Rahmbo vs. Chicago’s public employee unions

by Josh Barro

I have a new piece today at PublicSectorInc.org about Chicago’s mayoral election, which will take place a week from today. Despite being a Democratic candidate in a left-leaning city, frontrunner Rahm Emanuel has been aiming squarely for the city’s public employee unions. He’s calling for further school reforms, including the expansion of charter schools; he’s the only candidate in the race saying that the city must cut the pension benefits that current employees will earn in the future, not just benefits for new employees; and he wants to take the charter model beyond education to other agencies of city government, where services could be improved with more bureaucratic autonomy (and, if the experience with charter schools is any indication, less union influence.)

Unsurprisingly, with an agenda like this, Emanuel has no backing from Chicago’s public worker unions, which have divided among his opponents or are sitting out the race. He does, however, have wide public support: he’s polling between 49 and 54 percent in a six-candidate field, with his closest opponent trailing by 30 points. If Emanuel gets to 50 percent in next week’s vote, he’ll win outright; otherwise, he’ll be highly likely to win a runoff election in April.

As I note in the piece, Emanuel is probably taking such a tough line on the unions because he knows he has to:

In Fiscal Year 2011, which ends in July, Chicago faced a $650 million budget shortfall. But only about 15 percent of this gap was actually closed with spending reductions. The gap was closed mostly with one-time revenues, particularly proceeds from selling the Chicago Skyway toll road and city-wide on-street parking. In the case of the parking deal, the city sold seventy-five years of parking meter revenue, and spent 93 percent of the proceeds from that sale to close just three years of budget gaps.

This cannot go on, as the asset sale money is running out. It will likely be all gone within the next eighteen months. Once that happens, the only ways out will be spending cuts or tax increases–and fresh off a 66 percent rise in the state income tax, there is little appetite for tax increases in Chicago. Since about 83 percent of Chicago’s Corporate Fund (the local equivalent of a General Fund) is spent on employee compensation, spending cuts will have to include cuts in spending on public workers.

Like Andrew Cuomo in New York, Emanuel is seeing that the math for business-as-usual with public employee unions just doesn’t pencil. Combine that with Emanuel’s legendarily ball-busting personality, and you’re likely to see a very tough line on public employee compensation issues coming out of the Chicago mayor’s office for the next four years.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.