Use of reserves could keep Chicago afloat during recession

Right now, Chicago is facing the worst budget crisis in its history. To combat this downward spiral, Mayor Richard Daley has put forth plans to take $370 million out of the federal reserves to fund day-to-day operations, according to the Chicago Tribune. Doing this allows Daley to hold the line on taxes, fines and fees in 2010.

This comes as a change from past attempts by Daley to incur states funds. Over the last two years, the mayor has raised taxes, fines and fees by $329 million, and implemented one of the largest property tax increases in the city’s history. Daley’s reliance on the reserves is being seen as the next big revenue source for Chicago’s city government.

This time around, $35 million from the federal reserve funds will provide property tax relief. The Chicago citizens who were the hardest hit by past increases to property taxes will receive a $200 grant.

These reserves are meant to be “rainy day funds,” so the city has options during a time of crisis. And as many people are saying, it’s been raining pretty hard lately.

So it’s safe to say that, at this time, Chicago is in the midst of a great financial crisis and that now more than ever, Daley must utilize whatever resources are available to him that will be least destructive and detrimental to the largest number of people.

Right now, it seems as though there are very few options Daley and the city can look into that simultaneously would not raise taxes, fees or fines and that would keep people happy.

There are options, however unattractive they may be. The state could raise taxes or make cuts to funds for crucial endeavours such as infrastructure and education, but luckily, Daley’s plan does not include that.

While taking money from the federal reserves is not the most ideal solution, it allows programs to remain active and grants to stay put. As long as these funds are replenished in a timely manor, it seems that Daley is making the best of a bad situation. This option seems to be the least detrimental to the state. While Chicago skyway rates as well as parking permit rates will rise, at least Daley’s plan does not include raising more taxes at this time.

Illinois citizens have seen the toll the state’s budget crisis has taken on state programs with turmoil over MAP grants and the loss of crucial social services across the state. Now is the time to explore alternate options to keep our state afloat.