With Chicago’s revenue collections now $113 million below budgeted projections, city officials last week increased the pressure on unions to agree to concessions — such as unpaid furlough days — or face layoffs.
“We continue to closely monitor our financial position to ensure we are doing all we can to protect taxpayers,” said chief financial officer Gene Saffold. “But the reality is that we aren’t going to be able to address this revenue shortfall without reducing personnel costs.”
Personnel costs make up 80% of the city’s corporate budget. “We do not want to lay off any employees,” Saffold said. “But if we do not reach an agreement with our union partners, we could begin sending out layoff notification letters as early as next week.”
Revenues fell $17 million short of budgeted projections in May, bringing the cumulative gap to $113 million. The real estate transaction tax was projected to generate $11.3 million but only produced $5.5 million and is now nearly $29 million below projections for the year.
The last sales tax distribution to the city last month was $7.1 million below estimates and represented a 16.2% decline over the same period last year. Income tax collections generated $35.2 million, $5 million under April projections and represent a 20% decline over last year. Personal property replacement taxes did better than expected while utility taxes were off by $3.3 million for the month.
Chicago has previously announced cuts that leave the deficit at $82 million. The city faces increasing pressure to further tap mid-term reserves set up with its asset-lease deals, but officials have so far resisted dipping into permanent reserves totaling $900 million that are key to its double-A general obligation ratings.
