Economics professor questions effectiveness of Chicago budget changes
(The Center Square) – A Chicago economics professor has questions about the potential effectiveness of the city’s new budget restrictions.
City Budget Director Annette Guzman outlined the changes this week, after Mayor Brandon Johnson projected a budget deficit of nearly a billion dollars in 2025.
Guzman said a citywide hiring freeze would take effect immediately.
Frances Lee is an economics professor at Loyola University of Chicago. Lee said economists have a saying when it comes to hiring.
“We can achieve full employment if we hire half of the population to dig a hole and the other half to fill it. If we are eliminating these kinds of government jobs, then, yes, by all means do the hiring freeze,” Lee said.
The professor said that essential services are a different story.
“If the police force would be reduced or garbage would be left uncollected, then it would further drive people out of the city,” Lee said.
Chicago government officials also enacted restrictions on travel and overtime expenditures, outside of public safety operations.
The city’s budget forecast has projected a deficit of $223 million by the end of this year and more than $982 million in 2025.
Lee said her biggest concern with the deficit is how much taxes will increase.
“A higher property tax or a new real estate transaction tax could drive people out of the city. We know that Chicago is losing people to the suburbs, and the state of Illinois is losing people to other states. The number one issue on people’s mind when they move out is tax,” Lee said.
Lee added that a higher tax is not just a one-time blow to the economy.
“It would unleash a vicious cycle where people and businesses move out of the city, so the tax base shrinks and the budget hole gets bigger, and taxes get increased further. This vicious cycle can kill a city. That would be my biggest worry,” Lee said.
