Welcome to Issue #5 of the Red Star Bulletin!
The aim of this bulletin is to bring Chicago Democratic Socialists of America members a regular round-up of important legislation, committee meetings, and other updates from City Hall, as well as analysis of what this means for our organizing as socialists.
Make no mistake: the City Council is not friendly terrain for us. We must first and foremost continue to build power in the places it derives from–our workplaces, our neighborhoods, and the streets. But we hope to give CDSA members information they need to assess the electoral project we’re embarking on, and to continue building it into a powerful vehicle for working-class politics in our city.
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Response to Lightfoot’s Budget Speech
On August 29, Mayor Lightfoot gave a ‘State of the City’ address which focused on Chicago’s finances. Lightfoot explained that the city is facing a budget shortfall of $838 million in 2020. The shortfall is predicted to be worse in 2021. The mayor did not go into specifics on how city hall plans to plug the deficit, but even the vague overtones of hard choices and shared sacrifice are troubling.
Lightfoot largely campaigned on a platform of ethics reform, police reform, transparency, and general good government. The mayor correctly pointed out during the address that she has already enacted policies intended to address those issues.
However, the general fiscal policy hinted at during the address and subsequent public comments has raised serious concerns that Lightfoot’s City Hall will continue the neoliberal economic priorities implemented by the two previous mayoral administrations. From the address:
“There are limits to what any mayor can do alone to generate revenue. We have and continue to explore every reasonable option. ‘Reasonable’ to me means relieving the financial burden on those least able to afford it, AND not driving businesses out of Chicago. These two principles will guide my decision-making about revenue options.” (Emphasis in original)
Mayor Lightfoot then indicated that all options for revenue generation and budget reduction are on the table.
While we support relieving the financial burden on working families, the second “principle” calls into question the lengths to which Lightfoot will be willing to go in order to generate revenue.
When asked at a presser on August 30 about what kinds of policies would drive business out of the city, the Mayor replied bluntly: a Lasalle Street Tax. “If we try to put a tax on transactions, companies will literally flip a switch and do business elsewhere and there will never be another trade in the City of Chicago. I don’t think that’s a bluff.”
A Lasalle Street tax, such as the one proposed by Rep. Mary Flowers, could generate billions each year for the state, all from enacting a $1 fee on all financial transactions. Capital could go on strike and leave the city, as Lightfoot worries, but that’s easier said than done for companies like CME Group which has 1,800 employees in Chicago. CME Group was formed out of the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade in 2007, followed by other large acquisitions like the New York Mercantile Exchange, Kansas City Board of Trade, and London’s NEX Group. CME Group remains headquartered in Chicago.
“If we don’t secure this casino and the revenue it creates . . . we will be forced to make painful choices on finding other revenue sources – and we all know what those are, the sources we wish to desperately avoid.”
How does a casino, and taxation of legalized gambling more generally, compare as revenue stream to a tax on financial transactions? And why is one on the table but the other not?
Slot machines with a lower cost of entry generate the majority of revenue for casinos; table games generate a much smaller minority. Many states tax gaming machines at a higher rate than table games for this reason. According to the Illinois Gaming Board, in May of this year alone Illinois residents waged over a billion dollars between the state’s existing eleven casinos — and just on electronic gaming devices. In the same month, only $127 million was dropped at table games. The adjusted gross receipts — the actual taxable revenue of casinos deducting winnings paid out to winners — in that month was $118,141,437. Gross casino revenue in 2018 in the state was $1.37 billion with $462.2 million in tax revenue.
How is taxing gambling different from taxing cannabis? One key difference is that the cannabis industry is productive; it is a material commodity with use vale that can be separated from its exchange value. Gambling’s core value is providing a chance possibility of an increase on the initial exchange value paid out to the house, win or no win. Gambling primarily then exists as a way for the capitalist class to extract back a fraction of the money paid out in wages and benefits to workers.
One week prior to Mayor Lightfoot’s address, United Working Families membership passed a resolution for an “Anti-Austerity Budget” demanding disinvestment from developers and police, taxation of wealth, and reparations. Grassroots Collaborative released their Reimagine Chicago Platform during the mayoral campaign, which includes a set of proposals they now expect to generate $4.5 billion.
We will not know the specifics of Lightfoot’s plans until the 2020 budget is released in October. We do know that many of the proposals which would allow Chicago to generate revenue through taxes and fees levied against the wealthy require changes to state law. Mayor Lightfoot will need to work with Springfield in order to see those changes implemented. The sooner that process starts, the better.
- The full budget report is available here.
- There will be four town halls about the budget.
- The first is archived here.
- The second is archived here.
- The third is being held from 6:00 p.m. to 8:00 p.m. on Thursday, September 19 at George Washington High School, 3535 E 114th St.
- The fourth is being held from 6:00 p.m. to 8:00 p.m. on Wednesday, September 25 at Lindblom Math and Science Academy, 6130 S. Wolcott Ave.
- The Center for Tax and Budget Accountability has created an online tool for analyzing the budget from 2012-present and also a primer on decoding budget arcana.
As socialists, we know that taxing the rich is not just a moral principle that asks them to “pay their fair share.” It’s also a recognition that all their profits are derived from our labor, and prying more of these profits away for public use is one way that we take back collective resources. The idea that businesses, or wealthy individuals, will pack up and leave the city entirely if we tax them is not only improbable, it’s exactly the opposite of what we should be worried about. Instead, rising property taxes are driving many working-class homeowners out of the city, and mass school closures and general neighborhood disinvestment have led to a wave of African-Americans, in particular, leaving Chicago by the thousands each year.
Chicago is still a city rich with immense wealth and resources. The only reasonable solution is to fight for a fairer distribution of them with every tool we have.
Tax Increment Financing
It has been well-documented that funding public schools through property taxes is problematic; exacerbating the opportunity and achievement gap between students along socio-economic lines. The problem is made worse in Chicago with some property taxes being diverted into Tax Increment Financing (TIF) funds.
TIF funds are generated by TIF districts. In order to be designated a TIF district, an area must qualify as blighted or in danger of being blighted. The criteria necessary to meet this threshold are flexible enough to include parts of the Loop.
The process of designating and establishing a TIF district starts with the hiring of a consultant who conducts an “eligibility study” of the proposed area. If the area meets the state standards for being blighted then a redevelopment plan and project budget are commissioned. After the plan and budget are completed they are reviewed by the City Council.
If the project is approved, the TIF district is established. The County then assesses the value of all property in the TIF district and sets that value as the base Equalized Assessed Value (EAV). TIF districts exist for a set amount of years from the time they are established. Any increase in value or property taxes above the base EAV is diverted into the TIF fund.
The city of Chicago has a history of disinvesting from poor communities of color and heavily investing in affluent white communities as well as its central business district. This systemic problem is exacerbated by TIFs and the projects the city government chooses to finance. TIF funds can only finance projects in the TIF district that generated the revenue or adjacent TIF districts. Because a TIF fund can only generate revenue in areas that see increased EAV, TIF districts located in impoverished communities provide little to no benefit while TIF districts in wealthier areas serve as hoards of city funds that could otherwise be distributed more equitably.
TIF funds can be used for virtually any project that can be argued as stimulating development. Essentially, tax revenue that would have gone to city services is instead used to fund new development projects. Development projects like Lincoln Yards and The 78, the final neoliberal indignities inflicted upon Chicago by departing Mayor Rahm Emanuel.
Looking at a database of TIF projects, it is clear that, while Lincoln Yards and the 78 are outliers in terms of the amount of funds appropriated, it is all too common for funding to be diverted to projects that do not benefit the working class and to developers who do not need the assistance. For example:
- The UIC TIF project provided $108 million for “the land acquisition, demolition, environmental remediation, and infrastructure improvements. The project also consists of student housing for 750 residents, new retail space,parking garages, and private for-sale housing.” The University of Illinois system has a reported active endowment of $2.73 billion.
- The United Airlines Headquarters project provided $26 million for the “renovation of approximately 400,000 square feet of office and lobby space for the United Airlines Headquarters” in Willis Tower. In 2018, United posted net profits of $2.5 billion.
The ground has begun to shift on TIFs, thanks to years of organizing and popular education, as well as the increasingly shameless use of the tool by Rahm Emanuel’s administration, which actually managed to divert TIF funds to Navy Pier. For socialists and progressives, there should be no talk of reforming TIFs–they shouldn’t exist.
In 2018, $647.7 million dollars were captured by TIF districts and diverted into TIF funds, bringing the total TIF fund to $1.51 billion. We, along with Mayor Lightfoot and the City Council, should keep that number in mind as the city tries to plug its $838 million budget deficit.
Note on City Council Live Streams/Archives
In addition to regular monthly meetings, Chicago City Council subcommittees are now being live streamed. Recordings of the meetings are supposed to be archived online, but as of now none have been posted.
In The News
Aldermanic Coverage — Block Club Chicago
Ald. Daniel La Spata (1st Ward) plans to introduce an ordinance that would impose higher demolition fees on developments near the 606. This proposal would be a revision of an ordinance co-authored by Ald. Ramirez-Rosa (35th Ward) in 2017.
Aldermanic Coverage — Block Club Chicago
Ald. Ramirez-Rosa’s 35th Ward office has relocated to 2934 N. Milwaukee Ave., Unit C. The new, larger space will be open 9-5 Monday-Friday and has more space for community meetings.
Aldermanic Coverage — Illinois Policy
Anne Burke, wife of indicted alderman Ed Burke, was named to the Illinois Supreme Court.
Community Benefits Agreement — PBS Chicago (WTTW)
A new study shows that rents are rising around the proposed site of the Obama Presidential Center, even before construction begins. Newly constructed and renovated units are renting at rates too high for current neighborhood tenants to afford. This speaks to the necessity of a Community Benefits Agreement, as detailed in a previous issue of Red Star Bulletin.
Community Benefits Agreement — Block Club Chicago
Coverage of a pro-CBA march and rally held in Woodlawn to demand a Community Benefits ordinance to curb displacement around the Obama Presidential Center. The march was attended by more than 100 people.
City Budget — ABC Chicago (WLS-TV)
Mayor Lightfoot calls for a citywide hiring freeze that would affect all city agencies and positions. The freeze will remain in effect until further notice.
City Budget — Chicago Sun-Times
Some DSA-member alderpeople hold a press conference in advance of Mayor Lightfoot’s budget speech urging the Mayor to prioritize the needs of working families when setting budget priorities.
CTU Contract — Chicago Sun-Times
CTU votes unanimously to hold a strike authorization vote on September 26. If the vote passes, October 7 is the earliest date that the union could go on strike.
CTU Contract — In These Times
Outlines some of the main issues in CTU’s contract fight, including more school counselors, social workers, nurses, librarians, and paraprofessionals in schools; better pay and protection for paraprofessionals and substitute teachers; and sanctuary school provisions.
CTU Contract — PBS Chicago (WTTW)
Details about CTU contract negotiations. Mayor Lightfoot promises to account for smaller class sizes, more counselors, nurses, and librarians in current and future city budgets but has so far been unwilling to write these promises into the contract.
#DemocratizeComEd — Crain’s Chicago Business
Since March, ComEd, Exelon (ComEd’s parent company), and executives at both firms have donated $78,000 to Lori Lightfoot’s campaign fund. That accounts for 55% of the total donations from the firm in this period.
#DemocratizeComEd — In These Times
Bernie Sanders’ climate plan includes provisions for public ownership of utilities. His Green New Deal would invest in large scale publicly-funded renewable energy generation and provide assistance to cities seeking to form municipal utilities or electricity co-ops.
Housing for All — Chicago Sun-Times
Lightfoot upsets campaign allies, Bring Chicago Home, by breaking a campaign promise to use funds from a new real estate transfer tax to support affordable housing and services to people experiencing homelessness. The Mayor is now proposing using those revenues to balance the city budget.
Marijuana Legalization — Chicago Tribune
Lightfoot proposes excluding legal marijuana dispensaries from downtown through zoning.
Sanctuary for All — In These Times
Coverage of Chicago communities organizing foot and bike patrols to expand community defense against ICE. The article outlines examples of similar community defense initiatives in the US and UK.
See our page for regular Ward Nights here.
47th Ward Budget Town Hall – September 19th
A good opportunity to discuss the upcoming city budget and provide your feedback to Alderman Martin: bit.ly/budget47. The town hall will take place at McPherson Elementary School, 6:30-7:30pm. Facebook link here.
The Red Star Bulletin was conceived by Ramsin Canon and is a project of the Political Education & Policy Committee. This issue was drafted by CDSA members. Special contributions were made by Rebecca Burns, Sean Duffy, Tina Groeger, Geoff Guy, Nick Hussong, Ethan Jantz, Anna Kochakian, Leonard Pierce and Sveta Stoytcheva. Graphics were contributed by Patrick O’Connell. If you would like to contribute to the Red Star Bulletin or have any feedback, email email@example.com.