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Officials discuss city budget deficit

Mayor back home from Beijing
August 14, 2008 4:41:21 PM PDT
It's a cash crunch at Chicago's City Hall.New preliminary figures released Thursday show the 2009 budget coming up short by $420 million. That is shaping up to be the largest budget shortfall in Chicago's history.

City officials blame the shortfall on a number of things, including a weak economy, higher fuel costs and pension expenses.

The city's chief financial officer says revenue from recent tax hikes and fees are falling well below budget estimates. And he says nothing is off the table when it comes to making up the difference.

Neither Chicago Mayor Richard Daley nor anyone at the city budget office is speculating on how the city is going to make up the deficit. But everyone at city hall agrees there will probably have to be major cuts. And they will likely be painful.

By Chicago standards this was a harsh winter, with lots of snow and lots of overtime for snow removal. That's just one of the many factors, along with soaring gas prices and the poor economy, which have created the most serious budget shortfall in recent memory.

"The problem is significant. We're going to have to make some tough choices," said Paul Volpe, Chief Financial Officer, Chicago.

The city's preliminary budget estimates paint an ugly picture and could spell bad news for some city workers. The budget office is talking about the problem Thursday, not how to solve it. But some aldermen say they see no way to avoid layoffs. Twelfth Ward Alderman George Cardenas is estimating the city needs to cut about 1,800 jobs.

"There's no property taxes and sales taxes increases. And if we increase fees, that's going to be minimal. So we have to get to the bone, which is personnel," said Cardenas.

"We got to look at everything. And we should be looking, since we signed 10-year contracts, let's look at a 10-year budget and what this city needs for the next 10 years," said 2nd Ward Alderman Bob Fioretti.

Union leaders met with the city's budget office Wednesday to talk about what the budget crisis could mean for workers. They have no clear cut answers right now. But they are preparing for the worst.

"If there is some sort of layoff at the city, not just the frontline workers suffer. But if there's a layoff, it has to be middle management as it does have to be our folks. Our folks do the work," said Dennis Gannon, Chicago Federation of Labor.

Mayor Daley, in his first remarks since returning from Beijing, said everyone in the city has to make sacrifices because he says we're in a recession, and that includes the city.

"It's a crisis, not only in the private sector but the public sector. The public sector is not immune from this economy," he said.

The city's CFO says everything is on the table right now. Fioretti says those options should include using some of the $500 million from the lease for the Skyway and leasing parking meters and Midway Airport. He says that could help avoid layoffs. But there is no consensus on a solution in the city council at this point.

In his first public appearance since returning from the Beijing Olympics, Mayor Daley addressed the growing problem of foreclosures in Chicago Thursday morning.

The mayor's office is looking to offer more protection to renters who are impacted when their landlords lose their buildings because of financial problems.

With Wednesday's first public appearance being the mayor's first since coming back from China, of course, there were a lot of questions regarding Chicago's Olympic bid. But there were also questions about the city's financial crisis, the budget crisis, which the mayor has said is the worst he has seen.

The official business Thursday was about the foreclosures and how it is impacting tenants in Chicago, how it's impacting renters across the city. The mayor stood in front of a building in the 1100-block of North Austin that is now bank owned. The tenants inside paid their rent, they said, every month, but they are now being kicked out. The mayor says that story is being played out all over the city. He is now offering to expand the emergency rental assistance for anyone facing the same situation. The mayor characterized this as a serious problem that will only get worse.

"Chicago hasn't been hit as hard as some other cities south and southwest in the western part of the country, but the numbers are so far too high, especially in neighborhoods where people are struggling to make ends meet," said Mayor Daley. "There were 14,250 foreclosure filings in our city in 2007, which was an increase of 46 percent over 2006."

"I was very devastated because I was at work at the time when my daughter actually received this letter," said Bernice Baker. "When I got a call to my job about this letter and everything, like I said, I was hurt because at that point in time I was saying to myself, where are we going to go?"

Here is what the city is now offering to do:

  • offer up to three months of rent and moving expenses for eligible tenants evicted,

  • expand pro bono legal services across the city,

  • and the mayor is urging tenants who need help to call the city's non-emergency number, 3-1-1.

    As far as the city's budget crisis is concerned, the mayor says that he needs to work that out with the unions. He pretty much sidestepped that question Thursday morning.

    On the Olympics, the mayor was asked how can Chicago compete with what China has been putting forth? The mayor simply said Chicago is not competing with China because a Chicago Olympics would be different.


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