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9/2/2010
Stroger Just Doesn't Care Anymore
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Regular Lemont GOP meeting
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Had Enough of Pat Quinn?
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Katie Brady on Her Dad, Bill Brady
Chicago Facing $700M Budget Gap
7/21/2010 1:39:20 PM
BY FRAN SPIELMAN Chicago City Hall Reporter for Chicago Sun Times
Chicago is facing a record budget shortfall -- approaching $700 million when the cost of police and fire contracts are factored in -- setting the stage for another raid on reserves generated by the parking meter and Chicago Skyway leases.
As of Dec. 31, the city had just $180 million left from the $1.15 billion parking meter windfall that was supposed to last for 75 years. There was $550 million remaining from the $1.83 billion deal that privatized the Skyway for 99 years.
Mayor Daley has already promised to hold the line on property taxes in the 2011 budget that would serve as his re-election platform if he chooses to seek a seventh term.
That's even after this week's promise to hire 100 more police officers to help stop the bloodshed on Chicago streets.
If the mayor keeps his hand out of taxpayers' pockets for a second straight year, his choices are few unless he revives the failed deal to privatize Midway Airport.
He can raid the reserves, consolidate city departments, farm out or eliminate nonessential services or use a combination of those options.
Daley is not expected to raid the the $500 million long-term reserve fund generated by the Skyway windfall, because doing so could threaten the bond rating that determines city borrowing costs.
In a May 11 report that reaffirmed Chicago's AA minus rating, Standard & Poor's wrote, "The stable outlook reflects our expectation that [the city] will, with the help of careful budgeting, improve its financial operations and not draw on its long-term reserves."
The rating agency warned that city finances "could be challenged for multiple fiscal years" because of Chicago's reliance on "economically sensitive revenues currently in the downward trend."
"Maintenance of the rating at its current level is contingent upon the city's maintenance of its long-term reserves at strong levels," the report stated.
Daley's 2010 budget was precariously balanced by draining the parking meter reserves and ordering city employees to take unpaid furlough days that amounted to a 9 percent pay cut.
Since then, top mayoral aides have been forced to propose a $160 million short-term borrowing to bankroll back pay raises for police officers mandated by an independent arbitrator. The overall price tag of the police contract was pegged at $385 million.
The firefighters contract has not yet been settled. But, the 10 percent pay increase over five years will be identical.
The Fire Department also could be forced to hire 120 bypassed black firefighter applicants -- and distribute $45 million in damages to 6,000 others who will never get that chance -- after a landmark U.S. Supreme Court ruling on the city's discriminatory handling of a 1995 firefighters entrance exam.
Unfunded city pensions have created yet another financial time bomb that must be defused.
The mayor's pension commission has concluded that reduced employee benefits, higher worker contributions and "new revenue" from taxpayers will be needed to bail out four city employee pension funds that will run out of money by 2030.
Chicago's preliminary budget must be released by July 31. The City Council must approve a final spending plan by Dec. 31.
