CHICAGO — Chicago Mayor Richard Daley yesterday announced that 3,500 non-union city employees will be required to take 14 unpaid furlough days as the city grapples with what could grow to a $300 million budget deficit before the year ends.
Daley previously had ordered unpaid furlough days for the day after Thanksgiving, Christmas Eve, and New Year’s Eve in 2008 and 2009 to save money.
The latest move to require non-union workers to take seven unpaid days off and skip pay on another seven holidays would save an estimated $10 million. City Council approval is needed. Daley and chief financial officer Gene Saffold said the cuts are needed to address poor revenue collections on the city’s most economically sensitive taxes.
Daley said during a news conference yesterday on the latest cost-cutting measures that he doesn’t agree with the more positive economic forecasts coming from some federal officials of late, saying the improvements are not “as significant as people think.”
The city’s latest move puts pressure on unions representing the majority of Chicago’s workforce to agree to concessions such as pay cuts, furlough days, and work rule changes or face significant layoffs. The Daley administration has been meeting with union leaders in hopes of reaching an agreement that would alter the 10-year contract reached with workers in 2007.
Saffold announced last month that the first-quarter shortfall in the $6 billion budget was $82.8 million. About $31 million had been trimmed off the deficit through various spending cuts and management initiatives.
The city continues to weigh options, including dipping further into revenues from the $1.2 billion collected from its lease of the city’s parking meter system. About $325 million was placed in a mid-term reserve, of which about $150 million is already being used in the budget.
Chicago also has $126 million available from collateral posted by the private group that won the lease of Midway Airport. That deal fell through last month but the city gets to keep the collateral.
Chicago’s $6 billion of general obligation bonds are rated AA by Fitch Ratings, Aa3 by Moody’s Investors Service, and AA-minus by Standard & Poor’s.
