have no access to public transit. The groundbreaking eTOD investments by the city’s housing department fail to include specific investments to address transit deserts and inadequate service on the south, west and southwest sides. To be honest, government leadership and real results are needed, as the private sector alone will never rebuild those communities.
Second is to acknowledge that we do not pass budgets with clearly identified project/program funding. We pass budgets that are primarily salary and accounting tools. The 200-plus page budget ordinances have more detail but very few members of the public or City Council look at them. Yet, budgets are important policy documents about putting “money where our mouths are.” But we do not lay out clear enforceable language in the budgets specifying where the money goes. In any society, how you spend money is how you address needs, how you identify what are important shared or community goals, and what you commit to do. This is not just my curmudgeonly perception. A recent Bloomberg BusinessWeek article, “The UK Pays a Price For Short Term Thinking” (05/23/2022), criticized the planning failures from Brexit and Covid as too timid. Of course, conservatives and their academics glorify inaction or limited action as the “best” course. (See for example “The Theory of Nothing” by Vaclav Smil.) So the question would be – what would happen if we change how we present and pass budgets to make it very clear how and where the community investment would go?
We have to learn to present larger views of what will be done and not focus on individual steps, so it is clear whom to hold accountable. The New York Times’ recent special series on homelessness focused on the City of Houston’s successes, which followed rules mandating coordination and integration of all housing, services and planning programs and enforcing that coordination and integration.
So after 50 years of multifaceted disinvestment – loss of jobs, businesses, housing, schools, commercial areas and health care – we need to really deliver on multifaceted reinvestment. We know there are job deserts, as documented in the Crain’s series (Jobs Deserts), and a housing crisis as reported in the Sun-Times article (Englewood), and transit deserts, but we need to lay out all the things that need to be funded and implemented in one package. The structure of our agencies and funding streams may not change but our accounting and oversight will. If the public funds need to be supplemented by the “market” we can still do that without gentrifying those communities out of existence.
The real question is whether we can convince communities that broad-based redevelopment is possible. It seems to me that the first step is to lay out in the budget what pieces will be funded and where each year. This is not new funding as TIFs can fund the ward-based jobs programs as well as school programs and construction. The Chicago Recovery Plan contains significant funds, with over $157 million designated in the package that was part of Lightfoot’s 2022 budget. The 2022 city budget already contains $1.3 billion in spending that is a combination of $567 million in federal American Rescue Plan money and $660 million from general obligation bonds. The county budget has enough resources for $300 million in loans to municipalities to cover the sales tax shortfall. There are funds available.
Below is what a possible new ANNUAL budget appropriation section could look like and include.