The city's chief financial officer is painting a very dismal picture for next year's budget. While there have been some bright spots in the economy, they city says they do not translate into city revenue.
The 2010 city budget shortfall is huge and the city is not ruling out tax increases or spending cuts to fill the gap.
The sales tax revenue is plummeting, so is money generated from the real estate transaction tax and the income tax. Add it all up, and the city of Chicago is going to be $519.7 million in the red next year. The shortfall is the highest in years.
"Chicago, like every major city, is experiencing shortfalls as a direct result of the recession," said Gene Saffold, Chicago chief financial officer.
Saffold says the shortfall could be even worse if it were not for the rainy day fund created with money from the privatization of parking meters.
"Without the rainy day fund we would already be in the position of other cities and states that are cutting services raising taxes, steps we hope we can continue to avoid," said Saffold.
This year, the city avoided tax increases and service cuts by layoffs and furlough days for city workers and an early retirement deal for police officers. Next year, the city CFO is not ruling out more drastic measures, although the mayor has instructed his staff to avoid going down the road of a property tax increase.
"The last thing we want to do with regard to taxes is to further burden the citizens of Chicago," said Saffold.
But Saffold admits the city must close the budget gap and there are only two ways of doing it: cuts and/or increasing revenue.
The budget shortfalls also have some fearing Chicago Public Schools could be forced to make significant cuts.
Early childhood and bilingual education programs may feel the impact first.
Chicago Publics Schools CEO Ron Huberman has warned that the schools could lose about $84 million, adding to an already significant budget deficit.
However, Illinois Gov. Pat Quinn said Thursday that some of the cuts could be less than expected.
What about the taxpayers? Some city residents are sympathetic toward the city's budget woes. Others are not.
"It does concern me but I just hope the citizens of Chicago don't get hit with a property tax hike," said Lavane Williams.
"I understand there's a shortfall and I trust the mayor and the city council to be doing everything else necessary to avoid raising taxes," said Andrew Vail.
"I think the shortfall, it's hard to understand why there is a shortfall. I don't think that we've been exactly aware of how it grows," said Cindy Vargas.
Some have suggested that the city is inflating its numbers. Budget chief Gene Saffold admits while projecting revenues is not an exact science, he is confident in the numbers he announced on Thursday.
By law, the city must have a balanced budget.
Not all city revenue was down this year. The amusement tax went up.