Daley's budget plan fills the city's $520 million deficit without raising any fees or taxes. However, it uses about one-third of the city's $1 billion savings account, which until this year he considered 'untouchable.'
He said there's no way Chicago taxpayers could make up such a huge shortfall.
"With so many people struggling, this is not the time to ask them to pay more and more," said Mayor Daley.
Daley recommended using $370 million of the rainy fund that comes from the controversial parking meter deal.
"I understand some may have problems with it. But as mayor, I have a responsibility to provide the services that people need," said Mayor Daley.
Financial experts warn that a raid on the reserves could affect the city's credit rating. Alderman Joe more said it makes the parking meter transaction look even worse.
"We clearly have gotten money out of that lease. What are we doing with it? We're going to be spending it right now. What are we going to do next year?" said Ald. Joe Moore, 49th Ward.
Most aldermen said the only alternative would have been more service cuts- or another city tax increase.
"We've already cut to the bone. If we cut, we're gonna cut out!" said Ald. Carrie Austin, 34th Ward.
"I don't think the citizens can stand a tax increase," said Ald. Fredrenna Lyle, 6th Ward.
The mayor wants to put aside $35 million for a new program to help struggling homeowners pay rising property taxes. He said the city would maintain the number of police officers even though the department is already 600 cops understaffed.
"The prognosis for getting up to full staff is pretty bleak right now because of the economy," said Mark Donahue, Fraternal Order of Police.
Alderman Ed Smith wants police and firefighters to take furlough days like the 24 unpaid days the mayor has recommended for non-union city workers.
"They need to be talked to. There's no reason they shouldn't be talked to," said Ald. Ed Smith, 28th Ward.
Daley said after spending on his 2010 budget, there'd be $730 million left in the reserve fund. And he patted himself on the back for having the vision several years ago to lease assets.
"Had we not leased city assets, we would be forced to do what many other cities are doing--raising taxes and cutting basic services that people need now more than ever," said Mayor Daley.
The budget documents confirmed recommendations to spend less on non-essentials like city festivals and tourism promotion. The plan now moves to the hearing phase.
The mayor and alderman are hoping the economy improves and they are not faced with as large a deficit next year. That would be politically disastrous and would happen only a few months before the 2011 city elections.