Racing the clock, Johnson speeds up spending of federal pandemic funds

Mayor Brandon Johnson has been racing to beat a Dec. 31 deadline to allocate $1.88 billion in pandemic relief funds — and spend it all by 2026 — to avoid losing the federal money.

The race is paying off — but in a way that two influential City Council members fear could create a culture of dependency that beleaguered Chicago taxpayers can't afford to sustain.

The Johnson administration reported Thursday it has obligated 90% of Chicago’s allotment of federal stimulus money and spent 83% of it.

The federal money was made available through the American Rescue Plan Act, also known as ARPA. Of the $576 million earmarked for so-called “community initiatives,” the city’s annual “ARPA Recovery Plan” report claims a 29% increase in “total obligations” and a 24% hike in “total expenditures” over the last year.

Those community initiatives include $64 million to relaunch the wildly popular guaranteed minimum income program that has provided $500 in monthly cash, no strings attached, to designated low-income residents.

"We haven't had this much federal infusion of dollars into local jurisdictions since the '50's. There's such a thing as capacity building to be able to maintain and handle that, which we've done. Now, we're ready. Keep the spigot coming because we can handle these dollars," Budget Director Annette Guzman said.

Downtown Ald. Brendan Reilly (42nd) said it’s “great” Johnson is “obligating more of that money so we don’t have to turn it back.” But, Reilly added, Johnson shouldn't do it by “extending feel-good social programs that are not sustainable” when the federal spigot dries up.

“It’s almost like giving a heroin addict more heroin. You’re prolonging this dependence on a program or an expansion of a program that local tax dollars can’t sustain over the long haul. It’s delaying ... having to rip a Band-Aid off of many of these social programs that are all well-meaning,” Reilly said.

“These programs are gonna become, for some people, programs that they rely upon. … Large constituencies will consider them to be very popular and not want them to go away. That’s going to put a lot of pressure on progressives and Democratic Socialists in the City Council to find new local tax dollars to support those programs, which spells bad news for local taxpayers.”

Downtown Ald. Bill Conway (34th) said the city is using federal money to bankroll programs it will "probably have to cut."

“We could have adjusted this so all of this money would have been deemed revenue replacement instead of trying to allocate it to programs. We could have used this money in a way that would have offset costs. In the last round of funding for the migrant crisis — the last $70 million — we could have and should have used ARPA money. … We passed on the ability to do that, which was foolish,” Conway said, especially since Johnson set the precedent by using $95 million in ARPA funds for the migrant crisis at the end of last year.

“Chicago faces a financial reckoning and everything we can do to try and make that less painful — we should do that,” Conway said.

Guzman countered that the city did use $1.3 billion for "revenue loss," but "we do believe that the rest of that money should and has gone directly into communities" to help those long-neglected neighborhoods "recover from the pandemic quicker."

Former Mayor Lori Lightfoot used the avalanche of federal relief money to plug a pandemic-induced budget gap and create a slew of new social programs that ballooned the city budget and were beyond the city’s capacity to administer.

Spending was so painfully slow, that there were fears the clock would run out, forcing the city to return the gifted federal money to the U.S. Treasury.

Johnson was determined to prevent that. In April, he unveiled a plan to spend more than $374 million of federal money to help Chicago’s most impoverished communities.

It doubled down on successful and “low-risk” programs like guaranteed basic income that were viewed as easier to implement. And it scaled back or canceled programs tougher to get rolling.

The annual report highlights spending in six major categories: youth and the economy, including $64 million for monthly checks to 10,000 designated households and $66 million for “youth employment and leadership development opportunities; community safety, including $23 million for “violence interruption and reduction; mental health and wellness, including $20 million to reopen three mental health clinics and expand “trauma-informed mental health services and human rights, arts and culture, including $11 million to provide “target relief for individual artists and cultural organizations not eligible for other relief programs."

Guzman said the city is conducting "sustainability analysis" to determine which of those programs are "doing the most good" and deserve to be made permanent.

But,, she said, "We can only afford what we have resources for. ... We can't do everything."