No Tax Increase; Improved Management, Expenditure Cuts, Use of TIF and Parking Meter Funds Help Balance Budget; Skyway Reserve Fund Untapped
The City Council today approved Mayor Richard M. Daley’s balanced 2011 budget which makes government more efficient, continues to provide basic services and provides limited new spending to make neighborhoods safer, help grow Chicago’s economy and create new jobs.
The Council voted 43 to 7 in support of the budget ordinance.
“We had projected a City deficit of over $654 million for next year, a direct result of the worst national recession in seventy years. To date, this recession has caused us to lose more than $1 billion in revenue. The nation's recession is the biggest reason we – and every other city and state – continue to face major financial challenges today,” Daley said last month when he introduced the budget in Council.
“I deeply believe that had we not worked for years to better manage government and control costs and had we not worked every day to transform our economy and create new opportunity, the recession would have been far worse in Chicago,” he said.
Daley’s budget plan does not raise any tax, fee or fine, including property taxes. "I do not believe it is right to raise taxes with the economy as bad as it is," he said. This marks the third year in a row that Mayor Daley has not raised property taxes.
Daley also said that the budget holds the line on spending for most programs and continues basic services. “This is not the time to expand government,” he said.
The 2011 balanced budget will:
- Continue the freeze on non-safety hiring, which has been in effect since 2008, saving an estimated $20 million in 2011.
- Continue to consolidate departments to reduce costs and avoid duplication. It will consolidate the Departments of General Services and Graphics, the Department of Cultural Affairs and the Mayor’s Office of Special Events and the Departments of Community Development and Zoning and Land Use Planning.
- Continue to require that all non-union employees, starting with Mayor Daley, take furlough days and unpaid holidays, resulting in an overall savings of $20 million. Similar cuts for certain union employees are also included for a savings of $32 million.
- Cut 277 budgeted positions from the payroll, saving $13 million.
- Continue to generate savings from lease renegotiations, contract reductions, locked in lower utility costs, the reduction of custodial services and savings in healthcare costs, among others.
Further, Mayor Daley declared a surplus of $188 million in 25 of the 160 Tax Increment Financing districts across Chicago, which will provide the City $40 million to help balance the budget.
Under this TIF proposal, Chicago's public schools will receive a one-time infusion of approximately $95 million to help address their budget challenges.
Thanks to the City’s continued discipline and cost-cutting measures throughout the year, the City will borrow $60 million less from the parking meter lease funds to balance the 2010 budget than had originally been planned, and will apply those funds to help balance the 2011 budget.
In a step Daley said he knows is “controversial,” the City will borrow an additional $120 million from the lease of the City’s parking meters to balance the budget. That will leave $76 million remaining in the parking meter accounts. This use of parking meter reserve funds covers the last 18% of the budget gap which couldn’t be closed otherwise without raising taxes or cutting services.
The City will maintain its commitment to provide more than $21 million this year from the parking meter account to support people's needs – from home meals for seniors, to youth jobs programs and job training for ex-offenders.
To protect taxpayers, the City will not use any funds from the Skyway long-term reserve account to balance next year's budget. This will leave a half billion dollars in that account – a reserve fund that most cities do not have. “We have helped protect Chicago's future with this decision,” Daley said.
Without the asset leases – which were reached before the recession’s full impact was realized – the Mayor said that the City would have been forced to raise taxes substantially and eliminate or reduce many services on which people depend.
To encourage job hiring and creation, the 2011 budget will reduce the Employers’ Expense Tax, or “head tax,” paid by some employers by raising the employee earnings threshold. Employers will now have to pay the head tax on all employees earning $4,300 per quarter, up from $900 a quarter.
The 2011 budget also creates a new $2 million small business fund – to be supported by City government and the private sector – to provide loans for start ups, expansions and day to day operations.
The budget puts a priority on finding a way to invest a limited amount of additional money for programs that make neighborhoods safer and help grow the economy and create new jobs.
Daley said the City’s first priority remains to put more police on street duty.
Combined with other recent management steps, the Police Department will have assigned more than 800 new officers to street duty in the last two years.
Chicago’s $1.9 billion Capital Improvement Program for 2011 will again provide funds to invest in a broad range of important projects, including water and sewer improvements, street resurfacing, streetscapes, street lighting, sidewalk, curb and gutter repairs and the ongoing construction of new community anchors like police stations, fire stations and libraries.
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