In a well choreographed fiscal maneuver, Mayor Richard Daley said Tuesday that his administration has plugged a gaping hole in its preliminary budget for 2001, sparing Chicagoans the prospect of a new round of painful tax and fee increases.
But the rosy announcement, made possible mostly by adopting more optimistic projections about the economy, paper over the fact that city residents still will have to pay more in property taxes and sewer and water fees because of a series of annual increases approved by the City Council in 1999.
Daley’s announcement Tuesday was designed to allay fears raised last summer when the city’s Budget Department issued projections showing that, without remedial action, estimated expenditures would exceed expected revenue by a whopping $115 million next year.
But the mayor, in a moment of candor that made his budget director blanch, admitted that early city budgets often are crafted to present the worst possible–but not necessarily the most accurate–picture of the city’s fiscal health.
Asked by a reporter if “games get played” with the preliminary budget, Daley responded, “Right. You are right.”
Indeed, in most years, by tweaking the numbers and effecting internal economies, city budgeters are able to make early deficit projections disappear with few if any tax increases.
It is seen as part of an expectations game commonly played with budgets not just at City Hall, but in Springfield, Washington and many other centers of government: Make things look dire at first so the politicians can appear to ride to the rescue later on.
In sketching plans for the final budget, which he will present to the City Council next week, Daley offered the elimination of the projected deficit as evidence of his administration’s sound management practices.
“In this budget, I believe we can keep our city moving forward and protect taxpayers without asking them to pay any new or higher fees or taxes,” the mayor said.
But under questioning, Daley acknowledged that action taken by the City Council last year on his recommendation builds in an annual increase in the real estate tax levy of about $13 million through 2003. That translates into roughly $12 a year for the typical homeowner. The revenue is needed to retire $800 million in bonds used to finance new police stations, firehouses and other capital development projects.
Similarly, the council last year approved a Daley initiative to raise the water and sewer fee by 4 percent annually through 2003, adding another $12 next year to the typical homeowner’s bill. That money will be used to retire bonds issued to pay for other infrastructure improvements, including new water lines.
Most of next year’s projected budget shortfall was wiped out simply by revamping revenue estimates. Budget Director Michael Harris said that as much as $60 million more in revenue is expected now than his department projected in mid-summer.
There was fear a few months ago that a slowing economy and rising interest rates would hurt growth of sales and income tax revenue that flows into city coffers, as well as cool off property sales and the transfer taxes that result. But those concerns have eased, Harris said.
“It seems like things are going along just fine, so we are comfortable we can bump that [estimate] up,” he said.
Roughly $10 million in additional revenue is expected to come via more efficient collection of fines and costs of city services incurred as the result of negligence.
Daley said that a new taxpayer cost recovery unit in the Revenue Department will take over collection operations that now are spread through about 10 city offices–from the Department of Streets and Sanitation to the Department of Health–that issue citations.
The unit will concentrate on collecting fines for the most serious violations but will not ignore lesser offenses, Harris said.
The wide variety of fines imposed by different departments is expected to be streamlined and simplified as part of the new approach, Daley said. That ultimately could mean increases for some offenses and elimination of fines for others.
A $10 fine may no longer make sense, for example, because it costs too much to collect, he said.
Harris said the projected $115 million deficit has been whittled down to about $17 million, a total that will be reduced to zero by the time Daley presents the budget to the City Council next week. Layoffs are not planned, but leaving some vacancies unfilled is “one of the key options,” he said.
