A Chicago official has called into question the mayor’s pandemic funding decisions over issues of sustainability.
Mayor Brandon Johnson has until December 31 to finish allocating the $1.88 billion the federal government gave the city after the COVID-19 pandemic or lose the money. So far, 90 percent of the money has been allocated, and 83 percent was spent in the city—$576 million was specified for community initiatives.
With more federal stimulus money available to supplement the city’s budget, Chicago’s ARPA (American Rescue Plan Act) Recovery Plan showed a 29 percent increase in total obligations and a 24 percent surge in total expenditures over the last year.
One of the largest expenses is a $64 million guaranteed income program. The initiative was relaunched as a way to support low-income residents with $500 monthly checks that they could spend as they choose.
“Currently, cities are finding ways to institute ‘no-strings attached’ income strategies to designated low-income communities,” Kevin Thompson, a finance expert and founder and CEO of 9i Capital Group, told Newsweek.
“Chicago is not the only city that has engaged in using pandemic dollars to allocate to such programs. Countries around the world have found programs such as these to provide much needed assistance to families looking for a break especially during these inflationary times.”
Still, some people are concerned over the increase in costs that the city has seen over the past year but is unlikely to be able to sustain without the federal stimulus money in years to come.
Downtown Alderman Brendan Reilly told WBEZ Chicago it was “great” Johnson is “obligating more of that money so we don’t have to turn it back.” But he has concerns over Johnson extending “feel-good social programs that are not sustainable,” because of the problems posed when the money dries up.
“It’s almost like giving a heroin addict more heroin,” Reilly said. “You’re prolonging this dependence on a program or an expansion of a program that local tax dollars can’t sustain over the long haul. It’s delaying…having to rip a Band-Aid off of many of these social programs that are all well-meaning.”
Newsweek reached out to Johnson and Reilly for comment via email.
The city’s budget director, Annette Guzman, said they haven’t had this much federal infusion of money into local jurisdictions since the 1950s but that the city is prepared to keep up with the funding.
“There’s such a thing as capacity building to be able to maintain and handle that, which we’ve done,” Guzman said. “Now, we’re ready. Keep the spigot coming because we can handle these dollars.”
Still, Reilly is concerned that the programs will become too heavily relied on by residents, causing funding issues down the line.
“Large constituencies will consider them to be very popular and not want them to go away,” Reilly said. “That’s going to put a lot of pressure on progressives and Democratic Socialists in the City Council to find new local tax dollars to support those programs, which spells bad news for local taxpayers.”
Alderman Bill Conway said the city was using its stimulus money to fund programs it would likely need to cut in the future.
“We could have adjusted this so all of this money would have been deemed revenue replacement instead of trying to allocate it to programs,” Conway said. “We could have used this money in a way that would have offset costs. In the last round of funding for the migrant crisis—the last $70 million—we could have and should have used ARPA money….We passed on the ability to do that, which was foolish.”
Last year, Johnson used $95 million in ARPA money for migrants, and some question how that and other money decisions will affect Chicago’s future.
“Chicago faces a financial reckoning and everything we can do to try and make that less painful—we should do that,” Conway said.
Thompson rejected arguments that spending money on the migrant crisis was the wrong step, saying the problem would have cost the city regardless.
“Those arguing that using dollars towards for the migrant crisis, in the case of Chicago, should have gone to other programs, need to realize that the migrant crisis was going to cost your city one way or the other,” Thompson said.
“Using these funds basically helps offset the cost that you may have incurred otherwise. As long as the data remains positive around such programs, I foresee this being a net positive for Chicago for the longer-term especially given the fact they effectively offset cost by using the money from the American Rescue Plan.”
When former Mayor Lori Lightfoot was in office, she allocated the federal relief money to many new social programs, and some of those initiatives are straining the city budget.
Amid these concerns, Guzman said the city is implementing a “sustainability analysis” to decide which programs are worth making permanent and which should be cut over financial concerns.
“We can only afford what we have resources for….We can’t do everything,” Guzman said.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said many Americans might find the idea of certain cities and states needing to spend their pandemic emergency funds as “ludicrous,” but many local governments find themselves in this same situation.
“It speaks more to the sheer amount of dollars dispensed during that time,” Beene told Newsweek. “There is some truth to the comment of residents getting ‘addicted’ to the funding this stimulus provides.”
Beene also questioned what will happen after so many years of the programs being relied on by low-income families.
“While it’s great these individuals and families are getting this assistance, after so long, it could make them anticipate these incentives always being there when they are guaranteed to run out when the money dries up,” Beene said.
“Any strategy of dispensing the remaining funds should include messaging to those receiving these that there is an end date, and they should prepare for it.”
