Chicago Faces $1.2 Billion Shortfall in 2021 'Pandemic Budget'

CHICAGO – Mayor Lori Lightfoot on Monday said that with the city and country facing a catastrophic collapse due to unforeseen coronavirus costs and economic hardships to local businesses caused by a global pandemic and multiple rounds of civil unrest and looting, Chicago will face a budget shortfall of $1.2 billion in 2021.

Lightfoot announced Monday that the city now faces a $800 million "financial mountain" budget shortfall in 2020 alone and said that the city's 'pandemic budget' will experience a $1.2 billion shortfall due to ongoing economic hardships. Under some scenarios, the city could be looking at a scenario of a gap of $1.9 billion before city officials believe the economy eventually recovers sometime in 2022.

The Mayor said Monday that in lieu of the shortage of funds, everything is on the table although members of Lightfoot's budget and economic team said that the city filing for bankruptcy is not being considered.

Of the $1.2 billion shortfall, $783 million is a result of revenue losses caused by the pandemic, Lightfoot said. However, after recent looting and protests have taken place around the city since the death of George Floyd in Minneapolis, Lightfoot acknowledged on Monday that times have continued to get tougher since the pandemic first hit the city in mid-March.

Lightfoot said that "criminals" who participated in looting downtown not only after Floyd's death, but again more recently, not only shattered windows, but "shattered hopes and dreams and confidence in Chicago as a place that can sustain lives and livelihoods."

Lightfoot added: "Fear begets fear."

While Lightfoot said the city would attempt to use $350 million in federal CARES Act and stimulus dollars and $200 million in debt refinancing to shrink the financial gap, the Mayor said that the city faces tough changes, including. possible layoffs. Lightfoot added that she would prefer to avoid a hike in property taxes but said that with the city's economy likely not facing a recovery until 2022, all options have to remain open.

“The reality is that life will be different for the foreseeable future, impacting how services are provided and how departments are structured, and we must adjust to meet that reality,” Lightfoot said during Monday's budget forecasting speech. “A very difficult part of reimagining government will also include looking to our workforce, and making needed changes in places that are not being fully utilized during the remainder of this crisis and in our post-COVID-19 world.”

Monday's mayoral announcement comes at a time when more than 900,000 residents have filed for unemployment since the start of the pandemic, which has pushed the region’s jobless rate to 12.6 percent.

While Lightfoot believes the city will eventually find its way to a “safer, more prosperous and more just future”, the resiliency Chicagoans have shown in the past must rise the surface as challenging obstacles remain.

Lightfoot referred to the city’s 71,000 confirmed cases of coronavirus and 2,800 COVID-related deaths as being devastating and said that residents must stay as diligent as they were when the pandemic began in March.

She said when she announced the $700 million shortfall two months ago, the amount was admittedly conservative, which led to Monday’s announcement that the gap had risen by an additional $10o million. Lightfoot said that as hard as the city has been hit in 2020, she expects the hardships to continue deep into 2021, which led her to announce the city's pandemic would grow to more than $1 billion before Chicago's economy begins to recover.

“Our rising case levels have hampered our city’s economic recovery,” Lightfoot said Monday. “Particularly those businesses most impacted by COVID-19, restaurants, bars, hotels, entertainment venues of all sizes from small independent clubs to large concerts and tours, convention and tourism, hotels and all of the other related businesses — they are still hurting because COVID-19 is still here and on the rise. There is a direct cause and effect.”

As the city continues to face dire financial straits, Lightfoot called on city residents to continue to sacrifice at a time when she acknowledged that people continue to leave the city and business owners continue to struggle. Lightfoot's economic team said Monday that a world-class entertainment center that would include a casino could bring "hundreds of millions of dollars" but there is no set timetable of when that may happen.

As residents continue to deal with coronavirus-related concerns and health and safety guidelines, Lightfoot said that the city must stay strong as it deals with financial struggles that are being felt in cities across the country.

"This is not an environment any of us want to be in," Lightfoot said. "But we have to play the cards we are dealt...if we were any different than anyplace else in the country, I'd have even more concern. But there's no place in the country that isn't (facing) exactly the same kind of hard choices that we are.

"The grass is, unfortunately, not greener somewhere else."