The Daley administration announced Monday that the shortfall in the city’s $4.6 billion budget for this year could balloon to $80 million, more than three times the revenue deficit released only last month.
Budget Director Michael Harris said closer scrutiny of a dwindling revenue stream led to the new estimate. Last month, the administration announced it was considering a range of measures to plug a $25 million revenue gap in the first three months of the year.
Harris said the administration still considers tax and fee increases a last resort, but he was more circumspect about the possibility of layoffs. Harris added that any cutbacks in state aid would aggravate the situation and could make such drastic steps inevitable.
He said the administration would not release a detailed plan to address the shortfall until lawmakers completed work on the state budget.
“There are measures happening in Springfield that can adversely impact our situation and because of that reason and the magnitude of those effects…it would not be prudent for us to come out with a definitive plan until Springfield is done with its work,” Harris said.
The state, however, is grappling with its own budget crisis, and lawmakers are considering a wide array of cost-cutting ideas that could affect money used to underwrite programs in Chicago and many other communities.
Harris’ announcement comes in light of new data showing the city’s share of income and sales tax revenues has continued to plunge and was off by $10 million in April and May compared with the same period last year. To combat the problem, Mayor Richard Daley asked city workers to take a week’s furlough without pay or forgo midyear raises, but unions balked at the idea.
Daley has appeared reluctant to lay off employees, but Harris and top deputies would not rule it out. Earlier this month Harris announced that 425 city workers would be let go, only to be quickly reversed by Daley.
“The mayor has been really clear that taxes and fee increases are not on the table, they’re absolutely the last resort, but everything else in terms of cost cutting and management, everything else is on the table,” said Bill Abolt, chief management officer.
One measure under consideration to ease the state’s budget crisis would cost the city an estimated $19 million in state income tax. Harris said he and several aldermen, including Budget Committee Chairman Ald. William Beavers (7th) will go to Springfield Wednesday to lobby against the idea.
“We’re going because we just want to make sure we continue to get what we’re getting from Springfield,” Beavers said. “If we continue to get what we’re getting from Springfield, we’ll be all right.”
Another proposal being talked about in Springfield would remove the city’s share of a state sales tax, a loss of about $6.1 million annually. Both ideas are part of a plan recently proposed by Senate Republicans, who argue that local governments should help shoulder the state’s budget burden.
Another part of the Senate GOP proposal could help balance out the first two features. It would decouple state tax rules from those of the federal government, a move designed to avert costly corporate tax breaks recently enacted by Congress. It would save the city an estimated $17 million, according to Harris.
Some state lawmakers predict the city’s lobbying campaign will find a friendly audience because many are concerned about how budget decisions will ripple through to municipalities and other local government bodies in their districts. Although Chicago would take the biggest hit, local governments statewide would be affected by the proposals.
“It’s highly unlikely that the state will pull food out of the mouths of Chicago and other municipalities, especially in an election year when everyone is on the ballot,” said state Rep. Jeff Schoenberg (D-Evanston), chairman of one House appropriations committee. “This is a bread-and-butter issue for every local municipality in the state.”
