Wednesday, Sep 12, 2012, 12:52 PM

City Services Are a Zero-Sum Game

Although the Chicago teachers strike appears to be mostly about issues other than salaries and benefits, the question of the appropriate pay for educators still courses through the debate. Some commentators argue that teachers are already paid comparatively poorly, and that attempts to meet budget shortfalls through the reduction of expected raises and benefits reveal that elites and society at large place educators at the bottom of the professional totem pole. I’m not sure that they do. Looking at the taxes and expenditures of Chicago recently, it seems more likely that severely constrained city governments have to resort to layoffs and pay freezes because there is, unfortunately, nowhere else to go.

The Chicago school system was faced with a budget deficit of around $700 million that, by law, has to be met. But they also are contractually obligated to pay the salaries and benefits of their employees. The overall situation in Chicago is similar, with a $635 million deficit and a 90 percent unionization rate of city employees. These deficits come from some stupid city decisions, but also rising health-care costs for personnel and the weakened economy hurting revenue streams—the same two factors hurting the country as a whole.

The gut reaction of most liberals, me included, is to argue that these deficits should be paid for with tax increases. But, unlike the federal government, the Chicago Public Schools have raised taxes recently. In the last two years the city school board not only voted to raise the property tax, they voted to raise it by the maximum amount allowed by state law. It raised only $41 million out of the $700 million needed. Property taxes are the largest source of revenue for schools, and the second and third largest—state and federal aid—are not controllable by city and school officials.

While the city government can draw on revenue sources the school board can’t (sales taxes, cigarette taxes, fees from local airports), there don’t seem to be veins of money city officials are leaving untapped. And raising regressive vice and consumption taxes isn’t ideal during a weak economy, even for a good cause. The pattern here is that there are hard spending and revenue constraints in cities that don’t exist at the federal level.

This doesn’t mean Rahm Emanuel is blameless, or that he doesn’t deserve criticism. Politics ain’t beanbag, and a politician who calls liberals “fucking retarded” and purposely cultivates an image of a profanity-spewing hardass doesn’t need—nor should expect—white knights coming to his rescue in contract negotiations. Also, there are many aspects of the strike that have nothing to do with salaries, like whether testing-based teacher evaluation is reliable or useful.

But it does mean that writers who think they’re taking a fine moral stand by arguing that teachers deserve higher pay, higher benefits, and nicer schools have an obligation to give readers some sense of where that money should come from. I’m not an expert, at all, on Chicago’s finances, but like most struggling cities, the bulk of their budget is spent paying employees who are doing good, socially beneficial work.

In many ways cities have more of the progressive ideal of government spending than the federal government. The city of Chicago has no military to cut, no capital gains tax to increase; it isn’t giving out massive farm subsidies that could be instead used to pay teachers or firefighters. It’s mostly providing mundane but important government services—public safety, utilities, road maintenance—none of which are larded with fat to trim. That urban governments often have more progressive priorities makes finding targets for spending cuts or taxation much more difficult.

For instance, the largest part of Chicago’s 2012 budget is personnel cost, even excluding employee benefits. If you look at only the operating budget, personnel and employee benefits combine to 84 percent of the budget. So think of the other places money has to come from. Police and firefighters, yes, but also librarians, social workers, sanitation workers, road crews—do any of these professions deserve less money, either? Do they deserve fewer benefits? Clint Eastwood, in the movie Unforgiven (and not talking to a chair), told us the sad truth: “Deserve’s got nothing to do with it.”

 

COMMENTS: 3
 
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Mrrunangun:

Chicago has a large revenue leak. The Speaker of the Illinois House and it's State Senate president each represent large real estate operators in tax abatement cases. Since the judges are good Democrats, they tend to favor the clients of attorneys who are also powerful within the party. Crossing such individuals could mean being dropped from the slate next election for judge. So the big operators pay generous legal fees for reliable representation and escape their fair share of support for the schools, police,fire, etc. The ordinary citizen trying to pay the PIT on his bungalow pays up.

Sep 12, 2012, 4:48 PM
Spevaerecelew:

Democracy Journal: Arguments: City Services Are a Zero-Sum Game
longchamp

Nov 2, 2012, 7:26 PM
Julia Eagles:

Community development organizations are strong in the Chicago area. I do not understand the separation and disconnect between city governments and locally developed community organizations.
They are probably parallel on many issues city wide issues and have ideas that can function to replace blame games of judges, courts, and laws that have no place within Public school systems.
Equity in distribution and funding for all public services has to remain in the public forum. Unions are in place for a reason to protect employees from such times when it is tempting to control or deregulate Public Employee Retirement trust accounts.
Look to the people already doing the work, ask for their assistance,guidance and expertise within their community. They know best, trust them.
Bring back the Commons approach to democracy.

Nov 4, 2012, 5:33 PM

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