How Emanuel’s police lawsuit budget puts more burden on taxpayers

Chicago taxpayers will continue to pay extra for police misconduct lawsuits because the mayor’s proposed 2017 budget doesn’t cover the expected costs – meaning costly borrowing will make up the difference.

Mayor Rahm Emanuel’s budget continues a long history in Chicago of questionable fiscal management of misconduct lawsuits. From 2012 to 2015, the city spent more than $263 million on settlements, judgments and outside legal counsel for police misconduct. But only $70 million was budgeted for those costs, and the city issued bonds to cover them. At the high interest rate Chicago paid, that borrowing will cost taxpayers more than double over the life of the 30-year bonds.

The city is virtually certain to need more money to pay misconduct lawsuits in 2017 than the nearly $20 million Emanuel has budgeted. The mayor allocated $20 million last year as well, but Chicago had paid out almost 50 percent more than that by the end of August, according to data from the city’s Law Department. By that point, the Police Department had shelled out $29.6 million for lawsuits and judgments, with $23 million paying for misconduct lawsuits, a Chicago Reporter analysis found. (The rest, $6.6 million, paid for police lawsuits and judgments involving car accidents, employment discrimination and the Freedom of Information Act.)


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The $29.6 million doesn’t include the cost of outside lawyers to litigate the misconduct cases, which last year cost the city more than $13 million.

Emanuel did propose a $4 million increase to the city’s overall budget for lawsuit settlements and judgments. That money can be used to cover the gap in the Police Department budget. But if past trends are any indication, it will almost certainly not be enough.

Lawsuit costs fluctuate from year to year, but the city’s budget hasn’t covered those costs for at least a decade, according to the city’s most recent financial analysis. To make up an average shortfall of more than $70 million per year, Chicago has relied on issuing long-term bonds to raise cash. Municipal finance experts discourage the practice.

Emanuel’s other fiscal challenges — chief among them the city’s pension fund deficits — have overshadowed the problem of costly police misconduct. But in an April 2015 speech on fiscal reform, the mayor criticized the borrowing practice, blamed it on his predecessor, Richard Daley, and pledged to phase it out.

Nonetheless, Emanuel asked the City Council in May to approve $600 million in bonds; of that, $100 million in 2016 and 2017 would be spent on lawsuits for police and other departments. The council obliged. Those bonds are expected to be issued by early next year, a spokeswoman for the Finance Department said.

The interest rate on those bonds won’t become public until then. But in the past, the city has paid interest rates as high as 6.3 percent. That rate more than doubles taxpayers’ costs for lawsuits, including those for police misconduct, over the 30-year lifetime of the bond. (A recent bump in the city’s credit rating could bring down the interest rate somewhat.)

Molly Poppe, spokeswoman for the Finance Department, said Emanuel’s administration is still determined to wean the city from borrowing to cover lawsuit settlements.

“The Administration has added money to the settlement and judgments budget each of the last four budgets, as well as identifying additional revenue at the end of each year to pay settlements and judgments, decreasing the amount of borrowing for the settlements and judgments,” Poppe wrote in an email.

Chicago has started to address the policing practices that lead to costly police misconduct lawsuits. The mayor’s police oversight reform ordinance created a new deputy inspector general for public safety, whose responsibilities will include analyzing lawsuits for patterns of misconduct. That was an about-face for Emanuel’s administration, which had previously claimed it couldn’t analyze police lawsuits until the U.S. Department of Justice completes its review of the Chicago Police Department. That review could take many more months.

The mayor’s 2017 budget also includes $2.9 million for additional police training, including new mandatory de-escalation instruction, plus $5 million for the next phase of the department’s body-camera program. Body cameras for all officers will ultimately cost more than $6.5 million per year.

The police department is also considering a new, stricter use-of-force policy. Research suggests that could reduce the number of officer-involved shootings.

Some of these steps may reduce the number of lawsuits against police and eventually save the city money. But even so, Emanuel’s new budget will likely saddle Chicagoans with the high cost of misconduct for decades to come.