“Chicago is a welcoming city and always will be, and we will not be blackmailed by President Trump's Justice Department,'' Mayor Rahm Emanuel said Monday.
Chicago Mayor Rahm Emanuel will hire more police officers and announce other strategies to stem the city’s rising homicide rate and shootings that’s generated negative headlines nationally. Bloomberg News

CHICAGO -- Chicago plans to bolster its police ranks as part of a broader plan to tackle a skyrocketing homicide rate that some believe threatens to undercut the city's recent fiscal progress.

Chicago police superintendent Eddie Johnson announced plans to swell the department's ranks by about 1,000 on Wednesday with initial funding expected to be included in the city's 2017 budget. The added expense comes with the city already facing a $137 million budget gap with efforts to shed most of its more than $100 million retiree healthcare tab is pending before the courts.

That announcement comes ahead of Mayor Rahm Emanuel' public safety speech planned for Thursday evening.

Emanuel is expected to lay out broader strategies on job creation and youth mentoring that he believes will help curtail the wave of violence. Emanuel has characterized his plan as "comprehensive" with attention on policing, punishment, prevention and parenting.

In addition to the political toll the negative headlines exact, they also may weigh on investor perceptions, several market participants said. A prolonged increase in crime could provoke longer-term worries over the city's ability to maintain and grow its residential tax base and make further gains in attracting new businesses and tourists.

Such concerns could undermine the city's progress in reducing its structural deficit and tackling its pension woes especially since its pension reform plans require more revenue in the coming years.

Spiking crime and the national headlines it spurs have a "corrosive" effect on the city's overall image and when that happens "people leave," warned Brian Battle, director of trading at Performance Trust Capital Partners.

The city has to show that it is doing what's needed to protect the "the health, safety, and welfare" of residents, Battle said. "I think the mayor is being shrewd" in his fresh announcements.

"It has to be addressed and the hiring of new police is a show of force," said Richard Ciccarone, president of Merritt Research Services. "It's healthier for the city tax base if the city provides a relatively safe environment for its residents and businesses. We don't want to derail the positive momentum."

The initial price tag for the police additions would be borne by the city over two years but the precise expense – which has been estimated at about $135 million annually once all the new hires are in place-- and how the city would cover it remains unclear. A possible reduction in overtime costs that currently top $100 million annually could offset some of the expense.

Emanuel said the 2017 budget he will unveil next month will fund the officers and initiatives. He directed his finance team in August as budget work began in earnest to prioritize public safety and he stressed "we won't raise taxes to pay for it."

City taxpayers have been saturated by tax increases to cover pension funding increases. Emanuel won a record property tax hike last year for public safety pensions and a new water/sewer tax was recently approved to help stabilize the municipal employees' pension fund. That's on top of a host of other fees and hikes implemented in recent years including water rate increases, levy hikes for the schools, and a new garbage collection fee to help the city and school district erase red ink or fund infrastructure.

After his re-election last year, the Emanuel administration was forced to restructure debt to solve a potential $2.2 billion liquidity crisis due to defaulted bank contracts triggered by its fall to junk rating from Moody's Investors Service. And the finance team pursued costly pension fixes in the aftermath of court rulings that voided the city's ability to cut benefits.

In tandem with that progress, the city's homicide rate has swelled to more than 500 so far this year and is on pace to set hit a 20-year peak by the end of the year. Shootings are up dramatically and department clearance of homicides is low. About 200 officers would be promoted to detective as part of the hiring plan.

At the same time, Emanuel has faced criticism for delays in releasing video of a controversial police shooting of a black teen by a white officer that has contributed to heightened tensions between the police in some neighborhoods. The shooting sparked a U.S. Department of Justice probe of the department.

The city needs to "balance" its attention on financial management and crime with both requiring "high priority," Ciccarone said.

Battle said the mayor's moves may be "overdue" given the steady rise this year in homicides but the amplified attention offers something for both "investors and constituents" in that the city is taking action.

The decision to raise the police ranks by 970 to more than 13,500 sworn officers marks a reversal for Emanuel who has for years instead turned to overtime to keep more officers on the street. Council members were briefed Wednesday. Some raised concerns over how the city would absorb the costs of the added personnel and whether the city could train enough officers to raise the ranks as vacancies need to be filled to meet attrition from retirements and promotions to make a difference in crime statistics.


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