By Hal Dardick
Tribune reporter
12:23 p.m. CDT, July 29, 2011
Mayor Rahm Emanuel today said next year's city budget hole is nearly $636 million and he won't use one-time fixes or reserves to fix it.
"Today is to inform the public who pays the bills of the size and the scope of the problem," Emanuel said at a City Hall news conference. "The system needs reform. It is calling out for it."
Emanuel also said he won't raise taxes on Chicagoans who feel "nickeled and dimed" until the city's financial structure gets reformed.
"I can't ask people to pay more into a system that needs to be fundamentally restructured," he said.
Without significant changes in how the city operates, the city budget gap would widen in coming years to $741.4 million in 2013 and $790.7 million in 2014, the administration estimates.
Much of the budget imbalance results from long-term union contracts with locked-in raises, rising health care costs for workers and increased borrowing in recent years that brought higher interest payments.
The budget figures do not include shortfalls in city pension systems, which could add costs of $500 million or more annually in coming years. Absent changes in the pension systems or new revenue sources, that could result in a doubling of the city property tax, according to The Civic Federation, a non-partisan budget watchdog group.
Emanuel is required under state law to make them public by July 31.
Release of the preliminary figures is the first step in fashioning a budget for the coming year. Emanuel’s task will be to find ways to close that gap without tapping one-time revenue sources, as former Mayor Daley did repeatedly in recent years.
Emanuel, who personally briefed City Council committee chairmen on the budget this morning, told them he has asked his department heads to come up with ideas to close the gap. His appearance at the briefings was a break from past practice, when Daley had his financial chiefs present the news to aldermen.
In May, Daley said he anticipated a budget shortfall next year of $587 million, but incoming Emanuel administration officials have said they anticipated it would be higher.
Last year, the city plugged a budget gap of $655 million largely by dipping into dwindling reserves, refinancing debt and drawing money from once-sacrosanct special taxing district funds.
During his first couple of months in office, Emanuel has taken steps to curtail spending. He announced plans to cut $75 million from this year’s $6.15 billion spending plan, and he has pushed unions to make concessions, so far to little avail.
Critics note that even in 2007, when the economy peaked, the city faced a budget gap of $95 million, and spending has only increased since.
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