Cook County Board to Weigh Stroger’s $3.56B Budget

CHICAGO — Cook County, Ill., board commissioners will begin this week tackling President Todd Stroger’s proposed $3.56 billion all-funds 2010 budget that includes no new taxes and limited borrowing while relying on an unpopular, year-old sales tax increase that faces possible repeal.

Stroger late last week in unveiling his budget also announced the availability of $196 million of recovery zone facility bonds for private businesses from the program included in the federal stimulus act. Under the program, the county would act as a conduit issuer for businesses that would use proceeds from the low-interest bonds to invest in a range of capital development projects.

Stroger’s proposed spending plan includes a $2.3 billion general fund budget as part of an overall operating budget that totals just over $3 billion. He also proposed a $519 million capital budget.

“At a time when governments throughout our region have been raising taxes to address huge deficits … Cook County is again holding the line on new taxes and meeting its obligations,” Stroger told the 17-member county board of commissioners at a budget address Thursday. “This recommended budget is balanced. It reflects no delays of payment cycles, no long-term borrowing to fund operations, and no use of reserve funds to pay our bills.”

The budget would increase general fund spending by 3.6% over last year. About two-thirds of the general fund budget goes to public safety and the health and hospital system. As part of the plan, Stroger said the county would eliminate 714 positions, leaving a total of 23,845 full-time positions across the government in fiscal 2010.

Revenues for 2010 are projected to total $3.5 billion, according to budget documents. The bulk of Cook’s revenue comes from so-called home rule taxes, including sales, gasoline, cigarette, and other taxes, and just over 20% is derived from property taxes. The county’s property tax levy has remained flat since 1996.

The administration is projecting steady growth in sales tax revenue over the next several years, supported by a one percentage point increase in the sales tax that pushed the county’s tax to 1.75% from 0.75% and Chicago’s sales tax up to 10.25%. Gross sales-tax revenue is expected to total $651 million in 2009, $659 million in 2010, $674 million in 2011, and $703 million in 2012.

In his budget address, Stroger defended the controversial tax increase as necessary to help the county retain its bond rating.

“The penny increase in the sales tax last year has enabled Cook County’s agencies to tackle the county’s chronic structural deficit and provide vital services and begin to address rating agencies’ concerns about Cook County’s level of reserve funds,” he said.

Though Stroger touted the county’s bond rating as “solid” — noting that all three agencies affirmed their ratings last week — the county was in early June hit with duel one-notch downgrades from Moody’s Investors Service and Fitch Ratings.

Standard & Poor’s rates Cook’s GO debt AA. Fitch rates the credit AA-minus, and Moody’s rates it Aa3.

The board has narrowly failed to repeal the sales tax increase during several attempts this year. But the effort has recently found fresh momentum in a state bill that would lower the requirement for a veto override on the board to a three-fifths majority from four-fifths. If the bill passes, several commissioners predicted last week that the board would pass at least a partial roll-back of the increase.

Even if a repeal is successful, it would not take effect until next July, minimizing the impact on the fiscal 2010 budget, said Jaye Morgan Williams, the county’s new chief financial officer

“It would have less of an impact on 2010 than on 2011,” Williams said last week at a press conference with Stroger. Assuming a full repeal, he said the county would stand to lose roughly $400 million in revenue heading into 2011, requiring up to 25% cuts across the government.

Stroger said that would mean “massive cuts” to the health and hospitals bureau. “Cuts of that magnitude would dramatically impact the lives of our residents in many negative ways,” he said.

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Illinois
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