Daley Details Budget Badness
By Kevin Robinson in News on Aug 15, 2008 4:50PM
After much hand-wringing, doomsdaying and speculation, Mayor Daley and his administration finally laid out how serious the city's budget deficit is. The city's 2009 budget has a $420 million gap and the mayor is saying nothing, except an increase in real estate taxes, is out of the question. That includes as many as 1,800 layoffs. "We’re not gonna speculate on the number of layoffs or if they are even necessary. Today, we’re simply framing the issue for you," the city's Chief Financial Officer Paul Volpe said Thursday. "Today, everything’s on the table. That I would tell you. The mayor has said that he will not increase property taxes. That’s a certainty. Anything else, we’ve got some tough choices to make," he said.
The housing crisis has had perhaps the biggest impact on the city budget, with revenues from the real estate transfer tax down to $155 million this year, about $60 million less than anticipated. Three years ago, that tax contributed $244 million to city coffers. Daley was more blunt about the state of the economy, however. "We're in a recession," Daley said. "No one wants to admit it, but we are in a recession," adding "it's a crisis, not only in the private sector, in the public sector," Daley said. "The public sector is not immune from this economy." 38th Ward Alderman Tom Allen, however, has his own ideas about how to remedy the budget shortfall.
"We’ve got $500 million sitting in the Skyway fund. Take $100 million out of there. TIF funds have close to $400 million. Take out the key, unlock the safe and tap into that. The downside is, we need Springfield to permit that. Suspend the aldermanic menu program for a year, saving $60 million. And stop building for a while. I know it’s a good thing for our city. But, we’ve got to stop, take a deep breath, count to ten and postpone some of these capital projects."
That approach may not be good for the city's credit rating, though. Chicago's unrestricted cash balance in its operating fund is a scant $4.6 million, much less than most bond rating agencies would like to see in a $3 billion operating budget. If the city's bond rating falls, the cost of borrowing money could increase. Lawrence Msall, president of the watchdog group Civic Federation, blames the mayor and aldermen. “This has been in the making for many years,” Msall said, adding that the city faces, “a very serious and frightening budget deficit. They have very little room to maneuver. They have to make cuts.”
Photo by The New No. 2