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