Illinois Issues Summer Book Section                     

Ester R. Fuchs. Mayors and Money: Fiscal Policy in New York and Chicago. Chicago and London: University of Chicago Press, 1992. Pp. 361 with appendices, notes, bibliography and index. $42 (cloth); $15.95 (paper).

It's much easier to describe the symptoms of fiscal distress in America's cities than it is to understand the causes.

The symptoms lend themselves to objective enumeration and assessment: a significant decline in the tax base, the flight of businesses, declining employment, heavy debt load and the inability to tap credit markets. But the causes are often obscured by the smoke and mirrors of politics, and where beancounters are eager to tsk-tsk over the apolitical numbers, they are less vocal when it comes to indicting the political decisions that made the numbers so bad in the first place.

Fortunately, Ester R. Fuchs, professor of political science at Barnard College at Columbia University in New York, is every bit as determined to illuminate the political sources of fiscal strain as she is to assemble the figures.

"Politics and the political context of economic scarcity are central to understanding the urban fiscal condition," she writes, as she focuses on the parallel histories of New York City and Chicago from the 1920s through today. Her goal is to illustrate why some cities experienced fiscal strain (New York) and others didn't (Chicago) during that time.

Trends in Chicago and New York were the result of conscious strategic decisions made by both cities' political leadership over the decades. Nowhere is the result of such political decisions more profound and obvious than in a comparison of the functional responsibilities of each city: the activities that each provides for its citizens.

"New York has been responsible for more services than any other city in the nation," she notes, citing general fund obligations for such deficit-producing categories as education, health, welfare, mass transit and corrections.

Chicago mayors, meanwhile, historically limited their general fund obligations to such basic housekeeping services as police and fire protection and sanitation. The genius of Chicago mayors is credited with causing the city to jettison any budget-busting services into special districts. Any given special district may experience fiscal stress, but not all of them will simultaneously. Consequently, Chicago's budget has remained far more stable than New York's.

Richard J. Daley was the master of such functional divestments. During his tenure he insulated Chicago's general fund by divesting costly responsibilities like social welfare and corrections to the county and the state and transportation to the Regional Transportation Authority. The Chicago city budget also managed to avoid fiscal responsibility for park districts, education funding and even many capital building expenses.

By 1975, an imposing 75 cents of every dollar spent from New York's crisis-ridden general fund went to support services that the stable Chicago general fund either had divested or had chosen not to provide at all. Nevertheless, New York mayors continued to provide costly services, even seeking to add new ones when the city's periodic bouts with reform showed signs of bringing its budget into balance with new revenues.

In times of general economic misery and shrinking revenues, such as during depressions, recessions and cutbacks in federal aid, New York mayors sought to retain power by currying favor with special interests, including public-employees' unions, ethnic groups and ad hoc coalitions representing diverse constituencies such as the homeless and disabled. The mayors futilely attempted to maintain living standards and employment for New York citizens by increasing expenditures, but they succeeded only in pushing their city further into chaos.

It took the fiscal crisis of 1975, when New York effectively went into receivership, to halt the upward spiral of increased spending and debt. And once that crisis passed, subsequent mayors eagerly resumed the old pattern of spending and borrowing.

Fuchs argues that New York politicians were the willing victims of a fiscal mugging by their special-interest constituencies. Not only did each power bloc pursue its own political agenda, but together they recruited willing champions among the plethora of opposing elected officials who shared responsibility for spending, including the mayor, the comptroller, the City Council president and the borough presidents.

In Chicago, meanwhile, the various taxing bodies — from the Board of Education to the Mosquito Abatement Control District — presented a target too broad for any one special interest group to conquer. Also crucial to Chicago's stability was the fact that all expert information on fiscal matters effectively was confined to the mayor's office, thus precluding any messy public debate over budget strategy. Even the City Council was finessed out of a meaningful role in debate over fiscal matters.

What Fuchs has shown is that there's more to budgeting than a sharp pencil. Control of the local party apparatus in Chicago gave mayors sufficient support so they could reduce spending when economic conditions warranted without committing political suicide.

Meanwhile, New York mayors to this day remain locked in a political structure that gives them legal responsibility for costly programs and capital projects and yet still leaves them vulnerable to charges from special interests that, regardless of the level of spending and debt, there aren't enough resources to improve the quality of life for New York citizens. �

Dan Miller is publisher of City & State, a national business newspaper for state and local government officials. He has covered public policy and fiscal issues in Illinois local government for 15 years.

July 1993/Illinois Issues/27