Here we go again.

The Sun-Times reported this morning that the city, already hundreds of millions of dollars short of 2009 budget projections, is warning that hundreds more city employees could get pink slips unless their unions are willing to sacrifice pay or benefits.

As you may recall, the same thing happened last year. And even after union concessions, scores of front-line service deliverers were laid off (even as their bosses were getting raises).

Few observers of city government would argue that the work force isn’t padded anywhere. But it wasn’t just padding that was cut to “balance” this year’s budget, and it won’t be this year either. From graffiti removal to pothole repair, services that citizens pay for through taxes have drastically diminished—though tax rates have gone in the other direction.

This has created a mounting political problem for many aldermen. As one recently pointed out to me, they’re dependent on city departments to respond to service requests, but they have little control over how well they’re performed—or if they’re done at all. Most council members are afraid to raise a stink because of the possibility their constituents will be punished with even worse service.

Over the last few years they’ve sought other ways to keep their wards clean and safe. One popular solution is a program that essentially taxes businesses and residents more, using the funds to contract for private services in their communities.

And no, I’m not talking about tax increment financing districts. These areas are something else, called Special Service Areas, where the city, the alderman, and business leaders agree to levy an extra tax to cover the price of “added services” such as “sidewalk maintenance and beautification, landscaping, advertising/marketing, business retention/recruitment, parking, and safety programs,” according to the city’s SSA primer [PDF]. There are 37 SSAs around the city (click here to see a PDF map of them) with budgets ranging from $60,000 to more than $1 million.

It might sound like a great idea—a community comes together and chips in a little extra for some fresh paint, extra garbage cans, and security guards who provide a backup for overburdened police.

Unfortunately, that’s not how it works.

What aldermen like about SSAs, they tell me privately, is that they provide services the city is supposed to but doesn’t, at least not consistently.

“When I drive down Michigan Avenue in the morning now, it’s clean, and it didn’t used to be,” alderman Anthony Beale says of the most important business strip in the Ninth Ward. Employees of a private company hired with SSA funds “are out there cleaning up every morning. They’re picking up every piece of garbage, every wrapper. Before Streets and San would pick it up but they’d put it [in the trashcan] on the sidewalk and it would blow right back out into the street.”

But now there’s little need for Streets and San to bother at all. As another alderman explained to me: “Our SSA looks great, but because it does the city people don’t even come around anymore.”

And taxpayers haven’t received a rebate from Streets and San.

Beale says business owners weren’t doing their part to keep the neighborhood orderly, so he supported taxing them extra to pay someone else to do it for them. “They were not cleaning up or contributing to the community,” he says. “We had to take it to the next level.”

Now, he says, they’re happy too, because they know who to contact if the sidewalk hasn’t been swept—and it’s not the city bureaucracy. “The businesses love those guys. They have their cell phone numbers and can call them right up.”

But employees of these private contractors aren’t subject to the same governance as city workers—they’re not covered under the federal Shakman decrees prohibiting patronage—and they’re not accountable to anyone but members of the SSA boards, who are appointed to three-year terms by the mayor in consultation with the aldermen. “That’s why we make sure we get good people on those boards,” Beale says.

Next week Beale will introduce an ordinance to dramatically expand the role of the SSA in his ward and the neighboring Tenth Ward: he wants its private security guards to be able to write tickets for parking infractions and other “non-moving violations” such as graffiti and littering. He disputes my suggestion that SSAs are leading to privatization, and costing taxpayers more along the way.

“We’re not replacing anybody,” he says. “We’re just enhancing what we already have. It’s a matter of improving the quality of life in the community.”