Chicago lobbies for direct local government aid that also benefits smaller cities

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The next COVID-19 federal relief package should direct aid to municipalities to help replace lost revenue and smaller cities should receive a share, Chicago Mayor Lori Lightfoot said Thursday.

While a series of packages have provided help on the expense side of dealing with the pandemic including the Coronavirus Aid, Relief and Economic Security Act signed March 27, “there is so much more that needs to be done,” Lightfoot said referring to a fourth stimulus/relief package being discussed that has bipartisan support but faces obstacles on the size, scope and timing.

"I join literally a chorus, a tabernacle of mayors, who are saying you have got to help replace lost income,” said Chicago Mayor Lori Lightfoot said.

“I join literally a chorus, a tabernacle of mayors, who are saying you have got to help replace lost income,” Lightfoot said in response to reporter questions during her announcement of a COVID-19 economic recovery task force.

Lightfoot said the city is looking at various buckets of support it would seek from the federal government from replacing lost revenue to further help on housing and homeless initiatives. “We are in the process of quantifying” the anticipated loss in various tax and fee revenues from the shuttered economy that will impact sales, hotel, fines, leisure, and motor fuel taxes. The city operates on an $11.65 billion 2020 budget.

“We would like that to be directed to the cities,” Lightfoot said of additional aid and the federal government should lower the threshold for direct benefits in the CARES package.

Illinois’ share from CARES is about $4.9 billion with between $2.7 billion and $3.5 billion going to the state and the remainder earmarked for local governments with a population of more than 500,000. Only Chicago and various Illinois counties meet that threshold. “I’m hearing from mayors all across the region saying ‘we got left out.’ That can’t be. They are a vital part of the region too.”

Lightfoot’s comments came as the House was voting on a nearly $500 billion relief package that bolsters small businesses on payroll protection and hospitals and day after Senate Majority Leader Mitch McConnell raised questions over providing more direct state aid in the next package saying he was concerned over it being used to bail out pensions and that states should be allowed to file bankruptcy instead.

Lightfoot and former White House chief of staff and U.S. Transportation Secretary Samuel Skinner will co-chair the task force. It’s divided into five groups made up of regional government leaders, industry and business officials, community and local leaders, and policymakers. They are charged with making policy recommendations.

“COVID-19 is more than just a health crisis — its impact on our local economy has cost the livelihoods of thousands of Chicagoans and has imposed tremendous hardships across the social and economic fabric of all our communities,” Lightfoot said.

The policy and economic stimulus group is being led by Roberto Herencia, chairman, Byline Bank; Mellody Hobson, Co-CEO, Ariel Investments, Bob Reiter, president of the Chicago Federation of Labor, and Jenny Scanlon, head of UL.

The other groups cover mental and emotional heath, marketing and business development, regional coordination with the heads of Cook County and DuPage County among the co-chairs, and an economic change study group.

The taskforce’s initial work will focus on plans needed to emerge from sheltering in place and unemployment. Lightfoot said 247,000 in Chicago have filed unemployment claims in March. The “change study” will gauge the full extent of economic hardship and provide a baseline for the city as well as the business community.

Chicago budget officials this week said they expect to spend $150 million through June for COVID-19 related expenses and will seek federal reimbursement. Costs so far are for equipment, supplies and quarantine and shelter sites. The city believes it’s eligible to receive more than $500 million in federal aid from CARES with its eligibility on other packages still under review.

Lightfoot has said the city is still assessing the potential toll and revenue losses but is not considering layoffs, changes in the pension funding ramp or dipping into reserves. The city maintains strong liquidity of more than $2 billion in cash to manage near-term costs, as noted by rating agencies.

The council is expected to vote Friday on an ordinance that gives Lightfoot more flexibility to quickly move city money around and strike contracts under $1 million without council approval. Two aldermen used a parliamentary maneuver to delay the vote Wednesday. Lightfoot previously signed an order giving her the power but wants the council’s stamp of approval.

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Coronavirus City of Chicago, IL State and local finance