Introducing Cheat You Fair
A New Series Going Deep on Chicago Fiscal Policy and Better Options for a New Way Forward
The title of the series, “Cheat You Fair,” is a uniquely Chicago phrase coming from a famous store front sign at the old Maxwell Street Market where wheeling and dealing was always part of the atmosphere but so was building community.
It is once again budget season in Chicago–but really, when was the last time we weren’t discussing it? The annual, seemingly never-ending challenge of balancing the City’s budget and prioritizing how to address critical social and economic needs, paired with the gnawing feeling among many people that, regardless of who is mayor or governor, there has to be a better way to think about the problem, discuss solutions, and more effectively fund our government.
At stake are the macroscale factors that impact the investment climate in Chicago that can draw in new capital, grow small businesses, build new industries, and create good, middle-class jobs. And the strength of the safety net our residents can count on. And what community safety really means. And the neighborhood and sometimes block-level projects that shape the fabric of our city.
Thankfully, Chicago benefits from a number of very informed, very experienced public voices on fiscal and finance issues. They range across the political spectrum, and come from civic-minded, value-driven perspectives. But missing from this discourse is a sustained, longer-term policy conversation—exploring with in-depth analysis and historical perspective, how we got here, what the stakes are for all Chicagoans, and where we might go from here that meets the depth of the challenges—and channels the ambitions—of our great city.
The system we are wrestling with year-in-year-out was built by people, and people like us can change it. This series serves as a chance to step back, take a fresh look at the decisions and forces at play that govern our lives today, and gives some room to explore a different, better future.
MPC will host this conversation across a few different domains: online with written work by select experts with unique experience and perspectives; at more intimate in-person events; and, longer-term, through much of our core policy and programmatic work that is fundamentally connected to budget, finance and fiscal issues. We also intend to use this platform to try some new approaches that grapple with the way the attention economy is evolving traditional policy making—stay tuned for what that might look like.
We welcome your engagement and your feedback as MPC kicks off this vitally important dialogue.
Our first piece in this series is by Chasse Rehwinkel, currently Executive Vice President and CFO of Devon Bank and formerly the City of Chicago Comptroller, formerly Director of Banking for the State of Illinois, and formerly a senior official in the office of the Illinois State Treasurer. Chasse will ground this series in the little-discussed history that guides the current debate and shapes the policy options presently available to elected officials. If you ever wondered why Chicago mayors —no matter how hard they try not to—lean on tools like property taxes and sales taxes to raise revenue, or why the City of Chicago has to balance its budget unlike the federal government, Chasse covers some relevant historical context.
How Did We Get Here? A Play in Multiple Acts
1970: The Beatles Disbanded and Illinois Gets a New Constitution
It’s almost that time! A special time of year if you are a Chicagoan—or just a huge public finance nerd in general. The time of year when the leaves turn, the days grow shorter, and Chicago City Council debates next fiscal year’s budget. It’s exciting! After all, municipal budgets are the primary policy documents of a society. They represent the financial priorities that shape everyday lives within the city. If you own a business in Chicago, or go to school here, or want to visit, or set down roots, if you are a high member of Chicago society or homeless on the city streets, if you are a recent immigrant or represent six generations of Chicagoans, the city budget impacts you.
Furthermore, if you live in Evanston or Harvey, or Hammond, Indiana, or Racine, Wisconsin, or just live in Illinois somewhere or along the Great Lakes or on the edges of the Industrial Midwest, believe it or not, the Chicago budget impacts you too. Chicago, with an economy roughly the size of Switzerland, reaches far beyond its borders in terms of financial influence. The same is true with the State of Illinois, which is one of the few states with an annual GDP of over one trillion dollars. The fiscal policy decisions made by the leaders of Illinois and Chicago reverberate across the Midwest, the United States, North American and, yes, the world.
Today, when it can seem like our political structures and laws seem handed down from above (even they are being willfully shredded), the history of the Illinois constitution, and the fiscal and budgetary system it created, offers an important lesson: Illinois residents crafted this system, and we can craft a better one if we muster the political will do to so. In our next installment, I’ll delve into how Illinoisians did just that in 1972.
But how we got here starts in 1970.
Everyone to the Con-Con
Before we get to the momentous year that was 1970, we do need to back up just a bit. In United States history, we have not had a Constitutional Convention since the early days of our nation in the 18th Century. Yes, amendments to the Constitution have been proposed and added periodically, but a complete reimagining of the whole Constitution isn’t a structural function of our federal government. For states, however, this is not the case. A number of states include provisions for intermittent constitutional revisions.
Illinois is one of these states. Although the state was founded in 1818, Illinois held subsequent conventions in 1846, 1862, 1868 and 1920. Of these meetings, the conventions of 1846 and 1868 were successfully ratified by voters—in 1848 and 1870 respectively—creating new state constitutions.
This new atmosphere inspired renewed calls for a convention—the 1870 Constitution being seen by many reformers as archaic. Although there was a convention in 1920, followed by failed ratification in 1922, and additional pushes for a convention in 1934 and 1949, the 1870 Constitution remained in place as it approached its centennial. It would appear, in spite of all the calls for reform and the genuine need to do so, that the mechanisms of government and politics were incapable of comprehensive change. The foundation of the 1870 Constitution was immovable.
That is, until it wasn’t.
While there had been a consistent call for a constitutional convention since the 1920s, pushed by towering state figures like Frank Lowden and Adlai Stephenson II, it was two major events that finally created momentum. The first event came in 1956, with the indictment and later conviction of Illinois Auditor of Public Accounts Orville Hodge for embezzlement.
Hodge was a rising star in state government. A three-term state legislator from Granite City, Illinois, Hodge was first elected Auditor of Public Accounts in 1952. And as the 1956 election year took shape, there was little reason to expect anything but a strong landslide in favor of Hodge’s re-election. However, in the summer of ’56 the Chicago Daily News uncovered Hodge’s misdeeds—reporting for which the publication would receive a Pulitzer Prize.
What Hodge had done was declare to the General Assembly that his office was insolvent and that emergency funds were needed to right the issue. Hodge never had any intention to use the funds properly and when the General Assembly did appropriate emergency funds Hodge created a false paper trail that allowed him to pocket the money. One of the largest local government embezzlement cases of all time, Hodge pocketed what would be today millions of dollars in state funds. When Hodge’s scheme was discovered a renewed push for reforming the Illinois financial system followed.
This push for reform leads to our second event. Marjorie Pebworth was a reform-minded Republican State Representative from Riverdale, Illinois Pebworth had a passion for government service and worked hard as an independent voice for change in Illinois’s system, often bucking her own political party. She had chaired the committee pushing for a new Illinois Constitutional Convention, but throughout the 1960s she had made relatively little progress.
In 1967, Majorie Pebworth died at the premature age of 55. Although her reform politics clashed often with Republicans and Democrats alike, she was immensely respected by her colleagues. In 1968 a vote to conduct a new constitutional convention passed, a vote for which a number of General Assembly members felt was in homage to Majorie Pebworth.
And just like that, the immovable foundation of the 1870 Illinois Constitution was suddenly very movable. In 1968, delegates from across Illinois arrived at. the Old State Capitol building in Springfield for what was colloquially being called “the Con-Con” and for the first time in nearly 100 years Illinois was set to completely rework its system.
In next week’s installment, I’ll dive into the revenue paradigm that the1972 Constitution crated and that continues to govern what Chicago can, and can’t, do.