Will New City Council Maintain Same Old Financial Policies?


Last night’s first Committee of the Whole (“COW”) meeting of the “new” City Council provided some preliminary discussion of the repairs the new aldermen will need to make to the 2011-12 budget the “old” City Council phoned in while five of its members whose terms were expiring headed for the exit.

Fortunately, they have Mayor Dave Schmidt’s 70 line item vetoes to start with. You remember those, don’t you? The ones Schmidt – working with City Staff – came up with in response to the old Council’s complaints about his “blanket” veto of last year’s budget. The line item vetoes then-Finance & Budget Committee chair Ald. Rich DiPietro (2nd) suggested would be given serious consideration if Schmidt would propose them instead of another one-shot “blanket” veto.

When it came to voting to sustain or over-ride those 70 individual line item vetoes, however, it was the disingenuous DiPietro who flip-flopped and made the motion to nuke all of them in one “blanket” over-ride that effectively kicked the budget can down the road for the new aldermen to deal with in the first 30 days of their terms.

The new guys started to do that last night, with mixed results.

But at least this time around, the Council finally has somebody with an actual finance background chairing the Finance & Budget Committee: new Fifth Ward Ald. Dan Knight, who currently manages the cash and helps oversee the complex financial activities of a major Chicago-based company; and who previously performed similar duties for several publicly and privately-held businesses.  Unlike his predecessor, Knight seems ready, willing and able to work with City Finance Director Allison Stutts – who already has shown some promising financial chops in her short time with the City – to get a real handle on the City’s finances.

Whether this new Council has the ability and the will to do what is necessary to put the City on a financial path different from the multi-million dollar deficit-spending one the City has been on for the past few years remains to be seen. Discipline and austerity aren’t readily embraced by public officials who prefer the instant popularity that can come from picking the low-hanging fruit rather than taking on what’s tough but necessary.

Truth be told, what this new Council does with the 2011-12 budget will be basically a band-aid on a gunshot wound, because that 2011-12 budget, like the ones for prior years, was produced by a process that simply layered more spending onto a tax-borrow-and-spend structure without ever re-evaluating and updating that structure.

In other words, the same basic path of least resistance taken by our “representatives” down in Springfield. And we’ve seen how well that’s worked out, haven’t we?

So once the Council and Staff do what they can with the current-year’s budget, we hope they will immediately turn their attention toward next year’s budget process.

The first order of business in that regard should be achieving a clear definition of what a “balanced budget” is – something that has eluded City government for years because of the arcane system of “fund accounting” that turns the City’s finances, and the budgeting process itself, into a shell-game with a couple dozen shells.

Once that is accomplished, the second order of business should be exploring a fundamental change to the City’s long-standing “incremental-based” budgeting (“IBB”), which accepts the aggregation of all of the financial policies of previous years (and administrations) and just keeps adding on to, and adjusting from, them without on-going scrutiny.

The most well-known alternative to IBB is “zero-based” budgeting (“ZBB”), which starts department budgets at zero and then adds line items determined to be “essential” before addressing the non-essential, nice-to-have items. ZBB provides for a regular and systematic reconsideration of the validity of those long-standing assumptions and policies to reduce and eliminate obsolete or wasteful practices.

Another alternative gaining popularity is “performance-based” budgeting (“PBB”), which relates spending to actual accomplishments. Departments develop strategic plans and specific objectives, with the department’s budget tied to the resources it needs to meet its objectives.

But departing from business-as-usual has been an unattainable task for previous Councils, especially with so many special interests entrenched both inside and outside City Hall.

And with so many public officials who seem satisfied with simply being liked.

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