CHICAGO - Chicago-area governments should follow the City Colleges of Chicago's lead by holding their property tax levies steady and offering backup plans for possible state aid cuts, according to a report from a local business-funded government watchdog group on the colleges' $492 million fiscal 2010 budget.
The budget includes a spending increase of just under 1% over the previous year and relies on a 9.7% tuition increase to help offset possible state revenue shortfalls. Tuition and fee revenues are expected to increase by $8.7 million. Full-time enrollment rose by 10% between fiscal 2008 and 2009. The system intends to hold the tax levy steady at $126.2 million for two years.
The Civic Federation of Chicago praised the decision to turn to tuition rates instead of a property tax hike because of its limited impact on those who benefit most from the services provided. The college system also remains affordable compared to other community colleges in the region, the 39-page budget analysis states.
To compensate for possible state aid cuts of roughly $15 million, the colleges proposed eliminating 140 positions, cutting spending, reducing some grants, and dipping into its emergency contingency funds. Although Illinois Gov. Pat Quinn signed a new fiscal 2010 budget earlier this month, it includes plans for deep cuts and officials have warned the state will face a deficit by early next year and need to cut more absent an income tax increase.
"The Civic Federation believes the City Colleges' responsible FY 2010 budget sets a precedent other local governments should follow when crafting their upcoming budgets," said the federation's senior research associate, Genevieve Nolan.
The watchdog group's report did raise some concerns over shortfalls expected to begin in fiscal 2013 based on current spending levels. It is pressing for additional budget and financial information, including future enrollment projections and additional information in budget documents on the use of property tax revenues to support capital debt needs.
The federation also encouraged the college system to study the creation of a trust fund or other measures to address its other post-employment health care and pension-related benefits.
Separately, the group is working on a "shotgun" review of the Chicago 2016 Olympic bid committee's financing proposals.
The City Council passed a resolution seeking the review late last month, and earlier this month the federation agreed to examine the city's fiscal projections and to make recommendations. The group has hired London-based L.E.K. Consulting to assist in the review that is due before the end of August.
The federation's report is expected to review the fairness and reasonableness of the underlying assumptions and financial projections contained in the 2016 Olympic bid proposal, including its revenue and expenditure reports, construction contracts, and insurance guarantees.
The council's request for the review came after Mayor Richard Daley returned from a meeting of the International Olympic Committee in Switzerland last month to face mounting criticism for his promise to sign a host-city contract that provided an unlimited financial guarantee in case the games lose money.
The pledge contradicted past assurances from Daley that Chicago is on the hook for no more than $500 million. He contends that other privately funded guarantees, a state guarantee, and insurance coverage would kick in first in what he has portrayed as the unlikely event the Olympics lose money. The mayor has said the games would have to lose $2.5 billion before that unlimited guarantee would kick in.
Daley has repeatedly said the Olympics would not cost local taxpayers, but he made a similar pledge on the development of Millennium Park until overruns doubled the cost.
Chicago's Olympic proposal calls for private funds to pay for the Olympic Village, where athletes would live during the games, but some tax increment financing debt might be issued to support infrastructure projects.
