Gloomy forecast for city's 2010 budget

August 1, 2009 (CHICAGO) Money problems continue for Chicago, even after it exhausted its $320 million so-called 'Rainy Day Fund.'

Daley has laid off city workers and pressured unions to take unpaid days off to save money this year. Now, the focus has turned to 2010 and the gloomy predictions of another massive shortfall.

Because of the sluggish economy, it's likely that most Chicago residents expected the city's budget numbers to look bad, but nothing like what Mayor Daley and his administration are predicting. Chicago has a projected nearly $520-million budget shortfall for next year. And with no obvious new sources of revenue, there exists the possibility of tax increases, or more spending cuts, or both in 2010.

"This is the tsunami of recessions," said Mayor Daley.

That statement is part of Daley's explanation for why he says the city's current financial problems will only get worse. Just this week, the mayor's administration predicted the city's anticipated budget of $6.2 billion for next yearcould be more than half a billion dollars short.

"We probably knew it was not going to be better than this year's, but I think that it was stunning," said Ald. Virginia Rugai of the city's 19th Ward.

Daley says plummeting tax revenues and rising wages that account for a majority of the city's daily operations certainly do not help the situation.

"Our projected revenue keeps going down," said the mayor. "Income tax, sales tax, real estate taxes, any other fees. People are suffering."

That could be why Mayor Daley has told his staffers to not look at raising property taxes for 2010. New revenue came into the city's coffers by leasing out the Chicago Skyway and the city's parking meters, which let city officials create the Rainy Day Fund. Unfortunately, most of that money was used to plug holes in this year's budget.

The remaining $51 million will be used next year.

Out-of-work municipal employees still take issue with the mayor for laying off city workers and pressuring unions into taking unpaid furlough days to save money.

"He could have balanced the budget with money from the Skyway and the parking meters, instead of laying us off," said former city worker Douglas Johnson.

The outlook is bleak for taxpayers, too, who fear higher taxes and slashed city services. The mammoth budget gap comes as Chicago's police officers work without a new contract with the city.

Ald. Emma Mitts of the city's 37th Ward says allowing Wal-mart to build more stores may be an answer to some of the city's money problems. She says the Wal-mart in her ward has generated over $10 millions in city, county and states taxes.

"That's not a little drop in the bullet. It's certainly some money that could offset some of the debt we have today," Mitts said.

The mayor's chief financial officer says the biggest chunk of the next year's increased spending will be $117 million in higher wages, benefits and pension fund payments.

Some experts say new taxes are highly unlikely because the city is already taxing what it can, but residents should expect more personnel cuts.

The mayor's aides are already briefing aldermen on the 2010 budget in anticipation of a pubic hearing in September.

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