Official: City $31 million deeper in the hole

January 2, 2009 3:32:11 PM PST
Chicago officials says the city is millions of dollars deeper in debt than previously thought, and they blame clean-up of December's big snows and less tax revenue because of the housing slump. However, officials vow that there will be no new taxes to pay for the shortfall.

Word of the budget shortfall comes on a day when most Chicagoans are realizing that CTA and Pace fares have gone up, and it costs more to park, as well.

The city's chief financial officer says the recession is negatively impacting Chicago, and he expects the situation to get worse before it gets better.

The recession is one of the reasons why the city ended 2008 with a $31 million shortfall. To recoup that money, the city says it will cut back on spending, while Chicago area residents seem to be spending more to get around town.

Whether you drive, or take public transportation, getting around in Chicago is becoming more expensive. It will cost at least a quarter more to ride both CTA buses and trains.

"It's bad timing, definitely, but I know they've tried increases for a while. So, hopefully, we'll see some positive results from this," resident Sara Hassan said.

"I don't think anyone wants to pay more money, but I do understand that there's increasing costs. I think they should try to better balance their budget so that everyone doesn't have to share that cost," Chante Deloach said.

If you drive a car, get ready to feed the meter more money. The city has increased the rate of any metered spot costing less than one dollar an hour, up to one dollar. Meters costing $3 each hour, will now cost $3.50.

"It makes you a little bit more unhappy to be scrounging in your pockets to get quarters to put in the meter," said Omar Sinno.

All of those extra quarters will add up, with more than $320 million of the meter increase money earmarked as an option to help the city balance the budget.

The city's chief financial officer, Chief of Staff Paul Volpe, announced Friday that Chicago has a $31-million shortfall. The recession has caused key revenue sources, like money from housing sales, to fall below already lowered expectations.

The slumping housing market is having a big impact on the city.

"Even though real estate transaction tax projections were adjusted substantially this fall, as we reported, November collections were still $6 million below those adjusted projections. In fact, at $4.3 million, November was the worse month in real estate transaction results since March 1998," Volpe said.

In order to make up for that $31-million shortfall, the city will tap into more than $20 million it saved by locking in lower fuel prices, and $11 million will come from restructuring escrow accounts for the Chicago Skyway.

Looking ahead to the 2009 budget, there is a nearly $470 million shortfall, but the city is addressing that with job cuts, and money from the lease of the city's parking meters.

Officials say no new taxes are on the horizon.