City faces $654M budget gap
July 30, 2010 (CHICAGO) (WLS) -- For the second year in a row, Chicago faces a budget gap that tops a half billion dollars. But this year paying the bills will be a bigger challenge for the city. That's because the city has already spent a large portion of its cash held in reserve.
The big budget gap is blamed on lower tax revenue rising wages of city workers and the millions paid to settle lawsuits against the city.
The Daley administration dispatched its budget director to deliver the bad news.
"The preliminary estimate projects a shortfall of $654.7 million in the corporate fund in 2010," said Eugene Munin, Chicago budget director.That's $654,700,000 the city is short of the nearly $3.4 billion it needs for operations during 2011.
The problem for City Hall is the same one affecting virtually every other government. Tax revenues of all sorts are down. They are projected by the budget office to be at the same levels as in 2004. The aldermen ABC7 talked to said there's no way that a few months before the city elections, there'd be any discussion of increasing income the usual way.
"With the economy being the way it is, we just are afraid of imposing any more taxes on our constituents," said Ald. Fredrenna Lyle, 6th Ward.
Chicago's levy on real estate transactions has fallen more than any other source during the past three years. Mayor Daley, who held a news conference before the bad news budget numbers were made public, talked about restructuring government to make the most out of fewer dollars.
"You have to marshal all your forces and do more with less. You have to do that," said Daley. "I describe it as a restructure of America. A lot of people are afraid to say that. We're re-structuring America."
The budget director noted that 80 percent of the expense of running city government is in personnel, most of whom already take mandatory furlough days. He said their unions, including those representing police and firefighters, could be asked to make even more sacrifices.
"Well, there are things we are looking for from them that might generate some savings," said Munin.
"The employees have been doing more than their fair share. You know, we're at 23 furlough days. We surely cannot ask people to take anymore furlough days," said Ald. Leslie Hairston, 5th Ward.
Hairston is among several alderman discussing another idea to raise money: make Chicago homeowners pay for garbage pickup, which for many decades has been a free city service.
"It is not something that's uncommon. It's done in the suburbs, it's done statewide. And a nominal fee would be one option," said Hairston.Residents should expect many more ideas on how to raise money or cut expenses before October when the mayor presents a balanced budget proposal to the council. You can dial 311 for the locations of public hearings on the budget later this month.
The city's reserves were raided last year and only about $700 million remain. It's unlikely that source will be tapped again because that could affect Chicago's credit rating and its ability to borrow money.
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