(Bloomberg) -- Chicago Mayor Lori Lightfoot is facing increasing pressure from growing ranks of employees pushing for better pay and working conditions as she tries to close the biggest budget shortfall in the city’s recent history.
Chicago Park District workers represented by SEIU Local 73 voted to authorize their first strike in 85 years to push for a bigger pay raise and a walkout could come as early as next month. Meanwhile, the Chicago Teachers Union is holding a strike vote this week after rejecting a 16% pay increase and demanding more nurses, librarians and special education staff in schools.
Lightfoot is trying to figure out how to fill an $838 million hole in the cash-strapped city’s budget. While Chicago’s spending plan is separate from the budgets of the park district and school system, the three issuers are intertwined because they share a tax base and are all struggling with rising pension costs and a shrinking population.
Concerns about an ongoing exodus of tax-fatigued residents affect the city, school and park district, said Richard Ciccarone, president of Merritt Research Services in Chicago. Lightfoot appoints the school board and chief executive officers of both the school and park district.
“The mayor is very sympathetic to government workers but realizes she has to hold line somewhere,” Ciccarone said. “She’s got to look at the total burden” on taxpayers.
The tensions may all be on display over the next month as Lightfoot prepares to deliver a 2020 budget that balances expenses and funding on Oct. 23. While a strike by Chicago Park District workers would be a first, the city’s teachers had a one-day walkout in April 2016, and in 2012 the union staged the city’s first public school strike in 25 years.
More than 2,000 landscape laborers, attendants, instructors, recreational leaders and other parks workers could walk off the job as early as mid-October given the strike authorization. If three-fourths of members vote yes, the teachers union must give the Chicago Board of Education a 10-day notice and Oct. 7 could be the first day a walkout could start.
The city, school district and park district “are all still tethered,” said Ty Schoback, senior analyst for tax-exempt fixed income research for Columbia Threadneedle Investments, which has $18 billion in municipal assets under management, including debt issued by all three agencies. The schools and park district “play vital roles for Chicago’s livability and quality of life appeal as well as attracting tourism, which are all major underpinnings to the city’s credit quality and makes their fiscal situations relevant for city of Chicago bondholders.”
Chicago Public Schools’s pension shortfall was almost $12.4 billion in the year through June 2018 while the park district’s was $1.2 billion on Dec. 31. The city’s is about $30 billion.
The labor disputes are getting some national attention. Vermont Senator Bernie Sanders, a Democratic presidential candidate, attended a rally Tuesday evening hosted by the Chicago Teachers Union, SEIU and several other groups to show support.
The Chicago Teachers Union is seeking better pay but also wants progress on working and learning conditions “that are not just about money,” Jesse Sharkey, the group’s president, said during the monthly school board meeting on Wednesday. The union is at the table for a deal to do right by those who work and use the schools, he said.
Chicago Public Schools Chief Executive Officer Janice Jackson said during Wednesday’s board meeting that the district continues to meet with the teachers union and remains “confident that a deal can be made that does not disrupt classroom learning.” Still, she said some demands by the union such as increased staffing, which the district recognizes, may fall outside of the bargaining process per an independent fact-finder.
Meanwhile, the park district has “negotiated in good faith” over several months with the union to improve working conditions and pay, especially for the lowest-paid employees, but is facing rising pension costs, according to spokeswoman Michele Lemons.
“The Chicago Park District must also address a more far-reaching urgency, our spiraling pension fund that could become bankrupt by 2026 unless we act to resolve it today,” Lemons said in a emailed statement Wednesday. “As we move forward, we will continue to work toward an agreement that is mutually favorable for the Chicago Park District, its valued employees and city taxpayers.”
(Adds comments from teachers union president and schools CEO starting in 11th paragraph.)
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