The city that won't be working today

Chicago, the famous "city that works" won't be working today.

The City of Chicago will basically be closed for business on Aug. 17, a reduced-service day in which most city employees are off without pay, according to a release from the Office of Budget and Management. City Hall, public libraries, health clinics and most city offices will be closed.

Emergency service providers including police, firefighters and paramedics will be working at full strength, but most services not directly related to public safety, including street sweeping, will not be provided, the release said.

The most recent city budget planned for three such days, the normally snail paced workdays of the Friday after Thanksgiving, Christmas Eve day and New Year's Ever Day. The last of these was moved up t August 17, a move which suggest Chicago may be having serious cash flow problems.

Sales of discretionary items have certainly slumped due to the recession, as has tourism and convention business, all of which cuts back on sales tax revenue. In addition, the second installment of 2008 property taxes is not yet due. Cook County is responsible for collecting the tax, including the city of Chicago's share. By law the second installment, which reflects both any increases in assessed valuation and changes in the mil rate over the prior year, is due 30 days after the bills are mailed, but no earlier than September 1. In practice, the bills for the second installment are often not sent until sometime in September or even October, which means the lion share of payments probably are not received until sometime in November.

Forcing non essental employees to take a day off in August buys time but it does not solve the basic problem. Chicago and Cook county have been taxing themselves out of existence for some time now.

As Joel Kotkin noted of Chicago in his article The Luxury City vs. the Middle Class

The city has also experienced a rapid loss of its largely white middle class at a rate roughly 40 percent faster than the rest of the country.

When I lived in Chicago, it became obvious the local government was increasingly hostile to the middle class. There were high property taxes, high sales taxes and a local license fee for each automobile owned. These taxes were combined with high home prices, high property insurance rates, high crime rates outside the lakefront and poor public schools. On top of this, a city council bought and paid for by unions meant that cost conscious retailers like Wal-Mart were not welcome in the city limits. Then just last year, when the Cook County board inposed a whopping county tax height, Chicago achieved notoriety with the highest sales tax in the nation at 10.25%.

The result of these policies have been to fuel population growth in the outer suburbs and create thriving retail oases in the collar counties and across the state line in Merrillville, Indiana. This deepens the revenue shortfall as retailers of items like high end clothing, furniture, appliances and electronics go out of business due to the price advantage of their competitors across the county line.