In an announcement that could herald the approach of tax and fee increases, Mayor Richard Daley’s budget chief said Monday that the city faces a projected $217 million budget shortfall in 2008.
Rising personnel costs, coupled with a slowdown of certain revenues, was given as the main reason for the large gap in the city’s “preliminary” budget. And officials said they will spend the coming weeks looking for ways to cut before Mayor Richard Daley produces a final spending plan for City Council consideration in October.
But if history is a gauge, the size of the projected shortfall strongly suggests that taxpayers, in the end, will be required to come up with more money — even as Cook County and state politicians eye revenue increases of their own, presenting the possibility of a triple whammy for some taxpayers next year.
When a $220 million city shortfall was projected for 2006, a 20-cent-a-pack increase in the city’s cigarette tax was among the revenue boosts in the final budget. When officials projected a gap of $116 million for 2004, owners of big SUVs were hit with a higher city sticker fee, steeper fines for some parking violations were adopted and people who dine out were greeted with a new tax on restaurant meals.
“It’s not the worst we’ve seen in the last 10 years, but it is bad enough,” Ald. Patrick O’Connor (40th) said of the projected shortfall. “I don’t think there is any way you get that much money through [spending] cuts.”
A patchwork of tax, fee and fine increases have been used in the past under similar circumstances, and “I am assuming that is probably the approach we are going to have to take again,” he said.
Daley has held the line on real estate taxes since 2003, and there was resistance already on Monday to any proposal that would increase the burden on property owners next year.
Large projected deficits in the past sometimes have signaled the approach of a bigger bite on homeowners, but that is “not going to play this time,” said Ald. Bernard Stone (50th). City property owners already are being hurt by the effects of last year’s reassessment and “none of us is going to vote for a property tax increase,” he said. “I don’t know how we are going to make up for the shortfall, but we are going to have to find a way to do it.”
Taxpayers escaped any increases a year ago as Daley prepared to run for re-election, and Monday’s gloomy financial picture comes as City Hall negotiates new contracts with its union employees.
“Remarkably during the election year, there is no shortfall but immediately thereafter there is a black hole,” said Mark Donahue, president of the Fraternal Order of Police, which presented a proposal for a new contract to the city earlier this summer.
“They are going to have to raise taxes because I don’t think they can balance this budget on the backs of workers,” said Dennis Gannon, president of the Chicago Federation of Labor. “There’s no fat. There are just essential workers, day in and day out.”
In more than two months of negotiations on new contracts with unions that represent city trades workers and other employees, Gannon said there has been no proposal by the city to lay off workers or to deny them what he believes they should have coming.
“It’s been give and take on both sides, and I don’t think we are that far away from coming up with a deal,” he said.
Bennett Johnson III, the city’s budget director, contended that is too early to speculate about tax increases, layoffs or any other action to balance the 2008 budget.
“We always turn first to creative management to look at what we can do with what we have before we turn to taxpayers and cutting employees,” he said. “This is just the beginning of the [budget] process.”
Officials of the more than 40 city departments will be asked for their suggestions on efficiencies and cost-saving, and aldermen who received briefings on the preliminary budget on Monday were asked for input, Johnson said.
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